The Washington herald., 1919-08-23
BRITISH MONEY
ENIGMA Barred
Holland Explains Trade Bal
ance That Keeps Eng
land Going.

Lloyd George has not spoken, at
least since the United States en-
tered the wsr. in such manner that
all that he said has been as care
fully scrutinized and his statement
of facts analyzed as has been the
case with the address which he re-
Gently made in the House of Com
mons. First Of all attention was
attracted to his statement that for
several years before the European
war began England's imports had
exceeded in their money value, the
like value of her exports by $780,
coo, 700.
Formerly, the question was some
times asked the leaders in the
financial district how 1t was possi-
Bile that England should pay so
large an amount for imports in ex-
cess OF the amount received from
her exports without ultimately en-
failing serious financial disturbance
and possibly, in the long run, busi-
ness embarrassment. The answer
was ready, for our international
bankers knew that while England
was paying many millions more for
commodities which she imported
than she received for commodities
which she exported, nevertheless.
there was what was really a stu
pendous balance in her favor.
Invisible Trade balance.
1t resembled the invisible trade bal
ance which offset the favorable trade
balance created when the United
States, in the aggregate of its world
trade. apparently was a creditor by
at least S50OOOOOCo. For against that
s5O0,000,0O0 of favorable balance 1t was
necessary to offset the vast sums this
country was paying TO those who were
citizens of other lands, especially Eng
land, and who had invested millions
in American securities. these millions
calling for yearly disbursements of
large amounts in the form of interest
and dividends. Then. again, we were
paying very largs sums for insurance.
for freight charges and also on ac-
count of travellers letters OF credit.
And benefits of this kind invisible, not
reported and yet actual, were to the
advantage of Great Britain.
Some of the American men of finance
who went to England in the fall of
1915, returned to the United States to
report. in a confidential way, that Eng
land opened the books on their in
spection which contained the records
of her investments in other lands. The
figures almost staggered the imagina-
ton OF the American f1nanciers.
Billion Annual Income.
From these investments England re-
ceived each year in the form of inter-
terest and dividends or discounts an
amount of money which vastly ex-
ceeded the figures which represented
her loss upon international trade. that
is to say her exports as compared
with her imports. One estimate has
been that EnGland's incomes from
these foreign investments were con-
Siderably in excess Of a billion a year.
Therefore there were reinvestments,
money in enormous amounts being
paid in upon deposit TO the London
banks being made in that way avail
able for the purchase of foreign Sc
curlties representing government
loans. the development of railroads
and the exploiting OF natural re-
sources in other lands.
OF course. the presumption has been
strong that the war entailed not only
a falling off in the income thus re-
ceived but also the utilization OF many
of the securities so that England
could find the wayc and means where
by her constantly increasing war debt
could be met. But not until Lloyd
George spoke has an authoritative
statement been made respecting the
falling off in this income.
HOLLAND