Evening star., 1919-02-23
England's Financial Needs.

land are:
England's Financial Needs.
"tal For a considerable period after
the war a greater demand for work
ing capital. owing to the increased
cost of labor and materials, the ne
cessity for giving longer credit and
the anticipated expansion in the vol
ume of trade.
"fb) A greater demand for extended
credits for the purpose of replacing.
at higher costs. machinery and plant
which have fallen into disrepair on
account of the war.
"(c) Requirements for reconversion
of plant and works which may in
many cases be on the border line be-
tween working credit facilities and
new capital requirements in respect
of permanent outlay.
I'D New fixed capital requirements
in respect of permanent outlay.
Il do not fear money shortage.
The companies which will need
money may be divided into three
classes. The first consists Of firms
which started in war business shortly
after the beginning Of the war, and
they have been able to accumulate
reserves, sufficient for all their needs
or have tangible property upon which
to make advances. The second class
comprises those firms which became
engaged later in war work and. the
taxation rate being higher. have not
had the opportunity to accumulate
reserves But their extensions have
largely been written down at . ia
vorabie basis and the changes which
they will require are not extensive,
although the writing down does
leave the owners with most Of their
property in bricks and mortar And
finally come the firms organized
purely for war work and without an
established market for any pre-war
product It has been urged that
these should not be allowed to peter
out and that state assistance should
be given. Our committee was not in
favor of taking the state into the
finance of private industry, because
that would be unfair to private in
vestors In unaided industry and
might lead to incalculable lengths. I
think that these industries will have
to stand or fall upon their respective
merits; il they are sound they will be
able to get capital; IL they are un-
sound it Is in the national interest
that they be wound up.
Many Adjustments Necessary.
Many other matters are bound
up In these requirements, and chief
among them is the early settlement
ing of raw materials, the satisfactory
termination of the war contracts and
the disposal of the state-owned fac
tories and surplus war materials both
raw and finished.
THAT, however, which impressed US
as paramount consideration is the
re-esta blishing Of the gold standard.
credit and re-establish' the fnternA-
tional market for gold. When we had
a free market II became profitable
to export gold when the exchanges
moved against us; this caused ! a
shrinkage in the gold reserve and a
rise in the Bank of England rates
to keep credit in it's ratio to reserve.
Raising the interest rate caused gold
to be again attracted and also caused
people to pay of loans and to post
pone new ones. If money were tight
and loans could not be renewed. goods
had to be sold at low prices, and
this encouraged export and the grad
ual return to the equilibrium. Gold
being the basis for loans and debt be-
ing payable legally to gold, credit
could always be kept IN check. There
fore. gold not only maintained the
| whole financial structure, but kept
the general level of price in conso-
nance with world pYices-that fs, gold
prices. The withdrawal of gold as q
circulating medium has removed the
old check on credits, and cofse-
auentiy on prices: Il was necessary
cial crises could not have been
avoided.
There is too much credit in the
world. and getting back to the gold
standard and its check on credits Is
prime necessity: for the state to
ings-through a further expansion of
credit-would only De to raise prices
and postpone the inevitable reck-
oning.
Restrictions on Credit
Our committee. therefore. recon-
mended In brief that finance be
brought back to q private basis and
that banks generally increase their
| too free a credit extension policy.
| They have told US that they have
ample funds to meet all needs and
| hence. saving this one question OF in
| fiatfon, there seems to be no financial
! danger. We do not need money from
| credit facilities, I think that the
| shareholders of corporations should
| come forward to meet some Of the
| increased capital requirements OF
their companies. And they are al.
ready doing that. Every issue that
| has been offered Of late has been
! largely oversubscribed in spite of the
| concurrent taking of war loans"
DO you think that the internal re.
Quirements Of England will be 80 greai
| that the London money market will
give way to New York's-that New
York will be the new nnancia.
| centerr
World Big Enough for Both.
There cannot well be q conflict be
tween New York and London; the
world is quite big enough for tive
great markets. and II ought to have
lat least two. The Americans form 81
big field that all Of your resource.
can proitably be put there. It is no'
j really our field at ALI. for Raogra nhY