The Washington times., 1919-09-13
Boersianer's
Comment
on Business
By BOERsIANER.

Now that the Edge bill has been
approved by the Senate, the interest
in IT, is spreading. Attaches, to the
foreign exchange departments of A.
nanciaI institutions who ask What
Is the Edge biIl?' or who confess IT
haven't read it, are diminishing. The
measure is studied. Inevitably there
are criticisms. The double liability
amendment-as to shareholders in the
proposed corporation-is not liked. 1t
may curtail the prospective number
of organizations, may make capital
ization smaller.
Debenture bonds issued against
European notes and other European
securities-though closely scrutinized
by the Federal Reserve Board-may
not find as broad and ready sale as
Senator Edge is confident these will
have.
But, making full allowance for
critical misgivings; II remains that
in lieu of direct guaranty Of the bond
by the Government, or monetary par
ticipation in the plan by the Govern
ment, the scheme is an acceptable
alternative and is getting increasing
Endorsement in authoritative quar-
ters.
A vital distinction should be made
between the present and future credits
of certain European nations and the
business men OF such nations. Com
paratiyely a governments credit may
be well under that government. The
Federal Reserve Board surely would
approve the paper of the Austrian
Kothschilds, and might at the same
time reject the bonds of the Austrian
republic; woUld pass favorably upon
the notes of the German Mendelssohns
or Fuldas, yet on the other hand re-
fuse the securities of the German
government; would draw the linIs
despite the theoretical 6ictum-sOme-
nations financial strength is based on
the tax yielding power Of its citizens.
AS a general proposition a national
credit. or want Of credit, is gauged
by how much taxes the people can
or may pay. But a nation may be
discredited and still some Of its in
habitants may have substantial credit.
Mexico is a case in point. The Mexi-
can merchants negotiate important
loans for themselves in New York
and Chicago-which would seem to be
a satisfactory explanation OF the
striking weakness Of the German
mark.
The war debt and the indemnity
of Germany combined form a sum
which equals the national wealth of
that country in 1914. Since then, in
way of additional burdens. Germany's
resources have been restricted by the
loss of territories which contain 1,OOO,-
900 Of fairly prosperous citizens and
taxpayers, by the loss OF the bulk OF
her iron orc. of almost one-half OF her
coal. and by her appalling war NOR
tality.
A saving clause there is: The
wealth of a nation is susceptible of
indefinite expansion II there be con-
stant progress in scientific production.
But this must be provisional ever
with the scientifically endowed Ger
mans Normally a nations wealth is
not only on the abilities OF
the people. but more Importantly upon
the resources at the command of the
people.
However. there is another pro-
visionally alleviating aspect: IL prices
OF raw materials and products con-
tinue sufficiently high, obligations are
less difficult TO meet. If enough POI
ash, for instance, can be brought to
market at going quotations the Ger
man Eovernmeht-Whic is the chief
owner of the mincs-inay exist rela-
lively for a time as a solvent entity.