New-York tribune., 1917-07-23
Would Establish
Fund to Stabilize
Russian Exchange
Max May Describes How
Loans to Allies Affect In
ternational Finance

. CUO, according 70 NIdN Nay 'ANe-PiN''
dent of the Guaranty Trust Company.
In an article written for a recent issue
Of Successful Banking" Mr.. May says;
There are simply no precedents
whatever to guide one in analyzing the
future. However, one cannot stop do
ing business, but must try to foresee
trends as best possible.
What are the conditions that have
now been produced?
"This $3,OOOOOO,OOO and any other
billions that may be furnished later on
to our allies in Europe will not only
call for heavy interest payments to us,
but the principal will have to be paid
sooner or later after peace is estab-
lished. These colossal loans will prob
ably run for a specified number Of
years, with the understanding that re-
payment will not have to be made in
one lump sum, but in instalments, part
Of the loans being renewed.
Therefore, England and France and
Russia and Italy will have to lose no
opportunity TO accumulate dollar ex-
change for this purpose. No human
being can foretell TO what extent this
will raise the price of dollars and low
er the price of sterling and other Euro
pean exchange; but it is my judgment
that not for many, many years-per-
haps not in my lifetime-will dollar
exchange and sterling exchange sell at
the levels which ruled before the war.
to the par of 4.8665 within the next
decade at least.
Earlier Loans Also Factor
"This s3,OOO,OOOOOO transaction is
not the only development tending to
keep dollar exchange at premium. Pre-
vious to this United States government
loan to the Allies there had been bor-
rowed here by foreign countries some
F, thing like s2,750,O00, 900. while authorl-
tetive records compiled by President
| Loree of the Delaware & Hudson Kali
/ road show that European holders have
| liouidated American securities on such
a scale that comparatively little is now
| held by individuals abroad.
ave are already creditor nation on
a large scale. and if the war should be
prolonged the pendulum must swing
| still further and further in our favor.
| This. too, will call for heavy demand
/ for dollar exchange abroad to meet in
terest and dividend payments due US.
! "Then we used to pay a large sum
annually to European steamship COM
panies. Americas shipping plans are
| being laid on scale that will ultimate
/ ly enable us to carry in our own bot
toms the bulk of our oversee freight
| Here again the pre-war conditions VIII
I all be unset. These are matters Of in
/ calculable Importance, matters when
all bankers must ponder carefully IN
order to enable them to endeavor intel
/ ligently to adjust themselves TO the
coming new order of things.
Effect Upon Foreign Industries
"How can Britain and our other
European creditors meet these bur
/ dens and at the same time pay for the
/ enormous amounts of raw materials
which they will be obliged to purchase
| in the United States? Taxation
abroad will have to be heavy in order
/ to meet the interest on war debts ana
to reduce gradually the public debts.
1--WE are destined to see fiercer COM
/ petition than anything dreamed of in
/ pre-war days. Governments will either
cooperate very closely with or control
/ the activities of the more important in
/ dustries within their borders, and thus
/ reduce wasteful domestic competition
and domestic costs to the irreduclble
minimum.
; ave know that the belligerents have
| introduced labor saving devices in every
/ line of industry, while we know, also,
that the efficiency of labor has been in
creased enormously. The introduction
/ of women will go far TO offset the loss
of man power inflicted by the war; and
/ it is questionable if women will be paid
4 as high wages as men, the breadwinners
/ and the heads of families.
Expects Wage Reduction
! "Of course, we also will have to bear
more or less heavy taxation, of which
| industry and capital apparently are
/ going to pay large part, but | have
( not the slightest doubt that wages will
! have to be reduced in this country
| this will be labor's share of the burden
of taxation.
my opinion is that future COM
merce between the different nations,
, the major operations, will be dis
I cussed when the peace conference is
q held, and that the Allies will draw up
some broad, general plan calculated to
/ keep German competition in other
; countries within bounds, and that in
stead of an indiscriminate rush 10
| import all sorts of goods at wild
i prices, brought about by the pellmell
competition, the governments will re-
! tain supervision of imports and eX-
/ ports for quite some time and con-
! duct their buying on some such lines
/ as the Allies have established during
/ the war.
at will be recalled that the Allies
I held a momentous conference at Paris
long time ago to consider post
| bellum economic policies. This indi-
/ Gates the Importance they attach 10
! after-the-war conditions in the indus
| trial field. By evolving some such
method as here outlined, and embody-
ing il as part of the peace terms. the
! Allies would feel that they would be in
O position 20 deal effectively with any
of the much discussed German dump
I ing or other tactics.
"The regulation OF international
financial operations would, under any
such arrangements, continue in the
hands of the governmental authori-
ties rather than be left wholly to in
dependent action by bankers on both
sides of the ocean.
"ln short. my expectation is that
financing and merchandising will be
conducted or at least controlled for
the most part by the governments,
and not BY bankers. for considcr-