It ought to be possible for American banks, for British banks, for
French banks against adequate securities to borrow in Spain at an
acceptable rate of interest Spanish credits necessary to liquidate the
comparatively small favorable Spanish commodity trade balance. This
amount is in the neighborhood of a hundred million dollars per annum.
This might be accomplished by vigorously campaigning in Spain with the
consent, sympathy and assistance of the Spanish Government officials
for the sale in Spain of the War Finance Corporation Bonds, payable
in terms of pesetas running five years, of liberty bonds payable in
pesetas, etc., etc., using every available agency to correct the
condition so injurious to Spain and to the Allies.
I insisted when the War Finance Corporation Bill passed the Senate
upon putting in an authority that these bonds might be issued in terms
of foreign currency to accomplish this very purpose, and it became a
part of the Act, and later a like provision was made a part of the Act
authorizing bonds for the Third Liberty Loan. These bonds could be
bought by American importers, or by British and French importers and
sold in Spain if necessary at a sufficient discount to obtain Spanish
credits against the necessary purchases of the Allies or of the
merchants in the Allied countries. In this way the Spanish business
men would have a security bearing a satisfactory rate of interest,
payable in terms of their own money, and would thus be assured of
receiving their own money on a gold par basis with a satisfactory rate
of interest. This would suffice, if properly carried out, in bringing
the American dollar to par in Spain, and to bring the British pound
sterling and the French franc to par in Spain. To accomplish it,
however, requires a mechanism making it somebody’s business to do this,
to carry on an adequate campaign to place these securities.
As it is we have no adequate mechanism with which to handle it. American
or Spanish banks who place credits in Spain and carry credits in Spain
till the war ends will make fifty per cent. on every gold dollar at 67
cents they buy in the United States, into Spanish pesetas at 28.50.
They have no public interest to serve in preventing such conditions.
They are themselves engaged in profiteering on American commerce and
on Allied commerce. We have seen men trained as American bankers
deliberately advocating that it was best for the United States to
have its dollar at a discount, contrary to reason, contrary to common
sense, and most injurious to the United States, to Great Britain and
to France, interfering with the successful prosecution of the war and
actually serving the interest of Germany by indirection. I am willing to
assume that these gentlemen advocating the dollar at a discount are not
moved by unpatriotic purposes, but the result is injurious to America
and favorable to Germany and is contrary to the public interest, while
it is highly favorable to profiteering by private interests.