The Birmingham age-herald., 1920-03-21
MYSTERIES OF
 FOREIGN TRADE
By HOLLAND


 day one of the mysteries that envelope a greater part of our trade relations with Europe will undoubtedly be brought to an end so that we shall see clearly where we now see darkly. That mystery is as- sociated with the four billion trade bal ance accumulated in favor of the United States by reason of the excess of our ex- ports over our imports. That was ap- proximately a. favorable balance, as it stood on December 31 1919. Undoubtedly, some part of it has been liquidated. In- creasing and even astonishing heavy im- port have been received in the United States since December 31 but it may be that these imports will be chiefly avail able as an offset against our export trade since December 31 However, it is the current opinion that some part of that four billion dollars has been liqui- dated. But when inquiry has been put to those who should be able to answer, they reply that they do not know. Many ob- ! servers have been amazed as they learned | by official reports that our foreign trade
 has been maintained and is increasing | Early in January a report was made in this column which represented the views of men qualified to speak and which as- | serted that our exports WOul0 uHuOupt- edly fall off They felt certain that with | foreign exchanges remaining abnormally | low, it would be impossible to secure l means to pay for purchases in the 1 United Statees. But even these expert ob- servers were in error and today they confess that they do not understand the situation. Europe owed us four billion dollars upon international trade balance, accumulated in 1919, and there is only q l fn tIa rf tha Itnn dz tion or the means whereby it was pos sibe to pay some part of this trade bal
 ance
 1 It is known as fact that only a small ! part of the funds which were used to pay | for these commodities purchased in the | United States came from government loans. Every now and then there are | reports of heavy sales in the United | States of foreign securities As for in- 1 stance it was matter of interest that l American capital had been secured to 1 buy shares in the diamond production I company of South Africa. Sometimes | we hear that stocks of the United States 1 Steel Corporation have been returned to 1 the United States and sold here. There have been various runiors which profess to tell the amount of American railroad | securities the sale of which here may Ihave aided in liquidating the great trade balance But the leading railway authorf- l ties have been for some time of the opinion that long ago Europe and par ticularly England. disposed of the greater part of American railway securities which were held by citizens across the sea.
 The only answer to the inquiry, how this trade balance was liquidated, which is plausible is the statement that con- 1 siderably more than one-half of it was i financed by short time credits, This, or course is a guess. and nothing more, and vet it is regarded as reasonable guess. But how are those shore time credits themselves to be liquidated? One Of the Authorities asserts that it has been done lin mart by the direct holdinsl of exchanga bv banks and individuals. There is no idoubt that American exporters have an Iextepded short term credits to the Euro mean customers It may be that facii- ties of this kind have been shifted to the hanks. One of the authorities said tnis l morning that either the exporter mas discounted his customers notes pr rentances directly with his bank. or has wade up his lack of cash from European isaIes hv discounting notes or acceptances of domestic customers or by giving ms own note.
 l If this surmise be correct, then there is no doubt that the American banks are either directly or indirectly aiding in the | iiuuidatlOn or tnlS eHoTiiiouo tiauc oot' ance The statement made day or two ago by the controller of the treasury John $. Williams, that the resources of inc American banks amount to approxi- mately s23, .0fO. 600, goes far towards showing the ability of the American banks to bear without too great strain the enormous burden occasional by pay II ing A. trade balance of s0o0.00 600. It is
 all. however. mystery now. Some day IL will be cleared away, and there is no doubt that the explanation will be grati- fying testimony of the strength of Amer ican banks and of their willingness to as slst American industry in these days l when sc~,ethine like chaos prevails
 AN ECONOMIC PARADOX
 l There is another mystery-it may prop erlv be called paradox which is asso ciated with our international trade at thi, ltime. Here is a country, our own. which accumulates in single year trade ] balance in it's favor greater by billions than until recently it had been able tt secure, and certainly greater than an, | other nation. even Great Britain, has evel 1 accumulated. And yet we have been los ing gold at an unprecedented rate How 1 should it happen that with an enornout trade balance in our favor We neverthe less have been compelled to export golt larger in amount than in any previous year in our existence?
 l However this mystery is cleared away and what seems to be a paradox can b. l shown to be nothing of the kind. Tn reports which have come to us iron l Washington tell in detail what our inter l national trade with various nations IS The Washington authorities report fha