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Evening Star, Issue 15906, 11 September 1915, Page 6

This war is furnishing many instructive illustrations of the principles underlying the fiscal relations of nations. The general public will emerge from the experience of this war with' much enlightenment concerning the commerce of nations as well as concerning, the military equipment and fighting qualities of the great European Powers. The economio machinery is being violently disturbed, and the disturbance is revealing many things about that machinery which were known -to a comparatively small class only. The vast organisation which controls the distribution of the world's products is but imperfectly understood. In consequence many fallacious opinions obtain a stubborn hold upon the minds of men. For instance, the recent movements of the rate of exchange in America have occasioned disclosures quite startling to many people. Jt was not generally believed that a. country buys goods from another country not with money but with goods. Because this normal method of buying has been interfered with by the war English merchants are encountering unprecedented difficulties in their trade relations with the United States. England buys from America by offering commodities as the real purchase money, and because the quantity offered has suffered marked diminution she is greatly embarrassed in purchasing the supplies she wants from the States. After all, the •trade between nations is just barter on a colossal scale. This shows the absurdity of a political policy which multiplies the stimuli to exports and musters the impediments to imports. You cannot have the one without the other for any considerable time. Nothing emphasises this truth more forcibly than the cable in our "Wednesday's issue announcing that Great Britain had sent thirteen millions sterling to New York to rectify the exchanges, and that such action was looked upon with disapproval by the Americana. Can it be that a nation of beliovers in the "Almighty Dollar" don't want gold? Can it ,be that the Americans believe that a nation can have too much gold ? If so, what jis the ground of their belief ? If they ! are right in looking askance at gold, opinions cherished in many quarters respecting money will receive a rude shock. We get into the habit of thinking that all ouv selling is done for money. All that the merchant wants who sells his wares is gold. And it is difficult to conceive that the attitude of a nation as a whole should be different from that of an individual in it. The fact of the matter is that gold is a cloak disguising the real nature of trade, and it is this real nature which the war conditions are laying bare. Only when commerce is an exchange of commodities is it truly beneficial to a nation. The United States have ground for concern and apprehension, because the European conflict is forcing theni to accept much more gold than usual in exchange for their goods. They cannot refuse gold, because it is the generally accepted legal tender among nations. But a nation will feecome poor if there is a steady outflow of commodities and a corresponding inflow of jnoney. Apparently American bankers are quite sensible of the dangers which threaten their country. Just precisely what, is this danger ?" We are not going to embark upon the complexities of high finance, but a few explanatory words will disclose a eolid foundation for America's anxiety. It is axiomatic" that no nation acquires richee •by getting money, but only by getting what money,will purchase. Neither gold nor silver dollars are any good to the American people until they are translated jflte food, ©to. Now* the be!,.

America Does Not Want Cold.

ligerent nations of Europe aro offering to America gold,-but are multiplying thcTobstacles to that gold being changed into the goods that really account. Great Britain, Franco, Russia, Belgium, and Germany have one and 'all during this war offered large parcels of gold to America m return for foodstuffs .and munitions. America is finding that she cannot send that gold.back again to purchase goods in Europe, because all the countries at war find themselves with less surplus for export than at any .time before for a generation and more. In short, tho belligerent nations have comparatively little to sell to neutral countries. This is most unsatisfactory to tho land of Stars and Stripes. America is .realising with a vengeance the truth that hitherto has been but imperfectly understood : that a nation grows wealthy not by its exports, but by its imports. The American people are to-day spending their labor and capital in producing goods that will f eo d the men and cannon of Europe, and are receiving in return for a considerable quantity of their exports what in itself will not feed or maintain their people. At present Europe is getting the goods—that is, the wealth—and Americans getting the gold. Long ago Spain found that such a policy, if carried beyond a certain limit, ends in disaster. For vears she systematically pursued the policy of exporting the products of her lands and factories and importing gold, until everybody nad gold, but everybody was ponr. T 0 the extent that America" is receiving gold only for her goods she is working for Europe without an immediate return of wealth. She is in reality making herself poor temporarily in order to supply the needs of Europe. When the war is over and the pressure upon the industries of the belligerents is eased, America will be able to send her accumulated gold to the European markets to purchase commodities. It will be then that the States will really receive the payment for the service their factories and land are now rendering. The war, indeed, is concentrating i gold in that largest of neutral countries" [America. To obtain such accumulation America is scattering her wealth in tho form of army stores over Europe. With | the restoration of peace there will be a scattering and redistribution of the jfdd and a corresponding concentration of° European commodities in America. Tho United States are sowing now; they will reap later. _ But the postponement of the harvest involves present strain upon America's immediate resources. It means sacrificing' much wealth in the present for Europe's benefit, in order that there may be garnered a large measure of wealth in the future at Europe's expense. In the meantime America suffers from relative shortage of goods for home consumption and relative abundance of money. Two consequences follow. One is a general rise in the cost of living, and the other is a disposition to speculation. The latter springs from the enormous quantities of money lying in the vaults of tho banks seeking profitable employment. Such are just tho conditions which arc suitable to generation of that commercial inflation which is commonly known as a financial crisis. In short, America is suffering from a glut of money, and the bankers, so the cables inform us, are becoming apprehensive. They therefore urge upon Great Britain the rectification of the exchanges by means of loan rather than by the transmission of gold.