Evening star., 1940-11-28

VI UllO
United States and the public gen.
orally has any conception OF what
Is really involved.
The talk has been of repeating the
johnson Act so as to permit private
loans to Britain. But this is merely
a drop in the bucket. If private
loans would satisfy the situation re-
peal of the johnson Act would not
be necessary at ALL For both Canada
and Australia could borrow in the
United States and lend in turn to
Britain. 1t is amendment OF the
Neutrality Act itself which Is IN
yolved because the billions needed
can be furnished only by our Gov
ernment.
The subject is being temporized
with instead of being dealt with real
istically so as to avoid economic col
lapse in America as well as Britain.
Financial experts point out that
fundamental error is being made
already in speaking of British gold
resources in the United States as II
every ounce of such gold could be
!. utilized for British payments In
America.
Costs Might Double.
This overlooks the fact, 1t Is
argued, that unless the pound ster-
ling is maintained by an adequate
gold cover the entire exchange situ-
alton in the world will 60 to pieces.
Then Britain's purchasing power In
the United States and throughout
the world would be drastically re-
duced. If this happens every dol
lars worth of purchases in the
American market might cost Britain
twice as much as it cost before.
Another fallacy is the assumption
that the British hold large quanti-
ties of equity ownership in American
and Canadian companies outside OF
the securities which are listed on the
stock exchanges. This has been
estimated at about a billion to a
billion and a half dollars which,
while susceptible Of liquidation II
handled carefully, would take a lot
of time and would furnish currently
a relatively small contribution to
the vast sums needed to cover Brit
ish purchases.
There is another obstacle. In the
last war the flow of private capital
was not restricted by governmental
regulation such as we have today.
There is now no object in getting
up groups or syndicates to buy valu-
able properties. If the companies
turn out big profits most OF the
profit must be given to the Govern
ment in the form of large taxes. and
If the companies lose money the risks
are too big for investors.
America under the New Deal regu-
latory philosophy is not geared up to
become partner or owner in private
enterprises liquidated by the British
because there has been so little in
centive to invest equity money even
in American-managed companies at
home.
Headaches Ahead for U. s.
Britain isn't going broke in the
next few weeks or months because
the British have large sums OF cash
available, but it would be folly Tor
America to insist that Britain must
spend her last dollar before any con-
sideration is given to program OF
rescue.
1t has been estimated that by next
summer Great Britain will be buying
10 per cent of our total exports. This
may mean $4,000, 100000 for the
second year of the war, beginning
September, 1910, as compared with
..about ST 800 100000 in the first year
of the war and about 81 zoo, 900 900
In the pre-war calendar year 1888.
With world trade conditions dis
turbed and England practically our
only customer, some headaches Tor
the American financial and eco
nonnic structure are coming unless
the wisest and most experienced
financiers in America are soon
brought to Washington to work out
a program so as to cushion the in
d,lstries of the United States and
security values against a shock and
save Britain from financial collapse
and defeat.
Whether one likes it or not, the
same arguments that have caused
the Government of the United
States to violate historic neutrality
precepts in sending over-age de-
stroyers and other war materials to
Britain apply equally to the prob
lem of financing Britain or else
allowing her and her feet to fall
into the hands of the totalitarian
dictators of Europe.
- r,;rLts poserved