Evening star., 1920-02-28

can. however. be felt that the process
| of cutting down commercial credit
is potentially much farther along
than the figures in the bank returns
| have indicated. Just as the January
statement of the foreign trade en-
trely failed to show any curtail.
. ment of exports on account Of the
exchange conditions. so the Fedora
Reserve bank reports of January and
the greater part of February have
There is a common reason in both
cases-namely. that while curtail-
ment is known to be we'll under way.
it has not yet had time to show. The
February export figures will undoubt-
edly tell very different story from
the weekly bank statements in the
course of the next month to begin to
make a far different showing from
the preceding one.
Surplus Of Products Expected.
1t is plain that the selling out of
commercial loans will force slowly
upon the markets a surplus of food
stuffs and manufactured products and
will drive down steadily the prices of
these products This selling move
ment and price decline are bound to
have their reaction upon the senti-
ment in trade circles. cause the more
cautious note that is already appar-
ent to deepen, and before long to
bring about a general lowering of in
dustrial activity. Producers Of lux
uries and concerns carrying heavy
inventories are the ones, of course.
that arc i'm the most exposed position.
On the other hand. in the lines where
there has been no overproduction.
where. in fact. a real underproduction
exists. as in the steel trade, the ad-
justment will not be attended by any
unpleasant consequences.
Once again it is we'll to note that
while this readjustment of industry to
meet the requirements of the credit
situation would be very serious if a
listed. it cannot be viewed with grave
concern where overproduction is con-
fined to few quarters only. Herein
lies the Fundamental difference be-
tween the present situation and that
of other years where Industrial crises
have developed.
The gold export question still di-
vides financial critics into opposine
camps. So able an observer as Mr.
Vanderlip has declared that We ought
to keep an open market for gold and
pay off all our trade debts as long
as we have any gold to spare. On the
other hand there are equally good
judges who maintain that however
correct this may be in theory it is be-
coming dangerous in practice. For
every dollar we are shipping out IL
gold we are depriving ourselves of a,
least five dollars of badly needed
credit Had it not been for the gold
exports of the last year there would
have been no worry over the bank re-
serve ratio now. We have practically.
been mulcting domestic borrowers
and striking at business prosperity at
home in order to pay off obiiSahnn:
to South America and Japan. Thl:
might have been well enough if We
were running into debt in the interna,
tional trade. but to send S4Oo.o0o,oo'
of gold away from this country in the
last thirteen months when We have
been actually owed s4.000.oOO,0oc
seems very questionable pollcS.
Europe has asked US to accept credit
in lieu of cash for its Indebtedness 70
this country Why cannot we adopt
the same attitude in our Immensely
smaller obligations to South Amerlef
and the far east? The demand for !:
reimposition of the restrictions ueof
the gold outflow which were IN 1orc'
during the war is every day becomiht
sfronged and we believe it to be thor-
oughly justified.
Copyright. 1920