Atlanta semi-weekly journal. (Atlanta, Ga.) 1898-1920, 1919-10-07
WHAT, is EXCHANGE?-By Frederic J. Haskin.

the United States and foreign countries. 1t
balanced. The situation was satisfactory
Then the war came on 1t resulted in
Europe buying much more heavily from the
United States than formerly, and selling less to
US. 1t cut off such American money from
Europe as that derived from the tourist trade.
Europe did all the buying and did all the
selling. The bala..ce became always stronger
and stronger in our favor. Our StupendouS
loans in Europe brought about temporary re-
adjustment of balances but accentuated them
| in the long run, because interest has got to be
paid on those loans. Europe must always find
means with which to pay the United States.
| She must every day aggravate the exchange
| situation.
She will do this, will pay high rate of
exchange, when there is no other way. But the
world is getting back toward normal. Other
nations will soon have materials to SELL When
| that days comes Europe will to pay the
tribute of exchange and will buy elsewhere.
Here is the way exchange worked out in
the case of Canada. Last year Canada bought
twice as much in the United States as we
would have shipped gold to the United States
! to pay her balance and exchange would have
remained undiSturbed. But the Canadian gold
supply had run low and embargo had been
placed on it, In an attempt to help the ex-
change situation, Canada forbade the importa-
ton of luxurieS. Despite this, and despite the
helpfulneSs of England in arranging Canadian
credits, it has been necessary for firm in
Montreal, buying American goods, to pay pre-
MUM of two per cent for draft This means
that it will pay S1O2 for an article, the price
of which is 81. That difference of two per cent
may mean that the order will go to England
instead of the United States. So the first step
is made toward readjuSting the balance. Amer
lean export to Canada is curtailed. At the
same time an American draft for $500 in Can
ada is worth $1O2 and this becomes an in
ducement to Americans to buy in Canada. In
this way, the United States is penazed both
| WAY InS he has hppn inc mo-
than she has been buying, In this way a basic
| law of trade tends to force conditions back to
normal, back to that ideal state when buying
and selling between nations just balances.
The Canadian case has been the easiest we
have had to meet At one time last year Italy
had bought so hav over here, and we had
bought SO lightly in Italy, that it was almost
impossible to get exchange. There was no
American paper in Italian banks. The charge
for exchange at one time ran as high as 400
per cent. This meant that, if an Italian man
ufacturer bought $4,000 worth of cotton in
New Orleans he would have to pay a premium
of $4,000 on his draft which would make the
cotton cost him $4,000. Under these circum-
stances it is likely that he would buy his cot
ton in Egypt or India as soon conditions
permitted. Thus would the United States lose
the business She would keep on losing to one
buyer and another until virtual equality between
purchases here and in Italy was established.
She must either sell less or buy more, or
both, in establishing that balance
Despite the great loans we have made to
France there has been a constant exchange
charge against us of from five to ten per cent.
Spain has had to pay premium of fifty per
pay this premium only while it is impossible
to get materials elsewhere There are other
nations anxious for tn! trade of these countries
on whose exchange there is no premium at
all. But we are a creditor nation in the most
important markets of the world, and this fact
penallZeS our exports