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A recent issue of American Industries contained an article on for- 

 eign excliange and credit by V. Gonzales which explains many points 

 which concern men engaged in foreign trade. Referring to the period 

 before the beginning of the European war it is stated that most 

 countries were on a gold basis, that is, their different forms of money 

 .were convertible into gold on demand. Theii- international commer- 

 cial transactions were adjusted according to the gold equivalents of 

 their respective moneys, all referring to each other on a basis of actual 

 gold being obtainable as final settlement. 



The American dollar had an exact equivalent in all countries in pro- 

 portion to the gold contained in every other unit and to the gold value 

 of silver in silver standard countries. Commercial rates of exchange 

 fluctuated according to supply and demand of transfers, but rates were 

 confined within the limits of the cost of exporting or importing actual 

 gold. These limits only in very exceptional cases were passed. The 

 pound sterling was worth, at par, $4.8G%, because it contained 4.86656 

 times the amount of gold contained in the dollar. Commercial rates 

 fluctuated between $4.82 and $4.9065, because the cost of importing 

 or exporting gold never was more than 4.656 cents per pound. And 

 such was the case with all other moneys. 



Now the relation has been broken because gold is not freely obtain- 

 able anywhere, except in small quantities. There is no fixed value 

 to the dollar in the terms of any foreign money nor to any foreign 

 money in the terms of the dollar. Market quotations have no longer 

 any fixed limits and it is a matter of daily adjustment, according to 

 supply and demand, and the chances each one may be willing to take. 

 Transfers of money are not available anywhere and most of the trans- 

 actions are limited today to cable orders or payments converted into 

 local currency everywhere at rates fixed by the will of dealers in this 

 line of business. 



^Vhether or not gold will be restored as a basis of money values and 

 what relation it will have to the former units, no one can tell. It is to 

 be hoped that after the transition period all will return to normal 

 ♦onditions. 



In the meantime, we have a very serious problem before us — the 

 adjustment of accounts contracted in foreign money. Will goods sold 

 in francs be settled in dollars? Drafts discounted by banks, coming 

 back for want of payment will have to be taken up by drawers or 

 endorsers. Who will be the loser in the reconversion into dollars? 

 While the difference in rates was small no disputes arose, and 

 holders were contented many times with receiving another draft in 

 foreign money, which was practically replacing credit in a foreign 

 country. But at this time when differences may be very large, and 

 other drafts may not be obtainable, the question will supply grounds 

 for many disputes. 



Legal proceedings will do good to no one; it wUl be much better 

 to arrive at an agreement before the case presents itself. 



Ldmits of exchange rates in all places are no more confined to cost 

 of transferring actual gold which is practically impossible, and just as 

 tbfi franc can drop here from a par value of 19.295 cents to 10 cents 

 or less, the dollar in France, worth formerly at par 5.18262 francs, may 

 rise to 6, 7, 8 francs or more. Nothing can govern the rate. 



Bills drawn in all countries on other countries in foreign money 

 are payable in local currency at the collecting bank 's rate for drafts 

 in that foreign money. 



The countries at war and otliers not involved in it have decreed 

 moratoriums, that is, they have postponed maturities for a fixed period 

 now, but which can be extended indefinitely. We are not at war and 

 our payments are not postponed: what legal excuse can be given for 

 a delay? On the other hand, if our collections are delayed everywhere, 

 as may be the case, should we, alone, be forced to pay in due time? 

 Matters of national honor and individual credit do not seem to be 

 so much at stake now. Every country is hurt, even if as far away 

 as we are from the entanglements of the conflict, and every country 

 is resorting to or considering moratoriums as a temporary relief until 

 conditions become less stringent. Should we alone meet foreign obliga- 

 tions at their natural maturity? Payments due here by French mer- 



chants enjoy the benefit of the moratorium decreed in Prance. Would 

 American obligations payable in France enjoy the same privilege? Or 

 does the moratorium in France apply only to foreign obligations pay- 

 able in France by French people only ? 



We have advocated an extension of time to all foreign debtors, as 

 a means of relieving the situation and making trade slightly less diffi- 

 cult. But the string should not be pulled one way only. 



Exchange adjustments, at present, are next to impracticable and only 

 an extension, practically a moratorium, can save the good name of 

 acceptors. In London a moratorium was decreed not because of ex- 

 change difficulties, but because of lack of money or credit to settle 

 obligations, and while bankers there all enjoy the relief of the extension 

 they have not thought that they should grant as much as they took for 

 themselves. 



In few words, the absence of exchange, credit and money should 

 simply put off for a period pending obligations of the whole world. 

 We are much better off than the rest of the world, but if we become 

 disabled, because of a quixotic pride in sacrificing our gold, who can 

 then aid the trade of all countries during the crash and during the 

 period of convalescence? 



Domestic credit for domestic purposes is quite available here, but 

 to maintain it and utilize it as much for ourselves as for the rest of 

 the universe we must protect it. Our obligations, national, state, city, 

 of corporations or of individuals, are not taken by anybody anywhere 

 today, nor do we accept those of any other country. 



The Rubber Industry of the Future 



One quite frequently reads intimations in periodicals that the price 

 of rubber is Ukely to take a considerable drop on account of the 

 sjmthetic processes of making rubber, which are said to have recently 

 proved successful. It is also believed by some that old rubber will 

 eventually be so treated that it can be made to regain its original 

 elasticity. While old rubber can be economically employed in a great 

 many ways, it can never be made to regain its original characteristic 

 elasticity. The disintegrating processes in old or dead rubber have 

 progressed so far that it wiU be just aa easy for one to change bad 

 eggs into fresh eggs as it is to regenerate dead rubber into good rub- 

 ber. In the utilization of dead rubber it is always necessary to add 

 fresh or elastic rubber. 



So far as the synthetic processes of making rubber are concerned 

 no fear need to be entertained by those interested in the production 

 of vegetable rubber. It has been claimed that very promising results 

 have been attained through the chemical processes, but even if this is 

 so, the process has yet to be made practicable. It does not seem pos- 

 sible, however, that rubber can be produced artificially from entirely 

 different substances. The characteristic constitution of rubber is not 

 very easily understood, and it is still more ditficult to imitate and 

 manufacture it on a commercial scale. There would be no necessity to 

 produce rubber syntheticaUy if a substance with similar elasticity 

 could be discovered. Unfortunately, there is no such material. 



That rubber will eventually decline in price on account of the 

 numerous plantations which are now being started all over the tropics 

 is also questionable. The increase in the production of rubber is evi- 

 dent, but as this increase takes place which will tend to decrease the 

 price there is a corresponding increase in the demand for rubber. 

 The automobile business increases enormously every year. The chief 

 item of expense in the use of an automobile is the replacing of rubber 

 tires, and the future income of the man who owns a rubber planta- 

 tion is dependent upon the increased use of the automobile. The 

 price of leather has an influence upon that of rubber. The pessimist 

 who fears the fall in price of rubber has no foundation for his belief. 

 Moreover, those who have given the matter considerable thought can 

 readily see that the future outlook for rubber is very bright and that 

 new fields will eventually be opened up from which vegetable rubber 

 will be drawn. 



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