STABILISING WORLD'S FINANCES

Dominion, Volume 12, Issue 279, 21 August 1919, Page 5

STABILISING WORLD'S FINANCES

AMERICAN BANKER'S VIEW

NEW ERA OF CREDIT

Credit means moro to-day than it has evAr meant before. In that one word (savs Mr. W. H. Booth,. vice-prcsident of tha New York Guaranty Trust Company) is epitomised the ■foundaiton upon winch civilisation's future must be ba-cd. Prosperity, the happiness, the hope, the very oxistence of hundreds of millions ot peuple are dependent upon credit. It is the keystone of the arch which must bridge the chasm between war and peace. The great conflict which has just ended has indeed taught us much of the signifiennoo and economic value and vital importance of credit; peaco will teach us even more. As one of the primary results of tho war, lie says, the wealth of the world has been redistributed. By tne natural processes of wealth concentiation, the United States nas become very rich. Other nations in tho long drain of war have become relatively poorer. Credit must be the instrument by which wealth accumulated in one place may m reality be used in another until gradually and by processes less violent than those of war, tho wealth of the world will aifain assume the more natural distribution. It seems to mo that, regardless of the amount of tho indemnities which the enemy must pay, and oven if they were paid in full immediately, the chief assets of England, France, Italy, and Belgium, as well as of our other allies, exist within their own borders and within the people of those countries. It is essential for ns to lefnember that important fact, in view of the demands which'are now and will increasingly 'be &iado upon us for the extension of credits to the peoples of Europe. It is evidence that our aid will not be in the nature of charity—which our allies would, not accept, were we inclined to render it upon such a basis. It is the best guaranty that, while ou<r service will be of a practical humanitarian character, out service will also be profitable, inevitably, directly, and indirectly. Our allies would accept* aid only upon a strictly business basis.

Credit for Nations. It has been tho good fortune, as well as tho duly, of the United. States in recont months to participate largely in the extension of credit to our allies, and v/e stand to-day as one of the two premier creditor nations. , . , When peace has been definitely established, we will bo called upon to continue that service by the ■ extension of additional credits through private channels, with Government 00-operation and moral support. In the immediate futuro this is going to be our paramount duty and afford us, as well, ns great opportunities to help as did the war itself.Wo cannot :'ail to tak.9 advantage of this opportunity, nor can we shirk the responsibility which it Involves; but it is not going to be an easy task, because in tlio last analysis it must depend upon tin) support of pu&lio opinion in tho United Staves. This support can betnincd only by careful education. In tne immediate future and for present needs we must extend credit abroad on a shortterm basis similar to that of the Tecent 50,000,WW dollars Belgium credit. But, before tho maturity of these short-term obligations, perhaps within a year, wo must put ourselves in position to extend long-term crcdits in a sate and substantial manner. A plan of organisation for tha accomplishment of this latter purpose is now under way in tins country and in iiurope. Thu banks in tho larger cities of the United States havo been, or soon will bo, called together for the purpose of cooperating ill tho distribution of foreign securities whose, maturities oxtend over considerable periods, in tho countries abroad similar financial co-operation is now being organised to woric with us here. In this work tha memoors of your association can bo of inestimable value m a very practical manner. The taslc is going to be greater and will demand the best talent lii tuo country, it is going lo require above all things confidence in human nahire and in tho unfailing ability of peoples to work out their ealvar tnn when favourable opportunities "are afforded..

Wo are not unmindful of the fact that tho situation abroad is not good, but it is not abnormal under the circumstances, and after years of war anything but a depleted situation would be abnormal. Furthermore, it is natural ior all peoples to be optimists and workers and producers, and with the economy and care in living, which necessities of tho hour havo developed, and with tho safe and sane help and cooperation of this country, they are bound to work out a satisfactory solution.

But wo cannot risa 'to the occasion unless our domestic credit is sound, unless the factors which create that credit are functioning properly, and that means that business must be permitted to thrive and prosper. Our Governmental authorities must iccogniso this us the paramount need of the hour. Practice, Not Theory.

There is no dearth ot political idealism in the United States, nor lack of an able spokesman for our national morality. Only posterity, with the advantage ui perspective, can properly appraise them; certainly, i shaxi not attempt to d» so. But tliero lias never been an occasion wlien practical, constructive, business leadership was at a higher premium in this country than at tho present. If we are to keep pace with the accelerated movement of the new period, we cannot permit lilliputian ideas to bind our industrial Gulliver. And that is what flioso who seek to return to prewar. conditions and restraints are advocating. Wo may expound our national idealism to the world with all the zeal of modern crusaders, but unless we supplement it with practical efforts, based upon tho fundamental principle of helping other peoples to help themselves, our idealism will utterly fail cf lis purpose. And 1 contend that the best way to make such practical humanitarianisni possible is to free business of its present and prewar obstacles, for, if the war has taug'nt us anything about economics, we have awakened to a realisation that all nations are interdependent,' that the prosperity of each, is contingent upon tho prosperity of the others, that productivity does not enrich one people or el&Ss alone but all humanity as well. If this country, therefore, is permitted to utilise its industrial resources, strength, and individual initiative in a measure commensurate with tlio dema-nds of the hour, wo will put at the disposal of tho worui uiio oi uie most eihcacious of stabilising forces.