The Bismarck tribune., 1932-12-12
OUTLINE POSITION
OF F|NANCIERS ON
PAYMENT OF DEBTS
Leading Bank Says View Taken
BY Many Congressman Is
Mistaken One

New York, Dec. 1.-THE position Of
American financiers who have. urged
against forcing collection of the Eur
opean debts was outlined here Satur-
day in q statement by the National
City Bank.
Assertions by congressman that they
have no right to grant relief from
debts to European nations while large
numbers Of Americans are suffering
from the same inability to pay is de-
clared to constitute q mistaken
vieW."
Development says:
"The true purpose is to consider the
part that international debt payments
have played in the breakdown Of
world trade and the influence they
will have, If continued, to prolong the
depression. The people of the Unit
ed States, with their great volume OF
exports, are as much interested in
this as any people. The prices Of our
export commodities, of which wheat
and cotton are outstanding examples,
are of vital importance to our own
debtor class.
Relations Unsettled
Before the war, with the United
States and Europe both on a gold
basis, the currencies of these countries
had practically fixed relations to each
other, there was common basis OF
prices and payments were as easily
made between countries as within
countries. This is the service Of the
common standard of value. But the
maintenance of common standard
of value requires that trade and in
ternational payments of all kinds
shall be in approximately balanced
relations not requiring gold shipments
so large as to deplete bank reserves
and disturb credit conditions. The
basic principle of the common gold
standard is that of maintaining stable
relations in trade, In finance, and in
prices throughout the world.
During the war the gold standard
was generally abandoned temporarily.
Our immense exports were settled
partly in gold and partly by the gov
ernment loans that are now the sub
ject of discussion. After the war was
over and the countries returned to the
gold basis our favorable trade bal
ances were largely settled for num-
Der of years by private loans, but
when we ceased to lend and the credit
situation became generally unsettled
the heavy demands for gold in the
exchanges forced more than one-half
of the nations, Great Britain among
them, off the gold basis. Thus the
monetary. relations have been dis
rupted, and the common basis OF
trade and prices has been lost. The
results upon industry, trade, employ
ment and prices have been disastrous.
All nations are resorting to extraor-
dinary measures to reduce their i'm
ports, and all are injured by each
others efforts. It is of the utmost
Importance that cooperative action be
had to stabilize the various currencies
in their relations to each other, and
this is to be the chief problem before
the international conference to be
held.
British Currency Weak
"The British currency now has no
fixed relation to the United States
money, but the British Government
is endeavoring to give it degree OF
stability in relation to the present
price level. The British debt of $685.
$4,000 due on the 18th instant can
be paid in gold, but the United States
already is firmly on the gold basis,
with all the reserves it needs. 1t Is
more important to this country that
other currencies, and particularly
British currency, shall be stabilized
than that we should increase our gold
stocks. It is in the common interest
that Britain shall not reduce her gold
reserve, for that will tend to make her
currency more unstable.
If Britain is not to pay by ship
ments of gold she must go into the
markets and bid for the means Of pay
ment in the United States, in other
words for dollar exchange. On ac-
count of the low state of international
trade and the falling off of exports
to this country the amount OF dollar
exchange (claims on the United
States) Is abnormally small, and the
demand for it will raise the price, not
only in London but in all markets
Thus it will be made more difficult
and costly to obtain the means OF
making payments in the United
States, manifestly to our disadvant'
age. In other words, by forcing the
issue at this time we make 1t more
difficult to sell our products not only
to Great Britain, but everywhere
More currencies are now related tt
British currency than to the golt
standard, and the effect of widening
the gap between the pound sterling
and the dollar must be to depress thu
general price level in all Of these
countries in comparison with oul
our own price level, and since prices
upon our export commodities abroae
affect cur own domestic prices, tht
final effect Of depressing these cur
rencies Is to drag all commodity
prices to a lower level. Above every.
<J@{rnr also thic cho,Y1d ho avorfo1