The Daily News. WEDNESDAY, NOVEMBER 3, 1915. AMERICA'S FINANCES.

Taranaki Daily News, 3 November 1915, Page 4

The Daily News. WEDNESDAY, NOVEMBER 3, 1915. AMERICA'S FINANCES.

Mr. William Sherer, chairman of the New York Clearing House, which is the medium through which America's greatest banks do business with each other, has been saying some pithy things about the effect of the war on America's finances. Not only is Mr. Sherer a great financier, but he is also am economist and philosopher, who takes long views and is not carried away by the intoxication caused by big war orders in his i own country. The financial effect ot the war, he stated recently, had been made manifest in America by increased exportation of war material, including many things other than ammunition. [The war had stimulated almost everything America had for sale, and it had diminished European production of every, thing except dead men. As the producers in a belligerent nation are taken into the fighting -ranks, that country's needs become larger and its means of satisfying them smaller. This has stimulated the sale of American products abroad, and the enforced sale of America's securities abroad has enabled the United States, indeed has forced her, to pay oil' a great portion of the money which she owed to Europe. Vast sums which were represented by American stocks and bonds in the possession of foreign holders at the time of the outbreak of war have been cancelled. American securities of late years found many foreign purchasers, but' the Republic has been forced to take them back to liquidate the debt they represent. On its face the financial situation in the United States appears very satisfactory, but in Mr. Sherer's opinion it will not prove to be permanent enough to enable the country to look forward to inevitable financial supremacy. He is by no means convinced that the great war will mean that Europe will remain for a very long time financially at America's mercy. Nations have a way of adjusting themselves very rapidly to circumstances. At the outbreak of the American Civil War people prophesied that the conflict would injure permanently all business interests. The struggle did complicate life for a long time, but this very complication simplified some problems. For instance, it entirely did away with unemployment, for the whole surplus male population was absorbed in the army, and, although production decreased, there was plenty of work for those who remained at home to do. Tn this respect the present straggle affords a close analogy to the American Civil War, and the financial and economic results will be fairly approximate. "It seems to mc to be impossible." said Mr. Sherer, "that any large number of American citizens will largely and permanently profit from thla war. People who predict, the emergence of fortune

form misfortune are always wrong. When this war ends, Europe will he poor for a time, and unable to supply us with manufactured goods, because her capital and labor will be .absorbed in the enormous task of rebuilding. Expenditure will be curbed in many directions by the necessity of making up the enormous losses of the war." Europe's inability to supply America with manufactured goods will curtail the demand for American raw materials. America will be dealing with a poor man where, in recent years, she has been dealing with a rich man, and while the poor man's want will be greater than the rich man's ltis ability to satisfy it will be comparatively small. The return to the normal will be a long time in coming, although it may be more rapid than now seems possible. The condition of the American banks at the present time is, according to Mr. Sheror, excellent. The effect of the war has not been really bad even upon the savings banks, in spite of the large withdrawals by those who have gone abroad. The war's effect upon manufacturing will be inevitably reflected in the commercial banks, and in turn this will react on the savings bank«. "The whole thing," Mr. Sherer adds, "is psychological. In nations which are not i actually at war 95 per cent, of all business is done on credit. In sixty odd years the volume of business has been to the volume of capital involved as £BOO is to £-20. That is, £BOO worth of business has actually been transacted upon every £2O of cash invested."