Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-18
Continued From First Page

odACAy Idkc LOIlOOIl CTeOlC OF accept
ance payable in gold of definite, GER
tain amount and fineness. That pound
or credit could be used to pay for rub
Der coming to America from the East
Indies, and, in turn, the plantation
owner Of Ceylon could use the same
pound or credit to pay for cotton cloth
coming from England. The English
pound was practically universal money;
1t kept the wheels going throughout the
world. It's lack of fixed, stable value
| means that new ways must be found
to finance international trade, to settle
international accounts. The immediate
| result is uncertainty and confusion
throughout the commercial world.
Bar to Rapid Progress.
That, of course, is an impeachment to
rapid progress toward worldwide eco
nomic improvement. But it does not spell
| collapse, chaos, ruin. destruction and
various other unpleasant things pre-
dicted by the prophets of gloom Some
how, through many centuries and many
ages, men have managed to overcome
great obstacles and constantly to i'm
prove their standards of living. Look
| ing back only Is or 16 years, one recalls
predictions of the total obliteration OF
| all Western civilization within the
| space of three or four years. Yet
despite tragic losses We are still here
and looking broadly over the world we
! can see that Unreasonable progress
has been made toward healing the
| wounds of the war. In our own nation
| the healing process after the Civil War
| was not completed for a generation at
| least yet all the time, during periods
| of great financial stress, the Nation was
/ growing in wealth, more and better
homes were being built, more acres of
land were being cultivated and to
better advantage, more commodities
were manufactured and more real
wealth was being created and retained
by the mass Of our people.
! There are discouraging aspects about
the present situation of world trade
and there are encouraging factors also.
Before discussing either in detail it may
be we'll to set down one or two general
facts. One is that nations have always
had the inclination and found the
means to exchange commodities, what
ever the difficulties Of transportation or
means Of making payment. Another is
that the world managed to survive
much longer periods of warfare than
the so-called World War. and to make
another is that England "muddled
through" the destructive Napoleonic
wars, established the British Empire
upon which the sun never sets, became
banker for the whole world and has
maintained its national unity through
many centuries.
World Trade Will Go On.
am one, therefore. who believes
| that whatever the present condition OF
unsettlement, and% whatever temporary
set-backs may occur hereafter, world
trade will go on and steady progress
will be made toward complete recovery
| from a conflict the like of which the
| world Is less likely than ever to repeat.
To obtain correct view Of our own
situation it is necessary TO recall some
of the world events Of the last Is years
and TO review the situation in which
the nations with which we deal now
| find themselves.
Here is Great Britain suddenly in
| financial difficulty. Yet there is really
| nothing sudden or inexplicable about
| its troubles.
It went into the war with a public
debt Of something over $4,000, 100000.
It's public debt at the end of March this
year was $36 900 900. Much Of that
money was borrowed for the use of its
allies during the war. The interest on
the national debt is enormous-much
more than ours, for the national debt
of Great Britain is twice as much as
that Of the United States. English
taxes are correspondence high-l6
cents on gallon of gasoline, for ex-
ample-S353.50 on a single mans in
come of $1,000 a year. Other nations
owe Great Britain billions of dollars
| which she borrowed on the strength of
her credit and reloaned to them. But
England funded her war debt to us
at $4,000, 600, 900 in 1928 and has been
making payments regularly into our
Treasury.
Our own and English authorities es-
innate British investments abroad at
about $40 900 600, 600. In normal times
that investment brought in returns suf-
ficient to balance England's account
with the world for a surplus of value
OF food and other commodities imported
over goods exported. And England had
| hundreds of millions of income from
| its ships on all the seas and from its
| financial services to other nations.
In the early part Of 1920 the English
pound, without government support,
| was worth only $3.18 in gold. But by
1925 the English government felt justi-
fed in definitely establishing the
value az SfOOOO III SOl0 OchS n
to the par standard" Of many years.
And at that point the pound was kept
until the pressure of world conditions
| forced REIMBURSEMENT of the standard
Many Commodities Overproduced.
Throughout the world. the war en-
couraged the development of new agrl-
| cultural areas. while after the war more
efficient productive methods and the
LII "a - mn
controls brought about overproductlor
of many commodities. Prices inevitably
declined, and the loans that Great Brit
ain had made to producing countries
could not be repaid at the times when
| they we're due. British funds were in
vested in our own securities, railroad and
street railway bonds, industrial stocks
| and other shares which returned a
smaller income and were worth less on
the market. Germany reached point
where its credit abroad was exhausted
England Joined with us and other cred
itor nations in granting an extension
| OF time for huge payments Of money
loaned
I With this added strain on British
finance, with government expenditures
exceeding revenues, with world trade
| greatly diminished: many Of those ir
other countries who held credits OF
hundreds OF millions Of pounds began
"cashing in" and converting the gold
proceeds to other currencies-dollars
| and francs particularly. England was
| in the position of the merchant whose
| customers won't or can't pay. and
| whose creditors won't or can't wait. And
| so the gold standard of payment fol
| the pound had to be dropped.
In France the situation was different
The franc, which had been worth 1913
| cents in gold, had been "re-valued" and
stabilized at little less than cents
This relieved the government of much
financial strain. Money and goods came
| in as reparations from Germany
Frances gold reserve was built up SC
| that it became the largest in the world
| except that of the United States.
EnQland and thu IIr,itnd Cto&ar and