Italy’s purchases in 1914 were five hundred sixty-four millions for
imports against which she exported four hundred twenty-six millions;
in 1915 her imports were nine hundred and seven millions against four
hundred eighty-eight millions exports. When she got fully into the war
in 1916 her imports were sixteen hundred and nineteen millions against
five hundred and ninety-six millions exports. In 1917 her imports were
fourteen hundred and twenty-nine millions; her exports four hundred and
thirty-five millions. Italy’s bonds at five per cent. have been selling
for eighty-six cents on the dollar, and an American dollar in New York
will at current exchange buy about nine lire to the dollar, and one
dollar, now (August, 1918) will actually buy ten lire of Italian bonds
bearing five per cent., so that such bonds would return the investor
ten per cent. payable in lire, which after the war must come back to
par, and gives the investor a hundred per cent. bonus besides.
This means that brave Italy, shedding her blood lavishly on the
battlefields for the liberty of mankind, is paying a hundred per cent.
on top of war prices for the supplies required by her people, except
goods sold her on credit by her Allies.
There are several reasons for this:
First.—To the extent that Great Britain, the United States and her
Allies are not extending credits on a normal basis to Italy, Italian
purchasers are compelled to rely upon private credits extended by
citizens of other countries, who may or may not understand the
stability of the Italian Government, nor the financial security of
loans extended to Italian purchasers. The element of hazard, lack
of knowledge and desire for gain of the private creditors of Italy
are important elements in determining the enormous cost to Italians
of credits for their purchases for war needs. To the extent that
the United States, for example, furnishes credits to Italy, Italian
purchasers only pay the ordinary war prices, but precisely to the
extent that private credit is extended to Italy, Italy at present is
paying approximately ten per cent. interest and a hundred per cent.
bonus on the credits extended to her. This should be immediately
corrected.
This egregious example will demonstrate the importance of obtaining
for Italy sufficient credits at fair rates to cover her purchases
during the war, and it illustrates precisely and fully the necessity of
providing the United States with like credit facilities at fair rates
for purchasing from Spain, from the European neutrals and from other
nations where there is a depreciation of the currency of the United
States.
The United States is paying from fifteen to forty per cent. on her
purchases in nearly all the nations except in the countries of Great
Britain, France and Italy or their immediate Allies, to whom the United
States is extending large credits. It is perfectly obvious that there
ought to be immediately organized a scientific, a well-balanced,
systematic mechanism for handling this problem, for studying its
details in every country in the world. We have no such organism. The
Treasury Department through the Federal Reserve Board undertakes to
look after the gold and silver embargo. It has a sub-committee passing
on licenses to ship gold and silver. This sub-committee passes on
applications for the right to ship gold and silver, and is refusing to
permit many shipments without providing any means by which the foreign
indebtedness intended to be covered by gold shipments can be otherwise
covered by gold credits. This imposes a cost of destructive interest
rates upon our business men requiring gold or foreign credits with
which to settle foreign obligations.