The Sun and the New York herald., 1920-09-20
Foreign Exchange AerObAtIc.,

fH't ~ nAllNlNlti W N'kAh ~ ~ N"'N'F
There Is only one subject to consider
In the cOnference--a subject Of world
wide Importance, touching every mans
pocketbOok, influencing his social ac-
tlvltlcs, swayIng the dcstlnlcs OF ma
tlons, and making Itself felt wherever
there Is any human Intercourse. To
use dry, abstract term, which OF
Itself conveys little Of the real I'M
portnnce Of the problem, the single
subject before the Brussels conference
VIII be the stublllZatIOn OF foreign
exchange,
II IL easy 10 picture the turmoil and
dlsorgmIzaIlon IN domestic affairs
that would arise II the business men
of this country suddenly found chat
the money taken In over the counter
by them at 100 cents on the dollar
would he accepted for deposit at the
banks only at anything from 80 per
cent. down 10 10 per cent. OF Its face
value. or, suppose the wage Garner
we're to draw 800 In full payment for
500 of services and then discover that
his grocer would accept II to-day as
only $50, tomorrow Ms $40, the next
day ns S35, and 50 on, with different
and undetermined value for every day
Ia the year,
Under such conditions neither the
business man nor the wage worker
could long survive bankruptcy ur es'
cape actual hunger The deprecated
value Of his money would be n
severe hardship, but the absence OF
any fixed value would be n much
greater handicap. Contracts for the
future would be next to impossible Of
fuliilment. Trade and industry would
be paralyzed and the country would
90 back to primitive barter.
\ few months ago the English
pound would buy 81 Of American beef
or cotton. The French franc had n
purchasing power OF eight cents. To-
day the purchasing power Of these,
ns well as many other foreign curren.
cies, las diminished, not because the
credit OF the countries concerned Is
any worse than 1t was then, und not
because they are making no progress
toward reconstruction, but because the
guild standard has collapsed.
The decentralization in exchange Is
not confined to Europe. II affects
every country, neutral and belllgerent
/ Whether their currcncies have moved
upward or downward, they have Il
different basis OF value to figure In
/ paying for goods contracted for in this
country q sAor time ago,
a decline In buying power repre-
/ sents a dead loss to the purchaser Of
American goods. The Immediate or
original foreign purchaser may not
lose, but he must pass the extra bur
den Of exchange to the ultimate con
sinner by charging higher price on
goods imported into his country from
America, although the American pro.
ducer receives no benefit from that
higher price.
This not only forces the foreigner
10 shun American goods, but inJects
the element Of uncertainty into all
business transacted with this country
No fixed values can exist with the rate
for dollars and pounds, francs and
lire and every other currency rising
and falling from day to day, carrying
prices and the cost Of living, wages
interest rates and capital yields alonG
with 1t.
Gold no longer serves as standard
Of value because the nations that neet
IL to stabilize their currency long age
exhausted their reserve Of the meta
in buying war supplies. Many rene
dies for the foreign exchange dlemms
are proposed. The international re
serve bank, the IL. V. A." interna
tional valuta (exchange) association
international gold pools or bond Is
sues, and others are favorably men
toned by theoretical experts. But al
Of them are subject to the fatal crlti
cism that they contemplate the crea
tion of something out Of nothing.
Whether an international bank wer'
authorized to shovel out paper none!
by the renm. with the good will anC
support of every nation in Europe, o
whether an exchange hank, gold poo
or an international bond issue wer,
effected, the one and only condition
that would make the scheme sue
cess would be the participation of tn,
United States.
Sylloglsms will not make two bushel
OF wheat grow where one grew before
neither will fat currency based ol
nothing create anything but a falls
purchasing power Because Americi
has the goods and Europe has tn
consumptlve capacity, 1t does not fol
low that to capitalize the consnmptiv
capacity will pay for the things need
ing to he bought and consumed. I
that were true all would be drone
and none producers
The remedy which the Brussels con
ference must seek is not what seem
, to : be so widely supposed, a quacl
, scheme for Immediately restoring al