The New York herald., 1921-07-25
FINANCIAL NEWS
AND COMMENT
German Credit Plan First Step
in Expanding Foreign Trade
Since Readjustment.
RESERVE BANK POSITION
Stock Market Passing Through
One of Dullest Periods, but
Bonds Are Active.
RESERVE BANK POSITION


the task of breaking the six months
deadlock which caused surplus Ameri-
can products to lie in granary and
warehouse because they could not be
financed in export sales There is per-
haps. a little irony in the fact that the
commerce finds Germany on the receiv-
ing end of private credit arrangements
with American bankers and exporters.
But it is to be remembered that Of our
allies in the war England received so
severe a setback through three
months strike of coal miners that her
commercial transactions perforce had
to dwindle during the spring period.
while France, whose energies have been
devoted to limiting imports from abroad.
not long ago provided for part of her
needs here through a loan Of $10o, ,0OO,o 900.
Germany has broken the ice. The
$9.00O. 900 acceptance credit arranged last
week between bankers of that country
and bankers here for the purchase Of
grain quite possibly will be looked back
ON some time as the initial step in the
expansion of international commerce
after the postwar readjustment. In
addition, German banks have provided
for the Government additional credits
in the United States, Holland and Eng
land for the purchase Of necessities and
payments of instalments Of reparation
claims.
| In the midst of rather depressed SEN
timent toward domestic business 1T IS
encouraging to note what has occurred
| in the last few days in respect to the
export market. Besides the grain credit
mentioned the War Finance Corporation
has undertaken the financing of sales
abroad of some 100000 bales of cotton,
and arrangements are under discussion
which suggest that thousands Of addi-
tional bales will be handled by that
agency before the summers end. Bank
ers whose institutions are members Of
the Reserve system have registered a
willingness to enter a great pool for
financing shipments of cotton abroad in
case the War Finance Corporation and
private interests will not be able to
meet the demands made on them.
Example of Germany.
These developments are of the high
| est Importance just now. If Germany.
with credit impaired by the burden Of
war expenditures and penalties. is in a
position to buy goods on time in the
American market, why should not many
other countries more favorably situated
| make purchases on credit also? The
Reserve banks gold reserve is more than
thousand million of dollars large than
it was four years ago. The accretions
which brought it to the record total of
s, SOS, ,29S, 600, reported last week, have
come very largely from nations which
had to pay in metal because they could
not meet bills for goods here in any
other way. The ratio Of Federal Reserve
cash to circulation and deposit liabilities,
Ii is true. Is 16 per cent. less than 1t was
at this season of 1917. but the total
ratio of 62.5 per cent is more than 16
per cent. higher than it was in the first
week of January and accumulations of
gold are steadily raising It,
The point to be made from references
to the Reserve bank position is this: the
defation of loans and the increase of
gold holdings have brought the system
to where no strain would be entailed
In a reasonable growth of rediscounts
Of paper drawn in foreign trade trans
actions. The ninety day drafts to be
drawn against the completed s9,000.000
German credit presumably will be of a
character available for rediscounting at
Reserve institutions. Paper entailed In
other contemplated credits will be of
the same quality. Instead of overex-
panding the loans of the Reserve system
the process of making such loans will
entail the reduction Of other loans, for
cotton and grain sold for export will
release loans i'm Reserve banks which
thus far have been solidly frozen be-
cause q medium for liquidating the coll
lateral (farm products) has been lack
ing.
Apathetic to Stocks.
The stock market OF last week dis
closed a general apathy Of traders. en-
failing some of the dullest days since