The Washington herald., 1919-04-08
PEACE DEPENDS
UPON FINANCE
Holland Says Security oI
World Is Influenced by
Business Relations.


Gus financial problems which the war
has occasioned are with the questions
OF peace or the society OF nations has
been sometimes overlooked. except
ing by the greater financial author
tiles OF this country and Europe Re
cent news from Paris indicates that
the statesmen who are now assem-
bled there for the purpose of for
n1ulatng, If possible, a covenant be-
tween the nations, and a treaty Of
peace, are turning to the able men
of finance who have been called to
Paris so that they may enlighten the
commissioners upon these questions.
In this city there came a few days
| ago a demonstration of the problems
? ASSOCIATED with the funding of the
enormous debt which our allies owe
TO the United States. represented by
our governments advances to these
allies. Then, too, there arises an
other even more important problem.
That will be solved II We can provide
the means by which our allies will be
able to buy and pay for commodities
purchased in the United States, the
aggregate Of which almost stsggers
the magination.
warberg Tells Problems.
Paul VI. warburg. until recently a
member Of the Federal Reserve Board
st Washington. undertook to set forth
At the meeting OF American bankers
which was held IN this city few
days ago what sonfe of the problems
are and to suggest certain means by
which they may be satisfactorily an
swered. Yet his first suggestion con-
veyed nothing new to these bankers.
When Mr.. McAdoo was Secretary OF
the Treasury he formulated, so it
was stated at the time. a plan which
II adopted and IL government owner
ship OF the railroads was established
might have gone far toward paying for
the railroads. OF course, Mr.. Nc
Adoo's plan was vague. and IL may
be that il was only tentatively or
slightly formulated in his mind. He
did. however. look forward to an ag-
Eregate of loans by the United States
to foreign nations of at least $1,000
0cOC0O. He was not out of the way in
that forecast. although when he made
il our loans TO those associated with
Us in the war were = little over 5000
oe0CUn. Now the aggregate OF them is
a little in excess of g. 900. 100000.
If Congress were to authorize the
government to buy the railroads so
that government ownership could be
established. then It might be possible
to utilize the debt which our as
soc ates IN the war owed to the United
States for rart payment II the esti-
mate or eighteen billions as the sum
which represents the value OF the
American railroads be correct then "
the foreign debt were so utilized as
B. to pay in part for the railroads, the
government could So utilize this debt
as to make = partial payment OF over
one half possible
Now that il is apparent that the
country does not favor government
ownership Of the railroads this plan
ot course becomes nothing but a tradi-
tion
Soon after Secretary Glass succeeded
Mr.. McAdoO as Secretary Of the Treas
ury there came reports from Wash
inEtun that he had been thinking of
the possi ibility OF persuading foreign
nations to convert the demand notes
now in the Treasury which represent
their obligations to our government
into longtime bonds which would bear
= reasonable rate Of interest. Then the
United states might issue new securi-
ties based upon these bonds or
guarantee the payment of the foreign
bonds and then offer them to the
American public as a good investment.
To what extent Secretary Glass
considered the proposition is known
only to his friends. But he aban-
dOned il because Of the belief that
an offering Of ten billions of bonds
even though guaranteed by the
United States Government would so
greatly congest the securities mar
ket that there would be small op-
portunity for negotiating other Sc
curities which might be necessary
whereby to obtain the increased
capital with which to meet the de-
mands of our industries. These de-
mands are expected to be very
heavy in view OF the probability
that Europe will. IL financially as
sisted, enter the American market
so as to buy raw material. copper.
machinery. railroad supplies of all
kinds. The estimate commonly held
is that these purchases will create
2 yearly trade balance in favor Of
The United states OF at least a bill
lion dollars. what that will mea n
IN the way Of speeding up of Amer
team industrial life to Capa city
not yet attained is a question which
"a mot be answered. because as vet
the American business mind cannot
grasp the meaning.
what Men Of Finance Think.
The abler mon or finance have now
for some months felt assured that the
debt which other nations owe to the
American government and which Is
now represented bv demand notes held
IN the Treasury will be funded into
longtime bonds. Mr.. warberg does
not say that this will be done, al
though he intimates that it may be
the method adopted by which these
obligations can be cared for until the
other nations are In position to liqui-
date them.
One suggestion which Mr.. Warberg
made is spoken Of as something which
few. il any. of the bankers have
thought Of. or. il II has entered their
minds have seriously considered
There looms up the possibility. even
the certainty. OF such enormous inter-
national trade with the United States
~ will make the record of any other
International trade seem trivial
Mr. warberg intimates that this
trade can be secured only by adop-
lion Of methods whereby foreign
purchasers of American commodities
may be able to obtain financial as
sistance in the United States. That
- not new suggestion, however.
some Of our ablest inanciers have
made it through public statements.
Fred J. Kent. who is ranked among
tho ableest-at least. from the technI-
,.al point of yiew-made the state
rent few days ago. He and Mr.
warbcrg believe also that one of