The Washington herald., 1919-03-07
MUST FINANCE
EXPORT TRADE
Holland Says American
Business Abroad Needs
American Money.

"nen = MOT5dn was aonc1
within an hour or two after his re-
turn from Europe a few days ago
what the outlook for our seaport trade
with Europe Is, he answered. OF hand.
that il depends upon the ability OF
Europe to pay for goods bought
IN the United States.
He furthermore said that the debts
of the various European nations AL
lied with US in war days must De
liduidated These debts are enorm-
Gus and this may tend to limit pur-
chases Of American commodities. But
II was observed that notvtthstsnd-
ing this cautious statement, Mr.. Nor
gan also said that all these are mat
ters for financing. In those few words
is contained. according to the belief
Of those who are well informed.
hint that not only must there be
financing upon a very great scale.
but that IL will be successfully ac-
complished so that our markets will
be open to the advances which
European consumers hope to be able
to make.
In the excitement and interest which
have been, naturally enough, oCca-
stoned by the discussions due to the
league OF nations plan. there seems
to have been for a time some disre-
gard respecting this stupendous work
Of financing with which the United
States is necessarily soon to be assO-
ciated.
L. $. Trade Baiance Large.
Il may be that II the proper fnanc-
ing is accomplished the trade balance
in favor or the United States for the
twelve calendar months of 1919 will
reach five billion dollars. That. how
ever. will be Of no advantage to the
United States, unless adequate means
are taken whereby tbs balance can be
hQuidated. II is not a normal trade
balance in the sense that it repre-
sents 4 reasonable difference between
the money value Of American exports
and Of American imports. The ideal
international trade. as has been COM
monty held. would be of such charac-
ter that the goods which we imported
would substantially pay for the COM
modities which We exported. But We
are not likely to import commodities
from foreign lands which will he suf-
fiCient in money value to pay for the
commodities which We sell to other
nations. Therefore il our great ex-
port trade is to be continued and in
creased. as many believe il VIII. then
We must in another way assist our
foreign customers in paying American
manufacturers and exporters for the
commodities which arc bought from
them
Finance Foreign Trade.
This. according to Mr. Mor-au.s
intimaIiOn involves matter OF
financing. In other words we must
be able through the contamination
Of very large financial transactions
to advance to those who buy Amer
ican goods the money with which
to pay for them.
The best authorities here are
frank in their admission that If
We are to maintain our foreign
trade st the present high rate we
must be prepared to give credit to
Europe and upon a very large
scale. How large may be Inferred
from the fact that the 81. .0db, .COO
new credit-which under the bill
that Congress considered the war
finance corporation would be allow
ed to give to European nations
would be sufficient for not more
than the liquidation Of three
TCnths' trade balance Estimating
with these hgUres as 4 basis it is
fair to presume that we must ex-
tend credits during the next twelve
months in the aggregate of $1,000
10000. That amount together with
the money value Of our imports,
would serve to liquidste the pur-
chase by Europe of American COM
modities.
How shall Europe Pay.
Nevertheless the day must come
when the nations which take ad-
vantage Of these credits must liqui-
cate them. That will involve new
financing upon a very large scale
They must pay the banks and the
investors and the government for
the loans they secured whereby
they could pay American exporters
lOr the commodities they bought in
the United states.
In the current circular of the IA
tiOnal City Bank the statement was
made that the trade balance in favor
Of the United States created by
our January international trade is
larger than the total production of
gold in the world Inst year. excIu-
Sive Of the production in the United
states
In other words. if the new gold
produced from mines outside of the
United states in 1917 were to be
used to liqUidate the January trade
balance there would not be enough
uf it to serve this purpose.
Market Securities Here.
Therefore it is apparent that the
nations which buy of US cannot pay
their debts in gold. There was a
time when it might have been pos
sible to liquidate the trade balance
by sending American securities
which were held in Europe back to
the United States. That Is no longer
practicable. No accurate estimate
has been made of the aggregate
amount OF American securities
which have been returned to the
emitted States since the European
war began. But there is no differ
enCe Of opinion respecting the fact
that the rgfur9ed securities repre-
sent nearly all Of the debt owed by
the United States to Europe before
August, 1914 Some securities are
stilI tightly held in Europe and
doubtless will continue to be held
because Of their high security value
and the comfortable rate OF interest
which they carry.
Terms of Billions.
Two methods remain whereby the
Indebtedness other nations owed to
the United States on account of trade