South Bend news-times. (South Bend, Ind.) 1913-1938, 1917-06-10
The Finances of Nations as
Reflected in Exchange


circulating medium-the banknote-
was on a deprecated currency ba-
sis even in normal times (although
this depreciation was OF a minor de-
gree. still at the same time it had to
be recognized as irredeemable cur
rency) witnessed its exchanges 60
ing from bad 10 worse and when
these had reached the unusual price
OF six lire 10 the dollar the general
suppOsition was that they could not
60 any lower. In the twinkling Of
an eye, however, $50 was reached
and then 10 :. was but a step. The
next drop was 20 $50, and today
they are liza depreciation Of %
percent In other words, gold in
Italy today stands at "a premium OF
% percent Undoubtedly there will
be a reaction but much cannot he
hoped for in this respect
The recent abnormal decline in
the currency of this important cOun-
try is attributed 10 the failure OF the
latest internal loan that was opened
for subscription and which, as far
as its results are concerned, stood
out in such strong contrasts 10 an
internal loan that was opened 10 the
public in Great Britain. What the
remedy for this condition of affairs
Will be. when We are again able 10
devote our minds 20 thoughts of
peace, il is pretty difficult 10 say.
Opinions as TO a reaction vary 10 an
extent that is marvellous. II is evil
dent that we are-all cropping in the
dark as 10 the future.
The use Of banknotes has assumed
such enormous proportions that very
little hope can be entertained as TO
their redeema bility within a reason
able time limit This is due TO the
fact that there is not sufficient gold
in existence 10 convey the idea that
these issues are subject TO redemp-
ton. This perhaps is not a matter
of such extreme vital importance
that disaster can be predicted upon
the circumstance, as the full credit
and faith Of the government stands
behind these issues Regardless Of
conditions the state will always con-
tinue 10 exist and the solidarity of
the people behind these issues rep
resented by the state will ultimate
ly guarantee that the people will not
he the losers. Ii is only in connec-
ton with foreign trade where diff
culties will be encountered.
International business calls for
settlement only in three ways the
exchange OF products: the granting
of credits; and remittances in gold.
The legitimate way. Of course, is the
exchange of commodities. But il is
TO be feared that il will be "A great
many years before this exchange
will run along natural lines. and in
the meantime il will be absolutely
essential that long time credits be
granted. Such credits, OF course.
cannot he of a commercial character
but must assume the form OF obli-
cations payable within a fixed pc
riOd. thus serving as an investment
for the country granting the credits.
Unless this method should be adopt
ed the prosperity of the producing
country would be jeopardized 10 an
extent that might easily spell dis
aster.
We will have 10 take a lear out OF
the book of our friends on the other
side who have gained prominence
in the worlds commerce by doing
that very thing. The trade of South
America. Central America. Of the
Orient has all been done by means
of credit facilities freely and gener-
ously granted. and if we desire 10
maintain our supremacy in the field
of production in the future il is es-
sential that we do the same thing
OF course our own country is still
subject 10 considerable development
and funds will be needed here for
that purpose. but il must be borne
in mind that along with the devel-
opment of our own fields their pro-
ductivity can only be enhanced by
giving them the possibility Of pro-
ducing over and over again what
ofbar paffopc mad