400 THE POPULAR SCIENCE MONTHLY 



as the purchase and sale of commodities are concerned. On the con- 

 trary, the likelihood is that, aside from the securities problem, the move- 

 ment of gold would tend in the opposite direction. Incomplete trade 

 statistics show that the trade balance is running heavily in our favor, 

 and that if present tendencies continue the balance of trade in favor of 

 the United States will run considerably higher than in ordinary 

 years. This is in part due to the prostration of European manufactur- 

 ing industries, which has led to a reduction in our imports, and is in 

 part the result of increasing exports of food stuffs and certain classes of 

 manufactured goods, the demand for which has been stimulated by 

 the war. 



We must bear in mind that the United States, being a debtor nation, 

 must normally have a surplus of merchandise exports over imports, if 

 the exportation of gold is to be avoided. Estimates by leading author- 

 ities on foreign trade and foreign exchange agree that this excess of 

 merchandise exports over imports must range somewhere between 

 $400,000,000 and $600,000,000, in order that we may be able to square 

 our accounts without the shipment of the precious metals. This excess 

 of merchandise exports, whatever may be the correct figure, is needed to 

 enable us to pay interest and dividends on foreign security holdings of 

 from $200,000,000 to $300,000,000; the expenditures of our tourists 

 abroad, estimated at $150,000,000 to $200,000,000 ; the remittances by 

 Americans to friends and relatives in European countries, estimated at 

 $100,000,000 to $150,000,000; and pajonents to foreign ship owners for 

 freight, estimated at $20,000,000 to $40,000,000. With our merchan- 

 dise exports running above normal and our imports running considerably 

 below normal; with a likelihood that tourists' expenditures during the 

 coming summer will practically disappear; and with the encouraging 

 news that remittances in the past few months by persons in this country 

 to friends and relatives abroad have materially decreased, it seems alto- 

 gether probable that we shall have a real excess balance in the neighbor- 

 hood of $300,000,000 a year which can be used for the repurchase of 

 American securities. 



As the war develops and the, need of foreign nations for munitions 

 and supplies increases, due to the exhaustion of stores accumulated in 

 peaceful times, it is reasonable to presume that our exports of merchan- 

 dise may still further increase, and that our ability to absorb foreign- 

 held securities will correspondingly grow. There is no more reason why 

 it would be wise for us to demand the return of gold for our credit 

 balances than it would be for Europe to continue to draw upon our 

 store of gold. 



If we are correct that our commercial balance of trade is satis- 

 factory, there only remains for consideration the possibility of achieving 

 the ideal of controlling foreign liquidation in American securities upon 

 our own terms rather than upon theirs. I believe that this is possible, 



