Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-05-16
REIMBURSEMENT IS HERE
FOREIGN TRADE REVIEW
Factors That Have Worked to Improve
Conditions-Stocks Are Liquidated.
:. Trade Balance Situation.

in foreign enterprises. Our increased
| commercial foothold, especially In
Latin America, Canada and the
! Orient. and the growth of our inter
houses of the highest character
would appear to indicate that a mod
crate outflow Of capital in this form
| is to be expected. Its effect would be
! to offset the interest payments. and
to give US for years a favorable trade
| balance. Eventually. however. the
| increased interest payments on the
accumulation Of capital thus placed
abroad would exceed the new an
! nual remittances, and lead to an ex-
cess of imports.
Factors Likely to Operate.
"Other factors are also likely to be
operative on the debit side OF our
international balance. The analysis
| of our balance in 1919 shows nothing
more clearly than the predominant
part played by the government. one
important governmental item was the
purchase of European currencies to
defray military and other expendi-
lures in Europe. In 1919 this item
amounted to more than $526.000. 600.
factor In our balance of payments
depends upon the decisions which
may be reached concerning our inter-
national policy; but so long asst con-
tinues its effect in increasing the
debit side Of our balance will be i'm
portant. Similar in effect would be
a wiping of of part Of the gov
eminent credits to foreign govern
ments. If that part were considera-
pie the effect might indeed be long
1eit. and give us a favorable trade
balance for an extended period. But
there is no reason to anticipate such
an occurrence. Likewise. an extern
sion or renewal Of the funding ar
rangement would postpone the over
turn OF our trade balance"
Further Credits Likely.
1T appears certain that for a time
there will be further extensions of
credit to Europe to finance our ex-
ports. This. too. would tend to con-
tinue our excess Of exports. With the
out and stay out of trade financing
we are in hearty accord: but all in
dications in Europe (Great Britain
being always excepted) as well as at
home point to the fact that private
credits should-and, indeed. must
diminishing volume. That bankers
and exporters are finding means of
carrying their foreign customers is
generally known. That this practice,
or something equivalent to it, must
continue for a time is indicated by
must go in the interest Of our ex-
porters. who are committed to a
large-scale program. from which they
could not hastily withdraw without
injury: in the interest, too. Of the
assurance Of our financial security in
Europe. and also of such assurance
as can be thus consciously achieved
against any sudden upset Of our
none too firmly balanced financial
equilibrium at home. From every
point Of view. a gradual diminution
amounting to $s.161. 100000 in 1870.
a gradual change to the new position
Of an excess Of imports. is desirable Z;
and that gradual diminution would
appear to render necessary a grad
ual, rather than an abrupt. relin-
quishment Of our policy of export
financing.
Predicts Debit Balance in Late 2Os.
Eventually, as We have said. we
shall have an overturn of the trade
baiance-say in the late twenties
That the new swing in that direction
has already begun Is indicated by
the trade figures for 1919. That
is the evidence clearly afforded by
the quarterly and ha1f-yearly figures
of imports and exports. Those fig
ures. as has been shown already, in
dictate a decline in exports in the
second half of the year, and a very
striking. upward movement of i'm
ports in every quarter of the. year.
current year. In view Of the very
large and rapid growth Of the I'M
ports. it appears probable that the
eventual overturn Of our trade bal
ance will come about quite as much
by a process Of imports growing
exports. Diminution Of one sort there
will be in both terms Of our trade
balance: the value figures will dimfn-
ish with the defation of prices. But
in the general defiation process at
home and abroad this dfminution Of
trade values as a result Of falling
prices, would be without special eco
nomic Significance"