The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-08-18
'SMOOT TELLS PLAN
TO FINANCE WORLD
U. s. May Permit Banks to Is
sue Notes Against Foreign
Governments Paper.
DEFLATIoN BIGNECEssITY
Senator Declares PrOfiteeripg
an Evil That Can Be
Dealt With.
snecinl Daspatch 20 TIE SUE.

WASHINGTON, Aug. lit may be de-
termined to permit American banks OF
the Federal Reserve system to issue cur
rency against the approved Government
obligations Of certain foreign Govern
ments, Senator Smoot (Utah). one OF
the most conservative and best Informed
public men regarding financial and eco
nomic affairs, said to-day.
There has been something Of move
ment, the Senator said. looking TO per-
hitting foreign commercial bills to be
used In this way just as American busi-
ness paper is used. He expressed the
opinion that it would BIO considered un-
wise, but was not 20 certain that the
employment of foreign Government
paper in limited amounts would finally
be barred.
ut could be permitted only in the
case of countries whose financial
strength is beyond question:" explained
the Senator, land must not be permitted
to become a basis for imitation.
1.-The country Is pretty thoroughly con-
WINGED there must be measures looking
to defiation of our circulation and that
Is true, but It must be undertaken with
the greatest caution and executed In
such manner as to cause the least imam
cial difficulty. The whole world faces
the necessity of gradual defiation. Just
consider there Is to-day in the compare
lively stable countries of the world $751;
900, 900 Of paper money in circula-
ton, against $4,000, 100000 before the
war. The debts OF these countries
amount to s220.0o0. 900, 900. as against
SAC, 000, 0OO. 900 before the war. The in.
terest charge of these has risen from
50, 100000 to $1,000. 100000.
Cannot Carry Burden.
1.-THE truth is that the worlds produc-
ton cannot carry this burden and leave
opportunity for absolutely necessary de-
velopment. That fact must be faced.
1t is beginning to be faced In Europe
and when the peace is finally obtained
we shall hear more of the efforts to deal
with the inevitable. England, France and
Italy will have to resort to some form
OF the so-called levy on wealth. which
means nothing less than Reputation I'M
der a milder name; taking through the
taxing power a part OF the wealth of the
country to pay OF the debts. The posi-
ton OF Germany and Russia Is utterly
hopeless. Russia's debt outside the
country, SO nearly as have been able to
get figures on II, Is about $4,000. 900, 900,
on all Of which think there has now
been default. There Is probably $780,
900, 900. 900 of paper money In Russia
aside from the amount have mentioned
as being adoat in the more stable coun-
tries. Germany 10 likewise not included
in that calculation and its imitation il
tremendous, though exact figures are un-
obtainable.
THE programme of q levy on wealth
would impose burdens on France and
Italy so great It Is doubtful II those
countries could bear them.f Great Brit
ain Is in better posture to maintain its
credit.
ut is constantly asked how the United
States can help these countries and to
what extent 1t will be safe for US to ex-
tend aid. It must be done through bust
ness loans only. not through any more
loans to Governments such as were
made during the war.
our exports have gone up enor-
mously since the armistice and I think
we must expect that this will continue
for another year at least, while Europe
reestablishes stocks OF the immediate
necessaries of life and of raw materials
for her manufactures. The pressure In
this early period after peace will be for
foods, clothing and materials with which
to rebuild and reestablish industry.
Good CrOps Promfsed.
.o .
no Yer. Lato' AUG ieature OF 'he
s,'uae, ,, 20 tnat Va uoIsiueIa ois parts OF
the olo worio AT Ieas' mere Is now as
s Suranee OF eAeenemt crops tnis year.
Ah,s ~ uue espeeiah! vi oeioia' france
ana huTAhia ana OF cohsioeraoie sec
IONS IN russia ! oeneVe from 'ne pest
good deal OF cereals In Russia and there
thropSb tba RIarS Sea nort. 'e ''A'
arbe inward tsndencv q, ,r,oa. O.,
,h,s courtrv annaars on n oIns. '.tud,. ~
he q norr,oI nnnd,t,o, oonstS.-,s
sconor,ic stress that III. i..t go sns
hoXa ;r,,osad ~, -. hs,, 49,,
sbov,ng tbe moysnnsnt ~ n.,oos -,
nInstv comn,od,tias con,,,o,,,, 49, o.,
The tour years NJ The cI,,,i No. ,-,os
and also for the four vssrs tro,,, 49,
arv Ia15 m Januar,, 100 IT,,
shou, erneriencA NJ the mora recart ,,,ar
period il almost preciselv naralIe, IN
that OF the earlier one about the same
articles have advanced and the index
figure shows the advances to have been
lust about the same.
That might cause a presumption that
the process of def1stion would in the
present instance also pretty closely
parallel that OF the period after the civil
war; but this cannot be taken too