Evening star., 1939-12-31
Allies Are Expected
TO Restrict War
Orders Carefully
High Dollar and Stored
Supplies Cloud Hopes
For Huge Purchases
~ Cambridge Associates.

~ Cambridge Associates.
When war was declared last Sep
tember, 1t seemed to some that the
business mans Santa Claus had
come around the corner. The first
talk was of millions pouring into
the country in search OF all kinds
Of raw materials and manufactured
goods. Soberer second thought CEN
tered on the possibility that the
warning countries might spend no
more than necessary in country
whose currency commands a pre-
MUM.
Early in the fray, an estimate was
made by the Financial Division of
the Bureau of Foreign and Domestic
Commerce of the investments and
cash balances of other countries in
the United States. Britain and
France were reported to have some
$4,000 0,0OO, 900 between them; while
this figure may sound huge, $4500,-
100000 was available in 1914.
Beyond the mere mechanical diff
ficulty Of getting the machinery III
motion, there are three good rea-
sons why allied purchases will be
limited. In the first place, Britain'S
war machine was close to full gear
at the beginning of hostilities, and
materials for an extended wartime
had been accumulated. In the sec
ond place. trade arrangements had
been made with the sterling-cur-
rency bloc; trade returns for recent
periods show that half of the United
Kingdoms imports and tWo-thirds
of her exports are normally with
these countries. Every means will
be sought to increase these ratios,
particularly that of imports, as long
as sterling is at discount.
RatiOnfng Planned.
Finally, falling in line with Ger
many, Great Britain is ready to in
augurate system of rationing Ger
tain food-stuffs must be imported
and therefore require foreign ex-
change; consumption of these can
be limited to an extraordinary state.
Total foreign investments and
cash balances in the United States
are in the vicinity of $1,000 900 900.
The leading five nations are the
United Kingdom, with $4,000 ,000,-
600; Canada, 81 400, 100000; the
Netherlands, $1,000, 100000; Switzer-
land. 5000 900, 900, and France, $780,
100000. 1t is surprising to see such
large totals for the small neutrals
Over $1,O00,O000OO of the total
amount represents purchases of in
vestments in this country from 1885
to 1887.
Availability of the above balance
Is, of course. subject to certain re-
stricting factors, and the only basis
on which lively trade with bel
Ggerents can be forecast is that of
reciprocity. And along this path
lie many difficulties Businessmen
are generally not capable of arrang-
ing barter programs. Such arrange
ments are made by governments and
require great deal of time and
patience.
Shock Is Weathered.
OF the British and French bal
ances in the United States, about
$665 900, 900 were in common stocks,
and a total Of $920,000,000 in nego-
table securities. Much concern was
felt at the beginning of hostilities
over the effect of liquidation of
these securities on American Sc
curity markets. 1t is now apparent,
however, that the financial system
is proof against shock of this ma
ture although it may hamper any
tendency toward runaway markets.
Although investments and dollar
balances in this country are now
smaller than in 1914, gold holdings
are roughly double those of 1914.
These resources will be carefully
husbanded, and the governments in
question will use every means at
their disposal for limiting consump-
ton where drain on gold holdings
would result.