WORLD'S TRADE DEBT.

Hawera & Normanby Star, Volume XLII, Issue XLII, 2 November 1922, Page 3

WORLD'S TRADE DEBT.

AMOUNT OWED TO AMERICA SAID TO BE i&£AGGJjU&Ti£U.

.. Writing, m tiie cixrrent number of the Journal of the American iaaakc.a Association.^ Dr. John Ji. Williams, of Harvard University, reaches tne conclusion that the unpaid and overuue indebtedness owed by the outside world to the American market has been greatly exaggerated in current estimates, borne of tnese estimates have been iur as large a sum as 5,000,000, 'dollars. As a result of thorough investigation, Dr. Williams holds that the actual indebtedness of r tin's kind cannot exceed 1,000,000,000 dollars, j and that even this sum is mostly oltset by American purchases of the securities ol other countries. 'The American exporter to-day needs ! to he convinced' that foreign buyers can I pay for what they buy/" says Dr. WilI hams, long as tne statement continues to be repeated that the, world owes us an unfunded debt of 3,000,000,000 to 5,000,000,000 dollars our exporters will continue to be hesitant about pushing their foreign sales.' 5 The writer has been ior some time convinced that the current short-term in^ debtedness of the world to this country, representing unpaid overdue, accounts of foreigners'which, are carried'by our bankers and exporters, is much smalier than has been frequently stated. It appears certain that the amount does not exceed a bililon dollars, and in all probability is considerably less. If this is the case the existence of such an unfunded balance ought hot to constitute a serious obstacle tp the promotion: of bur foreign "trade. "An, investigation was based on a questionnaire distributed to forty-one leading banks and financial houses of our imports of securities -since the armistice. This inquiry showed that, in addition to the foreign securities issued in this country, accurate data on which are regularly published,, we imported in the three years 1919-21, 620,----000,000 dollars of foreign stocks and bonds which had been issued abroad, i and 489,000,000 dollars of American securities formerly held abroad. The combined imports of these two sorts of securities, 1,109,000,000 dollars, was about two-thirds as mueß. as' the new issues of foreign securities floated on this side in the same three years (1,007,000,000 dollars), -but exceeded the ; net amount of .such flotations^iffcer subtracting maturing isues (1,34*^000,----000 dollars) by 763,000,000 dollars. This huge- inflow of securities, much larger than had been commonly supposed, would serve to pay off-a considerable part of our balance of merchandise exports and reduce (Considerably the supposed uncovered balance. "More direct evidence on the amount of the unfunded balance was given by a questionnaire sent out to the principal domestic ♦baaiks, 5 private bankers, and foreign banks of New York, two large banks of Boston, and the more representative members of the- American Manufacturers' ..Export Association and the Exporters and Importers Association, asking :them to report .the j status of their balances with foreign countries. r . - ! "Tbte aggregate'balance due from all countries on July 1, ?1921, to 661 manufacturing and commercial coicerns, domestic banks, -and foreign bank agencies was 628,000,000, against which the balance doe -to all countries was 90,000,000 dollars, leaving a net un- . funded credit balance of 349,000,000 dollars. Contrary-.to the impression of many, the leturns show that the greater part was due from nonEuropean countries. Balances due from Europe amounted to 247,000,000 dollars, against due to Europe of 162,000,000 dollars, giving a net balance due from of 35.000,000 dollars. Balaaaees due from nonEuropean countries amounted to 381,----000,000 dollars, ajid those due to these countries to 117.000,000 dollars, leaving a net balance due from non-European countries of 264,j000,000 dollars. "It is especially interesting to note that the net balance due this country pertained entirely ;to the exporting* concerns. Taken as;a whole, the reporting banks appear ±o have had no net balance from afopaad. "In drawing .conclusions from this investigation, soiwercaution is necessary. A more- comprehensive inquiry would have included banfes in other cities than New York and Boston. One important group of exporters, packers, did not report; and fheir unpaid* foreign accounts have undoubtedly' been considerable. These in charge of the investigation, moreover, express some doubt conceraiiig :tche> reliability of "fche returns of 'balances due to foreign countries,' though stating that there seems to be good reason for regarding the figures under the items 'due from foreign countries' as ifairly trustworthy, !so far as the inquiry twas extended. "Even after allowing for such defects, however, and for. conservatism throwing out enfcejy •:£fee /balances due, to foreign countries,' 'iJEe total due, both from Europe and 'ifce rest of the world, would be but 62&,O0O,OO0 dollars, representing the ;total credits in foreign countries tsai July 1, -1921, of most of the important N"w York banks, two of the largest ibariks of Boston, and 'a large number of representative exporters and manufacturers, including many of the largest firms corporations in this country. Evea if w;e double, this amount, to allow for the foreign credits of noii-reporting banks and firms in other cities, we still have a sum not much below most of thei^estimates that have been made in re(cent years."