Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1919-11-21
SEES DECREASE
IN EXPORT LINE
Prof. Willis Points to Wari-
ness on Credits; Expects
Trade Shift


volume of our foreign trade must
apparently be done upon credit or
else that we must submit as an al
Tentative to great reduction In TIE
actual volume of trade, asserts Hen +!
ry Parker Willis, professor of bank
ing at Columbia University and d.
rector of analysis and research OF
the Federal Reserve Board.
Since the suspension of free move
ment of gold and the great changes
that have come about in the control
of exported comm odities," says Pro-
fessor Willis, "the usual influences
which tend to prevent a movement
of exports from going too far have
been absent. Accordingly, foreign
countries import freely, while the
United States has gone on extend
ing credit to them and exporting In
the belief that by SO doing it WAS
helping the foreigner and at the
same time making q large profit.
The fact that thus far the foreign
countries have paid us no interest on
our investment and are not likely
to do so in the near future throws
bright light upon the nonprofit-
ableness of this trade and makes IL
worth while to wonder whether from
the strict business standpoint we
have not paid too much for the
whistle in the form of very high do
mestic prices and costs of living.
This is situation in which the in
terest of specialized export industries
Is placed ahead of that of the rank
and file of consumers and in which
exporters may find 1t advantageous
to participate in a movement which
In the last analysis is not in the in
terests of the public at large. TIL
is situation which tends to correct
itself, as already seen, by virtue of
the fact that the public Is eventually
appealed to for the means with |
which to finance the further ship
ment of the goods, but a large sec
ton of the public finds it's invest
ing power greatly diminished by |
reason of the vast increases in liv- !
ing cost.
New Course of Action
at may fairly be said that defin-
lite foreign trade policy has been |
lacking except as n common course I
OF action among bankers and finan- ,
ciers has been emphatically work. |
ed out. That course of action, so
far as can be gathered from a sur
vey of the facts, may be considered !
to incline the following points:
"D Suspension of Government
financing of the export trade. This !
at least is definitely expected basis |
for the future, as indicated by au-
lucrative announcement of executive e |
officers.
"(2) Suspension or abandoning of
the idea of financing export trade by |
commercial banking credits, subject |
to renewal.
"(3) Discrimination on the part OF i
the general public to provide the
means for the continued expansion Of |
exports through the steady absorp- |
ton of foreign obligations of all |
kinds
"(D Recognition of the probable
necessity of placing our foreign trade |
credit application upon tkis new
footing, studying 1t carefully from |
the point of view of it's merits as |
an individual action of those who |
are most directly concerned in Sc
curing its success.
"(5) Abandonment of the idea of |
creating an artificial exchange rela- |
tionship between different countries !
and consequently development of an |
adverse quotation of many foreign |
currencies which in itself tends to |
correct~-the export situation by dis |
couraging buying in the United |
States.
"(6) In consequence of these diff
ferent trends or tendencies, a re- !
duction in the movement of our goods |
abroad.
Specializing Not Saving
"Unquestionable it certainly is that |
much of our current earnings is not |
going to saving but is being diverted |
to speculation or waste. One reason |
for the unfavorable reception of vari-
GUS foreign offerings of securities is |
the fact that funds are so largely |
employed at home in all kinds Of |
transactions in real estate, COM |
modities and securities. In the ma
ture of the case the foreigner cannot |
offer very large rate of interest |
as contrasted with the possible |
earnings of funds in speculative en-
ployment. =.
Our attitude toward foreign Sc
curities must therefore depend very
largely upon the extent to which we
value our trade development. If we
are willing to allow temporary specu-
lative profits to outweigh our inter-
est in steady foreign trade develop
ment on which to build future busi-
ness the prospect OF financing our
foreign trade is not very good and |
we may expect an early decline in
1t. On the other hand, If we are
willing to be content with a modern
rate of interest and prefer this,
COupleu Will tIhe prospect OF uG-
veloping a strong foreign trade, to
the quick and easy profits already
referred to the chance of floating
foreign trade securities is very much
improved.
"Just at present, for reasons al
ready stated. the pendulum appears
to have swung against foreign trade
financing. with the result that since
the beginning of November new low
records in exchange quotations have
been made, while the prospects ap-
pear to indicate a decline in goods
shipments to sundry> foreign coun-
tries. That such decline will con-
tinue to manifest itself because of
tie inability of this country to alb
sorb any such quantity of securities
as would be necessary to continue
the financing on its present scale. and
because of the apparent disinclina-
tion of American investors to pay
much attention to long-range trade |
problems, is the opinion of not a few,
and in the absence of countervailing
considerations seems to be entirely
likely"
BOASTTNG
Tho