The Bozeman courier. (Bozeman, Mont.) 1919-1954, 1925-10-30

The farmer sells his wheat to the
elevator man and yet the real buyer.
in many cases. is an Englishman. a
Frenchman. a German. or an Italian.
About One-third Of the wheat crop Is
usually sold abroad and this part Is a
large factor in fixing the price Of the
entire crop. Between the farmer and
the foreign buyer there are many
steps. In recent years the most i'm
pOrtant step has been that at which
the foreign buyer has to pay the
American exporter. for the inteFna-
tional mechanism Of payment has
been badly out Of order because
Europe was on the gold standard. Il
was Just as though an English buyer
drove up to your farm house, bar
gained for your wheat and drew up
the contract. But when you discussed
payment, he said: 'Pm sorry / haven't
any good United States money to pay
you with: I'll have 70 pay yOu In ny
English paper money, Whieh isn't
worth its face value IN gold. I dOR't
know what It may be wOEth AeEt
week. but that Is your risk" /
A Deadly Foe Of Trade }
How many would be willing . sign
contracts on this basis? Yet that IS
the way most Of the worlds trade has
had to be carried on since the Armis-
tiee. In practically all countries ex-.
cept the United States the ~currencies
have had no fixed value in gold, but
have changed in value from day to
day. Whenever one country sold any
thing to another country. somebody
had to take the risk of loss because
the value Of the money might change
before payment was made. Such I'M
certainty Of, payment Is a deadly foe
Of trade, and people were afraid 10 do
any larger international business than.
they had to.
Exports Of food stufs from the Unit
ed States fell from two and a half
billion dollars in 1919 to eight hundred
millions in 1923. and the difficulties Of
European buyers in making satisfac-
tory payment for American farm prod
ucts was one Of the large factors In
the drop in the prices Of farm prod
ucts. But now the recent action Of
Great Britain in declaring that it will
again redeem its paper money in gold
means that British buyers Of American
products can pay for them with money
which is accepted the world over at its
face value in gold. With the retur Of
Great Britain to the gold standard. a
majority Of the countries of Europe
have paper c~urrencies equal to gold,
How Reserve Banks Helped
American bankers have assisted in
the British return to the gold standard
by giving a 500, 600. 900 credit to the
British government. But more impOr
tant than this was the action OF the
Federal Reserve Banks in granting the
Bank Of England material cO-opera
ton. They placed $500 600. 900 gold al
the disposal Of the Bank Of England
for two years, to be used by It, If nee
essary. in maintaining the gold stand
ard. The readiness oe the Reserve
Banks thus to cooperate was an i'm
portant influence in the willingness o
the British to take this all impOrtan
step.
This action Of the Reserve Bank
was a most constructive step IN all
of American farmers and producer
who will benefit greatly by the re
moval Of this element Of ~uncertaint
from their export transactions. If al
the sins Of omission and commissio
charged againts the Federal Reserv
System by banker. business man. liv
stock man or political blatherskite 1
the last five years were true, and prat
tically none Of them are. the serviC
rendered commerce and industry b
the System in connection with the re-
iteration Of the gold standard Ia S
large a part Of the world would Ga
outweigh any mistakes that those
lcharge of the System may have mad
No banker. business man OF farme
SHOULD permit any self serving decla
alton by favor seeking demagogue
lswerve him from 2 determination
see that the System is maintained (,
the future welfare OF the country.
Fundamentally conditions are vel
, sound and We are doing a vel
large volume Of business. no little pa
OF which is due to the 'equalizing al
.stabilizing effect exercised BY the Re
.eral Reserve System on the credits
the, country Throughout all the sire
OF the last I've years there have be-
no times Of either stringency or 81
thora Of bank credit. Rates have n
along on a rather level keel and
my judgment have had much 70
with the stable volume Of busine
which we have enjoyed. and which
quite contrary to the old experience
the aftermath OF panics. With q ere.
structure such a. only the Fede,
Reserve System can guarantee. I &.
we need have no apprehension but
the contrary soand optimism for
Entura.