TOO MUCH MONEY.

Hawera Star, Volume XLVIII, 1 September 1924, Page 7

TOO MUCH MONEY.

AMERICA PUZZLED AND SURFEITED. .

NEED FOR FOREIGN TRADE. THE ALMIGHTY.DOLLAR LOAD. America has a thousand million dollars and more in, surplus gold, which is as much of a white elephant as her idle fleet of ships. On this white elephant foreign: nations are riding and getting paid for the privilege by the American taxpayer. ‘ Building foreign trade is the only profitable work this white elephant could do, and Uncle Sam has not been able yet to find ii way to make , him do it. * • .

“After the war,” says General Samuel Mcßoberts, a banking expert, “some of the foreign Governments woke up to the fact that if they kept their gold reserves in this country they would be just as useful to them, and America would pay them interest for doing it. It is a'mighty good seheme —for them. ” ' , '

And this,is his remedy: “Get rid of 9m- surplus gold by using it to. build up up ,our foreign trade. Our golden opportunity is now. When the Ruhr controversy is settled and Europe gets back on a. normal business basis, it will be more difficult. In the case of most manufactured articles we cannot compete with Europe. We are like a man living off his own fat at present. Our surplus gold is only serving to bolster -up an entirely artificial standard as compared with the rest of the world. If it is to be treated the same as our' idle shipping it will follow the same course. It will be slowly dissipated and wasted without doing any good. We are buoyed up now by a period of temporary prosperity, but when Europe returns to normal we will find the shoe on the other foot.”

“Cannot this surplus gold be used o advantage at home?” he was asked.

“Not without causing inflation and subsequent disaster. People who do not realise that money is worth only what it represents in merchandise probably think that it is impossible for anyone to have too much gold, but a nation ’s currency simply represents the goods the nation produces. All the gold we can use is what is necessary to redeem our currency at its face value. More than that is a surplus. If we use our billion (U.S. equivalent a thousand million) dollars surplus as the basis for more currency or the expansion of credit we vcould have a disastrous inflation.” . “Just how can.this surplus be used in foreign trade?” “We should export capital,” replied the general, “and we have got to educate the American people to the value of foreign investment. ” “But foreigners do not want to borrow money here,” it was suggested by an interviewer, Mr. Edward H. Roberts, “because they say we charge too high a rate of, interest. ” • “That is only because our rates are

based on o.ur domestic financial condi-|

tions. From the American standpoint they are not higher than the English rates are from the English standpoint. That, however, is the nubbin of the problem, and .1 confess I do not know just what is the solution. If we lowered our rates to meet foreign competition in the matter of loans they would also have to be lowered for domestic purposes, and that- would mean inflation. To make a success of lending money abroad at the expense of inflation at home would, of course, be too costly, a bargain.

“What is the secret of England’s strength and the remarkable manner in which she shouldered the principal part of the financial burden of the war, and yet is to-day the most prosperous nation in Europe? It is simply because for generations, for centuries even, she has invested, her surplus abroad. Two hundred years ago it was India and the other countries of the Orient. A hundred years ago it was this country, and later still the Argentine and other, countries of- South America. ,

“England poured her wealth into the United States when we, like most of the conntries||pf Europe to-day, had no gold to speak about. Most of our early railroads were financed by English capital, and the same thing is true of many other of our big industrial enterprises. English gold has found its wav into half the countries of the world and created anchors for the home country which held her safe through the most tremendous storm of her history.

“We have got to do the same thing. Perhaps, we cannot do it in quite the same way, but in some way it must be done, and now, if ever, i§ the time to begin. ”