The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-12-22
Europe Deep in Our Debt.
Should That Debt Be Increased to
Develop Our Foreign Trade?


To THE NEW York HERALD: 1t has
been proposed to extend credit TO for
eign buyers for the purpose OF develop
ing the foreign trade of this country
the credit TO be obtained either from
the Government or individuals. 1t has
not been stated how much credit Is TO
be financed
The producer or manufacturer OF
goods in this country must necessarily
receive money or the equivalent OF
money for goods shipped. for otherwise
he would soon be obliged TO go out OF
business. The producer or manufacturer
as rule delivers his bill of lading to q
bank, which either advances money upon
the bin or sends 1t forward with the
invoice attached, TO be paid by the con-
signee before delivery of goods.
Assuming that the consignee has no
money he must obtain credit through his
bank, which RENTS to the bank Of the
consignor, which credits the money to
the account of the consignor. From the
above it will be seen that the credit
must be extended by the bank OF the
consignor.
Now, having in view the fact that
the banks in this country are carrying
upon their books credits 10 the extent
of 81, 900 900. 0eO It is not reasonable TO
suppose that they will. and in fact 1t Is
known that they cannot, extend further
credit.
Now as regards the Government:
Where is the Government to get credit?
The Government can issue its obliga-
lions in the form OF notes or bonds, but
to convert such obligations into credit
it must sell such obligations to the
banks and such banks furnish credit.
Again the question is. where are the
banks to get the money? 1t appears
likely that the idea in the mind of the
proposer of the Government scheme Is
that the Government obligations shall be
sold to the general public.
Again the question. where Is the gen
eraI public to get the money to buy
the obligations2 Necessarily, from tho
banks, as It is obvious that the general
public does not carry around In its
pocket 800. 00o, 900. Now, where are the
banks going to get the money to turn
over to their customers 20 purchase Gov
eminent obligations? Further, will the
public purchase such Government obli-
cations when the fact Is known that
the average bank to-day throughout the
United States declines to loan money on
Government bonds, not because the
banks have any doubt of the security
offered, but for the simple reason that
they have not the money to loan; that
their credits have been so extended they
are unable to increase the credits.
Turn now to the question Of the wis
dom of increasing further foreign credit
The foreign credit existing to-day
amounts 10 about s17.00o.00o,0 900, $10,-
900. 100000 representing Government
loans and $1,000, 100000 balance Of
trade in favor OF the United States. On
the $4,000, 100000 no interest has been
paid. or the $1,000. 900. 900 on about ST.
900, 100000 interest has been received.
and on the remaining $4,000, 100000 the
question is doubtful but it is believed
that the interest has been added to the
principal
Undoubtedly. If the export trade of
production OF certain lines of goods, but
this is not an unmixed evil. Naturally
manufacturers producing a surplus will
decrease their manufacture, which will
release labor not only for employment
in those industries which underproduce
but for the production of the wealth Of
the earth, which is really the source
of all wealth.
This country seems TO be engaged in
doing everything it can TO destroy the
interests OF its own people. Capital is
given to other nations which we need
in our own industries. We propose to
restrict immigration and. therefore. by
maintaining a shortage in the labor
market, maintain the high wages and
necessarily the high cost of living The
labor unions naturally are afraid OF
dilution of the labor market, failing to
recognize that the greater amount of
available labor, the greater the produc-
ton; the lower the cost of producing,
the lower the cost OF living. and the
better the position of the United States
In the worlds trade.
America has i07.ooo.000 people, the
smallest national debt, is the greatest
producer of natural wealth from the
soil, and lost fewer men in the war than
any other nation, and yet the people are
suffering from lack Of wholesome food.
from lack of credit. from taxation which
is disproportionate and improper. most
of which is used to pay the interest on
the loans made by this country to for
eign countries
II the United States were called upon
to pay only the cost of it's Government.
plus the interest on $4,000, 1000 900 of
war debt. which is the amount in excess
VI all the loans to Europe. the necessity
for the present war taxes would not
exist. GEORGE HILLARD BENJAMIN.
NEW YORK, December 81.