The Washington herald., 1920-04-19
SITUATION IN
FOREIGN BONDS
Important Factor Toward
Placing Countries on
Sound Footing.
AID TO EXCHANGE
Buying Of Foreign Securities
A Stimulant to Our
Trade Abroad.

"As contrasted with the conditions
prevailing during the last two or
three months of 1919 and the OPEN
:ng of the current year. the rresent
foreign exchange situation presents
a brighter aspect and to no small
extent is justifyinG these who nave
advocated the purchase of securities
abroad" says a. 3. Leach &c Co., OF
New York.
The announcement that gold is to
be shipped to this country from Eng
land and France to provide for the
payment of the Anglo-French loan
has gone far to eliminate any
thought of speculation which may
have existed in reference to the
purchase of foreign government
bonds and has given to all of this
business more of the investment
character which II deserves.
One Is not attempting to sdJ ll:at
all OF the worlds troubles have been
overcome but it Is thoroughly Grati
Tying to feel that the problems are
to be met fairly and squarely in the
proper way. The world as a whole
is striving to recover from the after
effects of the war.
The present state of affairs s. the
inevitable reflex of abnormal trade
conditions created by the world war.
Five years of continuous destructi On
In Europe. without production but
for destructive purposes. five yea s
of continuous buying in :his gentry
without any selling of aay' imrC ri =
ance to this country to offset u. has
caused Europe to present the most
unfavorahle trade balance the world
las ever known. and has made
America produce without limit; Sell
TO Europe without limit. take IN
billions of dollars. and starve Der
own people for al kinds of necessi-
ties of life. the consequences "f
which we find in the extreme cost
of living.
Debts between nations have to be
settled in gold, goods or securities.
We own today the greater part of all
the gold the world possesses: the
situation, therefore. is one which
hinges almost completely on goods
and securities, and Europe has very
little goods. Therefore. until pro-
duction in Europe reassumes large
proportions. she can pay us practi-
cally only in securities. If she can
not sell US securities. she will have
to borrow from us dollars; if she
cannot do this, she must either buy
dollars and drive up the price of
dollars or to put II differently, sell
her own money for what it will
fetch, or she must stop purchasing.
The above reasons and the impos-
sibility to put some of them into
effect, have made the banks in our
country decide to put a stop to
Europe's unlimited purchases and to
Americas continuous endeavors 20
sell to Europe by refusing 70 con-
tinue discounting paper drawn on
European importers.
Foreign bills today are only taken
for collection. As a result the eN-
porter suddenly finds that in ship
ping goods abroad he is practically
confined to a cash basis, namely.
either cash here, or cash abroad
upon delivery, which is another way
of saying that the foreign exchange
market now bears the entire burden
of export financing apart from hav-
ing already to meet the maturity of
sixty and nincty-d bills put out
two or three months ago before
credit conditions became so acute.
The far reaching effect this will
have on the export business, and
probably. as a consequence. on a re-
duction of the cost of living, de-
serves the greatest attention.