The Washington herald., 1917-01-14
Exports Bencfit All.


AutOombies .....~.............. aOoOoo Guocp
Exports BENEFIT All.
Thus it must be plain that every
part of the country is vitality interest
ed in our export trade: the farmer in
the West the cotton grower in the
South. the miner in Pennsylvania and
Arizona, as well as the manufacturer
in the East. 1t is with this picture
in mind that we must consider seri-
ously the fact that, IL we fail to ex-
tend credit to Great Britain, France
and Russia, these countries will be
compelled drastically to cut down
their purchases in America. Realizing
this and believing their notes, payable
in dollars. to be sound security, we
have urged upon Americas growing
investment community the necessity
of granting credit to these and other
nations ---. ....-- 80.
secod: The Gold situation-sinee
January IL, 1918. this country has,
through import of the metal. increased
its stock of gold by about $500. 200. 900.
100000. According to the or1cial re-
ports, the stock OF gold in the central
banks in England. France. Russia and
Italy aggregates approximately 81, oO0.-
900, 900. Gold in itself does not consti-
tute a nations chief wealth or re-
sources; indeed. the proportion of a
eountry's wealth represented by its
stock of gold is relatively insignih-
cant. For example, Americas total
of 100000, 100000. Further. the inn
portation of gold is not even the prin-
cipal, far less the sole, benefit which
country derives from its foreign
trade. Its benefit lies almost wholly
in the exchange of goods. Foreign
trade encourages greater and more
effective division OF labor 1t stimu-
lates production to top capacity, there
by increasing the real revenue and
wealth of the country.
Gold Is Not Wealth.
The popular notion that money OF gold
the terms are commonly used synony-
rlously-represents wealth naturally aris-
es from its double function as an instru-
ment of commerce and as the measure Of
,alue. But economists ard publicists long
ago recognized that accumulation of ex-
cessive supplies OF gold by country is
detrimental to its foreign trade; indeed,
Is likely to prove a menace to real pros
perity. For the last half century or more
gold has been used in the settlement Of
the usually insignificant international
trade balances that have existed after tho
giving and taking of credit instruments
In other words Great Britain and France
have been in the habit for decades past
Of drawing upon America for compara-
lively minor quantities of gold. The bulk
of our floating Indebtedness to them they
have Cancelled through the purchase of
our securities: in other words, by lend
ing America money. 1t was, for instance.
estimated that at the outbreak of the
war the amount of the foreign holdings of
American securities was in the neighbor-
hood of 5000, ,OOO, coo; this figure having
been greatly reduced by our repurchases
of our own securities in the last two and
a half years.
But should America now insist that her
valued foreign customers continue to re-
duce their stocks of gold at the present
unprecedented rate, the result would con-
ceivably be as disastrous for America as
for her customers abroad. II our present
stock of gold, now at a height unpre-
cedented for any country in the world
history, be augmented by another 81. .ooo,-
on00J0 OF the metal, expansion of credits
would be likely to lead an era OF specu-
lation and of inflated prices; to invite
calamity upon our business community, |
with consequent severe reaction and m
dustrial depression. No man can say that
this must of necessity be so; for It Is,
Of course, possible that a people, in the |
face of rapidly expanding credits may
practice a self-restraint which will cure
or mitigate the evils which have usually |
flown from such condition. In forecast |
ing the future. however the prudent man
can base his predictions only on what has |
really happened. |
Deny Credftsy Lose Trade.
Moreover, and at the same time, con-
tinued heavy importation of gold would |
so drain our best customers abroad of
their usual medium of exchange. gold. |
that we should probably witness long
continued hard times and inability, on
their part, to buy largely of our pro-
ducts. 1t Is an axiom of sound business |
that the seller of commodities cannot
continue to prosper unless the purchaser
also continues in well-being. Yet a pro-
posal to deny ample credits to these rich |
countries abroad. and to compel them 70
Drain themselves of gold. means that we
shall deliberately frnpoverish and cripple
customers whose trade Is now making us
wsaieay, and whose good VIII and custem