Evening star., 1938-12-16

WI Z II u Z, OIL
course, any comment Of this sort
from official quarters, 1t means that
the Government of the United
States expects that five years from
now there will be a government in
China.
This bit of moral support-for
such 1t will be regarded in the Far
East-is clear indication to the
whole world that the United States
has by no means dropped out of
Far Eastern affairs or abandoned
its belief that the open door of
commercial opportunity still exists
in the Orient.
Entirely apart from the effect in
Japan, where money is scarce and
American financial wealth Is some
thing to be thought about in terms
OF friendship rather than hostility,
American dollars will perform
peace mission in other regions of
the world. Thus, if the Department
of State says the word, Government
loans can be made to the govern
ment of Spain and Government
loans can be made to the smaller
countries of Europe which need
American supplies.
Goods to Be Shipped.
It should be borne in mind that
American gold isn't being shipped
abroad, but American excess pro-
duction. Thus, manufactured goods,
motor trucks, ETC., and American
farm products will be exported and
paid for with the proceeds of the
Government loans. In actuality,
there will be no money shipped,
but credits will be established. Pay
ments will be made by the American
Government to American producers.
The American Government will
accept the foreign government
notes with interest.
The record of the Chinese on
previous loans has been very good,
so the R. F. c., which has made
the latest loan, feels the risk is a
good one. Chairman Jesse Jones
is not the kind of an executive who
makes bad loans. His record in the
lending field is almost unsurpassed
in the history of Government lend
ing. He was originally appointed
by President Hoover and he has
served efficiently throughout the
whole Of the Roosevelt administra-
ton.
Mr.. Jones has not announced his
future plans for foreign government
loans, but under the existing au-
thority he possesses, the R. F. c. can
buy stock in the Export Import
Bank and can accept the notes
which the latter institution receives
from the borrowing governments.
These notes will not be sold to the
American public, but will be held as
assets of the R. F. c. or the Treas
ury.
Study Extended Credits.
For several weeks there have been
rumors that the administration was
beginning to study the possibilities
OF extending credits to foreign gov
ernmentS as a means of moving
American goods and farm products
into market. Dumping, of course,
Is froWned upon, but the lending of
money is thoroughly legitimate
transaction and there is no justifi-
cation for assuming that this or
that portion of the loan some day
might be discounted. The impor-
tant thing is that the United States
Government is not hesitating to use
Its financial resources to build up a
world economy and to stimulate
worldwide employment. For once
this is accomplished, the basic
causes of poverty and unemploy-
ment which have given rise to d.
tatorships abroad and radicalism at
home will be to a large extent re-
moved.
To lend Government money opens
up criticism to be sure, but the rec
ord of foreign government loans for
non-war purposes is better than is
generally believed. Thus a study
made by some specialists for the
Brookings Institution showed that
over a period from 1920 to 1895, al
lowing for defaults of principal and
interest, private loans for non-War
purposes averaged net return of
just about the same amount as
would have been yielded if the
principal had been invested in
American Government bonds during
the same period.
The reason for this, of course, is
that between 1920 and 1929 heavy
payments were made on principal
\ and also the interest payments were
at very high rate. Some of those