The Washington times., 1922-01-19

FINANCE
- AND 4
BUSINESS
~ \ Q. FoRBEA
BY D. o. FORBES.

Il
~ n o. F0RBEA u
BYE. o. FORBEs.
Instead Of reading column by me
today. you win be moro interested In
reading the following. written for
this column by one Of America
ablest international bankers. q recog-
nized authority on foreign exchange.
who lived, for years In Europe. and v
thoroughly familiar with conditions
there. He writes.
Since November. 1913, more than
Of Europe tried to make wine out Of
water. Instead of creating wine they
have Created more water every day.
First, all governments continued
spending money which they were not
earning, mostly on armament. Bud
gets which could not be balanced by
revenuee were balanced by !. 0. us
OF their respective governments. by
floating treasury bills which had to
be bought Tor discounted) largely by
the central banks. These central
banks. In order to pay the govern
ments the proceeds Of such Treasury
bills, printed paper money which was
pushed into the hands of the people.
AZ the unsecured paper money In
creased, prices Of commodities in
creased which is only another ex.
precision for decrease In the buy.
Ing power (value) Of such watered
paper money.
While the watered pound sterling.
franc. Ira, mark, crown, rouble, ETC.,
decreased In value at home, these
currencfes decreased also In value In
the United States, where those "ex-
changes" were offered In exchange
for dollars. The rise in the value OF
the dollar was brought about by the
fact that Europe bought more from
the United States than It sold to the
United States.
II this state of affairs were to con.
tinue, the European exchanges would
90 on depreciating in the United
as the Austrian crown, the Polish
mark, the Russian rouble. etc. In
other words, the European currencies
would decline to nothing and no Eu.
ropean country could then buy q dol
lars worth of American goods, as
they simply could not pay up.
II therefore follows that Europe
Observation-Disclosures pros
porous again before she can again
think of buying heavily from Amer
lea.
But Europe needs foodstuffs which
America has so Tar supplied. There
fore-f America cannot sell Europe
any more because the latter has no
money valuable enough to serve as q
medium of exchange to obtain dollars
Europe must raise the foodstuffs
herself.
Before the war Russia and the
Danubian countries largely supplied
Europe with grain and other food.
stuffs. And now Russia must again
take up that important task.
Europe must buy In countries with
cheap exchanges, such as Russia, be-
fore II can again think OF buying from
countries with dear exchanges, such
a. Argentina, the United States. etc.
The Boishevih ruined Russia, but
no impartial observer can absoive the
allies from having added to that result
by not having ere this had recourse TO
an open conference with Russia
To make q seemingly involved prob
lem appear simple one only has to con-
slider this: The Bolshevih abolished
capitalism. Everybody had to work for
nothing. Formerly the Russian peas
ant was paid for the grain he raised.
Now his grain Ia confiscated. This in
duced the Russian peasant to raise
only enough grain for his own needs.
He was not sufficiently imbued with
Bolshevist altruism to raise grain
without compensation to himself-for
the rest OF the country, to say nothing
of grain for export.
II It II true that Lenin II again In.
Producing capitalism In Russia, the
Russian peasant will again produce
enough for the entire Russian empire
and for the rest Of Europe. Common
sense tell US that, with payment for
services rendered, the incentive for
gain will again assert itself, especially
II the money received 10 good" money
and can buy the many, many things
which the peasant needs. These things
would be furnished by the industries
of the countries buying the Russian
grain.
The moment the inpecunious coun.
tries Of Europe could buy grain from
Russia they would naturally stop buy
ing Argentine and American grain,
and, consequently, the hunger for
Argentine and dollar exchange would
subside.
That Russia SHOULD again raise
large crops for export II absolutely
necessary for another important
reason. Suppose there should be q
crop failure In Argentina or Canada
world cannot afford to play with fire;
II has played with fire too long.
This reason and the high price Of
dollar exchange make Il absolutely