NOT YET

Evening Post, Volume XCVIII, Issue 146, 18 December 1919, Page 6

NOT YET

A FINANCIER'S OPTIMISM

BRITAIN IS FAR FROM BANKRUPT.

Much interest has been excited in London by an article headed "The Answer to Mr. Vanderlip," which appears in the current number of Sperling's Journal, from the pen of E. Mackay Edgar. Mr. Edgai', who recently returned from a visit to America, is the head of % the well-known London firm of Sperling aiid Co., which held for niany years a prominent position in financing. American and other foreign enterprises.

In his article Mr. Edgar not only criticises ' Mr. Vanderlip's scheme for an intarnational loan on behalf of Europe, but draws a much more optimistic picture of Great Britain's commercial prospects in the face of American competition than has yet been presented to the public on either side of ths Atlantic. In an interview .with. The New Yoi-k Times representative in London Mr. Edgar further developed his views :

"My position," lie said, "is very simple. I welcome American co-opera-tion, that is to say, the co-operation of British and American films and interests and groups that are working along the swne lines, and I believe it will be mutually advantageous. But I do not" fear American competition ; on the contrary, I see fome reasons for thinking we in Great .Britain are in many ways in ai sounder position than America, that we hold the winning cards, and if we play them rightly shall soon regain all we have lost, and a little more into the bargain. KIND BUT CANDID. "When I was in New York the other day, I found people talking as though Great Britain was bankrupt. They were very kind about it and wanted to help us, and had no idea of taking advantage of • our extremity, but they frankly thought we were done for. Of course, as you know, that is all nonsense. There is no lack of credit facilities at this moment in Great Britain. Any one can. get all the. money he wants for a sound enterprise. London is still as much as ever the centre and clearing house of international trade and finance. Our capacity for production has been immensely increased by the war, and directly our workmen settle down to work, we shall go bounding ahead. "What I think misleads many of our friends in New York is the decline of the pound sterling, as measured in American dollars, and the spectacle of the debt which the British Government owes the American Government. But the fall in the value of sterling hurts America more than it hurts us. It forces us to cut down our American purchases to a minimum. It operates aj effectively as heavy exports against the shipment of American goods and products abroad. It hampers America in getting rid of the immense stocks of commodities ol alt kinds which she accumulated at war prices. It therefore tends to bring about a_ state of congestion, which can be relioved only by selling at a loss, by diminishing production, or by* lowering wages; and in the present temper of American labour, and with the bitter outcry against the high cost of living, none of these alternatives is present.

SOMETHING MUST GIVE WAY. "The truth is, that production prices and wages have reached such an inordinately uneconomic point in the United States, that something is bound to give way. As for the British" debt, I look upon it as a bond of commercial union between the two lands As America cannot proceed against us for the recovery of the sums owing to her, she is compelled by her own interests to assist our prosperity and join in putting our solvency,' and our ability to pay off our loans, beyond question. But, in any case, except so far as they affect the course of exchange, these inter-govern-mental debts aie a minor matter They .have very little to do with commercial and international finance.

"Some Americans seem to think New York will displace. London in . world finance. . The Americans certainly will not do it by making loans to Govern-, nients; I doubt whether they will do it in any event. The advantages of experience, habit, ' geographical position, and the possession of vmique facilities which Mr. Vanderlip1 freely concedes to London, are very real advantages. That is proved by the fact that London is today .doing as much business as ever.

LONDON'S FINANCIAL PRESTIGE. "But there is another reason for British confidence. You. can get a sate 7 per cent, almost anywhere you like in America. How can a country of which that can be said, a country that is still amazingly underdeveloped and underpopulated, and that offers within her own boundaries limitless opportunity for de-' velopment, play a big part iii international finance? Where is the inducement? Why should the American investor venture into an unknown field and run greater risks .for the sake of getting smaller returns? Therefore I think London will long continue to hold her own in international trade and finance. "It is the same with shipping. I have some very big shipbuilding interests in Great Britain, and I do npt fear American; competition. Why not? Well, for several reasons. One is that American yards cannot yet turn out special ships for special trades. That is the backbone of the British mercantile marine. Secondly, their costs of construction are very far ahead of ours. Thirdly, the expenses of operating American ships are at least 30 per cent, heavier than ours. Fourthly, they have not even the beginning of that wonderful network and organisation of shipping agencies which our people 'have built up all around the world. Fifthly, a mercantile marine, while a necessity to Great Britain, is a luxury to America. Sixthly, the American instinct for the sea has been very greatly impaired in the United States, and an ordinary American can always get a better paid and more congenial job on land. "So, too, with American commerce. America made a, magnificent burst into the arena during the war, but I doubt .whether she will be able to maintain it. Hera, again, the element of compulsion is lacking. Our foreign trade is absolutely vital to us; to Americans it is merely; a convenient way of disposing of their surplus. America is so huge; her command of her own market of 110,000,000 people so secure, and her domestic demands likely to be on so prodigious a scale that ten years hence you may easily find that the smaller profits and longer credits of international trade will have little, attraction for her people. «s

THE RAW. MATERIALS. "Again, America is reaching the end of some of her. most valuable raw materials and natural resources. . Already she is importing oil for her own consumption ; she will soon. be importing copper—perhaps even wheat.' Her 'magnates' are rightly and shrewdly looking ahead and scouring the world for reserves of basic metals and minerals that will make good their own dwindling supplies; but wherever they turn they find that British enterprise .has been before them. We hold many of these essential key positions in our "own hand?. Even if they do not lie inside the British Empire^hey are controlled by British capital. America one of these days

—and • not very distant days, either— will have to come to us for the oil, copper, and perhaps the iron.ore she needs, just as she has to come to us for wool. That is why I, for one, am not greatly disturbed by America's competition. "The social and industrial difficulties ahead of her are at least as menacing as any that confront us—in my opinion they are more so. Try to look ahead ten or fifteen years, and you will see, I think, that it is the Americans, and not ourselves, who have greater cause for uneasiness. What it really comes to is that we 'are in the same boat, and have everything to gain by pulling together. Commercial partnerships and understandings between groups of Englislunen and Americans who are engaged ill the same lines of business are, in my judgment, the most fruitful form that an Anglo-American alliance could take."