Daily capital journal. (Salem, Oregon) 1903-1919, 1915-08-25

New York, Aug. 21.--The loss of the
Arabic caused sharp drop in the mar
let ON Thursday when it was realized
that this threatened fresh and danger
ous crisis in our relations with Ger
many.
Tn one form or another, the war con-
tipues to dominate financial affairs
here. Although we have succeeded in
being strictly neutral in our actions, our
foreign and domestic trade, our foreign
exchange and security markets as well
as our banking arrangements have all
been deranged more seriously and more
fundamentally. than at any time since
the Civil war-if not even more than
during that great crisis. If the dis
organization has been extraordinary, so,
TOO. have been the energy and ability
with which it has been met and over
come. This country has exhibited in
dustrial strength and financial capacity
far beyond all expectations The conse-
0uence is. we are facing future in
which the chief danger lies in an ex-
cess of optimism. We are far more like
" 70 suffer from too much activity, too
much confidence and too much specula-
ton than too little. Evidently we are
liable to run into period of excessive
initiation, the danger of which | hope
is fully recognized by those who control
our banking system. We are now the
only first class commercial power whose
resources are not being wasted by war,
and, while all other great trading and
industrial nations are rushing madly
into losses which it will require years
TO overcome, and some of which never
will be recovered, the United States is
steadily augmenting its resources and
preparing itself for new era of ex-
pansion in both domestic and foreign
trade. When the war is over, it will be
found that the relative economic posi-
tions of the various nations will have
vastly changed Germany will require
years of recuperation So, too, will, Bel
gium and parts of France Russia and
Italy may feel the consequence less Sc
riously than the countries just mention
ed, while Great Britain will feel the in
iuries least of all the belligerents. But
the United States remains the only
great power in the world that will, or
even can, benefit from this tragic strug-
gle. In estimating our business future
this is the central fact that should
not be forgotten.
Attention in financial circles has once
more been concentrated on foreign ex-
change. Sterling dropped to AGA, the
lowest on record. This means shrink
age of nearly 5 per cent in sterling ex-
change, compared with about IL per
cent in French exchange, about ~ per
cent in German exchange and 70 per
cent in italian. The decline in sterling
would have gone still further had it not
been made known that the British gov
ernment was taking active steps for
protecting its credit in this market. The
situation in exchange was rapidly be-
coming more acute by knowledge that
the time was approaching when the ex-
cess of exports over imports, which is
at the bottom of the present exchange
crisis, would become still more formid-
able. Some stable settlement of Eu-
ropes debt to the United States is i'm
perative. Our creditors may talk about
sending us another $50 to 300 millions
Of gold, but they can poorly spare it
and we do not want it, our present
stock being so huge as to be embar-
RAISING, if not positively dangerous as
an inflationary element. To US such q
proposal does not seem in line with good
finance. 1t would seem as if the only
practical way of adjustment was the
selling of British short term notes OF
bonds in the United States. British hold
ers connot be induced to part with any
further important amounts of American
securities. Efforts to raise loans II
this country by pledging British hold