The sun., 1916-01-04
CATION can be discharged; and we quite

cation can be discharged and we quite
as naturally answer that 1t cannot.
Nevertheless we may be sure that,
whatever composition any nation may
have to make with It's domestic credi-
tors, 1t will maintain its international
credit. There will be no Reputation
Of external debt; and so far as re-
CARDS domestic debt we must not fall
into the error of contemplating the
sum Of debt as principal.
Debts for this war must he looked
upon In the terms of the annual in.
terest payment which will be In
volved, the flxed charge, In short, on
national earning power. Sooner or
later the European war bonds In the
hands Of domestic creditors will be
funded into perpetual rentes or con-
soils and will become simply war
rants emitting the holders to annui-
ties. Whether there will be further
adjustments Of domestic debt when
this basis has been contrived Is a
question which looks too far ahead.
The most practical concern which
we have In war finance at the mo-
ment is in the organization Of British
resources to sustain the war. The
proclamation recently addressed to
the public by British bankers, as
serting that the war In 1916 would
cost Great Britain $4,000, 100000 and
appealing for the utmost support
from the private purse backed by
private thrift. was part of cam
paign to mobilize British wealth for
the last stages Of tho war. This Is
of much interest to us. for IL IL In the
superiority Of ultimate resources Of
men and munitions, but most Of all of
money. that the Quadruplc Entente
appears to possess the final advantage
which will shape the outcome.
OF more acute present interest TO
us is the fact that II substantial part
of British resources for the rrosecu'
ton of the war consists of the many
hundreds of millions of dollars OF
American securities which have not
been sold back to us since the out
break of the war. British financial
policy is to compel, 10y every kind OF
pressure, the return Of these remain
ing securities in accordance with our
ability to absorb them.
| How does that affect our financial
position and prospect? In the first
place II Is certain that British finance
will not overtax the capacity of OuI
markets to stand the continued liqut
dation Of our securities from Lon
don. 1t Is vital to Great Britain moi
to spoil the market which we afford
for ON this market Great Britain ant
her allies must rely for the chief ex
ternal supply Of goods and munition.
which have to be imported during thu
war. For the rest let the record o.
1915 make the adequate reply that II
a twelvemonth upward of a billioI
dollars, perhaps as much as a billioI
and q half dollars, Of our securities
have been absorbed here SO readil.
that the level of quoted values for nj
descriptions from bonds to stocks Il
higher than 1t was n year ago.
Not only does the financing of tn
war do us no immediate injury, 1t i
inuring to our benefit. We are extri
cutting ourselves from Indebtedness
abroad and assuming creditor rela
ton to the rest of the world; and II
importing our own securities from tn
other nations whose citizens hav
held them we are receiving accept
able means of payment for the hug
export commerce which the war ha
created for us, n commerce that no
only gave the original stimulus, bu
has given persistent stimulus to al
branches of domestic business.
As long as Great Britain can oil
tain our own securities to send u
with some cash to boot, we are as
sured that this export trade move
ment will 60 on, and on the ascel
tained holdings of our securitie
abroad 1t would seem to be good 70
another year at least. What wi
happen after that depends too muc
on whether or not the war Is ende
TO permit reasonable conjecture.
Good Words Como to the Top.