In the Argentine American purchases have exceeded American sales to
the Argentine during the last year, or since we entered the war, by
about sixty million dollars. The Reserve Board was enabled to effect
an arrangement through which Argentine gold credits were placed in New
York on satisfactory terms until the war should be over.
This is one of the means by which to adjust our foreign purchases on
a basis which requires us only to pay a fair rate of interest for the
indebtedness due such country, but it is _not_ the only way; the sale
in the Argentine of American securities, of Liberty Bonds, payable in
pesos, of War Finance Corporation Bonds, payable in pesos, or secured
bank loans there, would suffice to effect the same ends. Such sales
would be equivalent to shipping commodities to Argentine in settlement
of our trade balance.
But if British merchants and banks, if French merchants and banks, if
American merchants and banks were freely furnished the right to buy
Liberty Bonds and War Finance Corporation Bonds payable in terms of
pesos, thousands of individual adjustments could be made through such
securities or with such securities as a basis of credit for the period
of the war.
Argentine has a favorable trade balance. Argentine has the money and
credits to lend. Argentine cannot otherwise conveniently employ these
funds which are in excess of her normal requirements.
Argentine is therefore in a favorable position to make such loans,
just as Spain is; moreover, if Argentine does not make such loans she
will have her trade injured in a manner which was pointed out above in
relation to Spain.
The United States also controls through the War Trade Board the
issuance of licenses covering imports and exports. These licenses
can be serviceable in bringing the dollar towards par by opposing no
obstruction to the export of goods not required for actual war purposes
to countries to which America owes a balance of trade.
The Shipping Board, as far as the war permits, should encourage
furnishing bottoms to take supplies of commodities to those countries
where America owes a trade balance in order to liquidate such balances
as promptly as possible.
The Federal Reserve Board, or the Treasury Department, acting under the
authority given by Congress to the President, to control the transfer
of credits to and from the United States, has a Department under the
management of Mr. Fred I. Kent, with offices in New York and in the
Treasury Department, which visés transfers of credits to and from the
United States. This Department should facilitate in every way possible
the placing of American securities, especially War Finance Corporation
Bonds and Liberty Bonds, payable in terms of the currencies of the
country to which they may be sold, or in which they may be placed as
security, and should exercise every effort to place public and private
credits in such countries where America or the Allies are in debt to
overcome the depreciation of the American dollar and of the Allied
currency, and to bring down to par the currencies of such foreign
countries in relation to the United States and in relation to the
Allies; otherwise the United States and the Allies will continue to
suffer the enormous cost of these usurious credits which appear in so
egregious a form in regard to Italy, but which in degree applies with
equal force to the United States, to Great Britain and to France in
their purchases from various other countries.
In 1917 the United Kingdom imported five billion, one hundred and
eighty-four million, and exported two billion, eight hundred and
ninety-four million; her excess imports were therefore over two
billion, two hundred million. France had an excess of imports over
exports of over two billion. Italy had an excess of imports over
exports of over a billion, but the total imports of the United States,
the United Kingdom, France and Italy amounted to over twelve billion
dollars, a large part of it from neutral or non-belligerent countries
who had a favorable balance of trade, and upon which the exchange
rate ran from ten to fifty per cent. The loss of these gigantic war
purchases which took place outside of the United States, Great Britain
and France, probably exceeded a billion dollars because of the adverse
exchange rate.
Such loss can be corrected by the United States, Great Britain, France
and Italy by intelligent, comprehensive, co-ordinated employment of
credits and government power. It is a question of an orderly
arrangement by which to systematically accomplish this end.
The United States has as its only agency the Federal Reserve Board
and the Treasury Department. The Secretary of the Treasury, occupied
by many cares, being Director General of the Railroads of the United
States, charged with the duty of collecting and disbursing the gigantic
revenues, framing revenue plans, acting as Chairman of the Federal
Reserve Board, of the Farm Loan Board, of the War Risk Insurance
Bureau, and in charge of the Public Health Service, besides supervising
all of the public buildings of the United States, not to mention
miscellany, cannot give it much personal attention.
The Governor of the Reserve Board not only has the supervisory control
of the Federal Reserve Banks with thirty-eight hundred millions of
resources, supervising also the member banks, exceeding eight thousand,
but is in active charge of the War Finance Corporation.
The question of adjusting these exchanges cannot receive the personal
attention of either the Secretary of the Treasury or the Governor of
the Reserve Board. The members of the Reserve Board are charged with
duties of the gravest responsibility, enough to occupy their entire
attention.
Mr. Oscar T. Crosby, the very able patriotic Assistant Secretary of the
Treasury, is trying to adjust the exchange in Spain and Italy; he is
now in Europe engaged in this very important business. Mr. Albert
Strauss is acting as adviser of the Treasury in connection with the
foreign exchange problem.