The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1919-12-24
ciaI Neus---Stock Market Prices
OUR CURRENCY
PROBLEM ACUTE
Holland Discusses Fiscal
Affairs Involving Debts
Of Foreign Nations.

No individual or no corporation
great or small Is watching with more
observant eyes The attitude OF the
Senate toward the League Of Nations
covenant with restrictions and the
treaty OF peace, than Is the Federal
Reserve Board.
Indications are plentiful through the
recent action OF the Federal Reserve
Bank Of the New York district that
there appears to be some concern,
perhaps q little apprehension. In the
Federal Reserve Board due to the
present day situation. which Is some
thing entirely beyond the feld OF
partisan politics.
The public does not appear to have
as good an understanding of the prin-
cipal features associated with the
present day situation as do those who
represent the Federal Reserve Board
and who are the executives in the
Federal Reserve Banks. So. also.
some Of the ablest men Of finance
have a clear understanding Of the
situation as 1t now Is and. like the
Federal Reserve Board, the neces-
sity of speedy action IL the situa-
ton Is to be mastered.
The Federal Reserve Banking sys-
TEN was created in part for the pur-
pose OF providing currency whenever
there was a special need of 1t and
also with the power of withdrawing
that currency when the opportune
moment came for doing that. This
service was admirably performed
while the European war was in
progress.
Dry OF Warning.
A day OF warning came early in
November when the action of the
Federal Reserve Board made 1t nee
essary to call loans and this resulted
in a temporary panic in the securi-
ties market. due to the high r2te
charged for the use of money.
While the temporary panic in the
securities market wss speedily end
cd. nevertheless II has become ap-
parent that the Federal Reserve
banks are now practically unable to
issue any more currency. They do
not possess gold enough to meet the
requirements Of the law represent
ing reserve. Although the resources
of the United States are enormous.
nevertheless 1t is not possible ade-
Quately and specifically to mobilize
them or to develop those which are
unexpected SO that advantage could
be taken of these resources to re-
lieve the situation.
AS IL Is in the United States. where
the limit OF the issuing Of paper cur
rency has been reached. so Il is sub
Nstantially in all nations OF the world.
Practically all of them are on a pa
per currency basis. There is not
sufiicient gold I'm the world to fur
nish a reasonable reserve for this
paper money.
Actual situation Now.
What the actual situation is may
be revealed in a brief statement.
There appears to be much rejoicing
over the fact that the trade bal
ance in favor OF the United States
will for the year 1919 be not less
than two billion dollars. Dwight
w. Morrow. in his Atlantic City adj
dress. estimated the trade balance
in our favor at not less than two
and oae-half billions after having
deducted the so-called offsetting in
visible items such as insurance, i'm
! ports, freights and SO forth. 1t
seems, however. to be the commop
impression that official statistics
will show the trade balance in our
favor for 1919 will be not far from
three billion dollars.
The present day situation IL due
in some measure to anxiety respect
ing The ability of our debtors across
! the sea to liquidate the trade bal
ance of this year. For II they can
not liquidate it in a satisfactory
manner or procrastinate about the
payment of the debt. then it is GER
tain that the absolute economic
/ law which relates to trade will be-
come effective. In other words. our
export trade will rapidly diminish
and it may be that before the end
of another year it will have in some
measure disappeared.
Therefore the pressing question
Of the moment is this-Howi can our
debtors across the sea pay what
they owe on account Of purchasing
American goods? That question is
really the crux of the present day
situation. HOLLAND.