Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1920-03-09
CUT IN EXPORTS
NOT ADVISABLE
N. Y. Bankers Say Gradual RI
adjustment the Solution.

NEW YORK, March 9.-Discussing the
foreign exchange disorganization, its
meaning for our foreign trade and its
reaction on present business conditions
the Mechanics and Metals National bank
of New York says in it's March letter:
During the last year the country has
become accustomed to a prosperity IN
paralleled for many years. Prices hayes
reached a level unprecedented since tnea
civil war; wages. have risen to eorre-
spond; labor has been fully employed ana
the chief complaints have been that EN-
ployers can not get enough labor ano<
that buyers can not get enough goods.
REIMBURSEMENT OF
PRICES MUST COME.
But during recent weeks signs havel
accumulated that this condition may be
greatly altered. Foreign exchange rated
have declined TO points hitherto un
known, with a violence never seen De-V
fore. Rates for call loans have been e@3
ceptionally cratic; time money has al (
vanced to a level unapproached in sey
eral years; even these rates have nots
served to check the desire for borrow
ing, and banks following the dictates OF!
prudence have been unwilling to grant,
many applications for credit allowableI
in more normal times.
1T is Obvious that prices of commod-l
tiles can not continue to rise indefinitely i
point where it is at last becoming evil
dent that consumers are being forced to-
curtail their purchases. Gold has beer
flowing out of the country at an unprece
dented rate. With the foreign exchange
disorganization, with prices at such
levels, and with credit to finance fur
Their price increases unavailable, 1t d
apparent that some readJustment or al
teration Of business conditions is be
fore US.
Though the exchange rates are not in !,
themselves so important as they are
often thought to be, they are of great
significance as barometers- They are notI
the chief evil, but they indicate the cba22I
evil, and that is the fact that our excesaI
of exports threatens to disappear be
cause our European customers viii lacks
the means of payment. They can nots
pay without credit, and our extensions
of credit seerl to be coming to a stop
Their need of goods has been and is still
so great that they have been and are
still willing to pay the exorbitant prices
brought about by the exchange rate
but they can not pay those prices II wei
will not even extend them the credit|
to buy the goods
CREDIT QUESTION
I ONE OF VITAL IMPORT.
"Our trade with Europe will fall of
gradually in any case. No one can ex-
pect it long to continue in it's present
L
needs, the result of shortages of goods
brought about by five years of war, must
soon decline; not only as they are filed
by goods from Us, but IS Europe returns
to production. Mere extensions OF
credit, no matter how generous, will not
ward of this decline. Credit demanIaN
interest; credit must be repaid; and tlssI
business men Of Europe viii go intoI
debt only for goods that they need.
."rhe real question before the American
people is whether this decline shall be
gradual. so that industry in this country
or whether IL snail be sudden, whether ~
shall come as a shock, whether it shanI
result in a backing up Of goods, whether.
II shall mean disorganiZation. That Is
what will happen II credit comes sud
denly TO a stop. We can forego talk OF
PHILANTHROPY and aid and generosity
we can forget that credit or our export
{ trade are helping Europe in any way W
can take the narrowest possible selhs
view. and the fact remains that a suddef
cessation of credit which means A sudden
shrinkage Of export trade, would brin
hardship and confusion to our own 4
dustries and diminish our present proIH
erty. However much in theory We maj
difier among ourselves IS TO the effef<
and Importance Of a great export ira
on prosperity, We must face the facts
the present situation, which are that OF
agricultural and industrial output are Z
day proportional to and based upon d
unparalleled export trade, and that an
sudden diminutiOn in that trade wouH
cause unsettleE1ent and trouble throug sF
out industry.