this must be redeemed upon demand, no matter what sacrifices this would entail. The essential characteristic of paper money is that it shall be redeemed without question upon demand, but paper money and securities are entirely different. The first is a call for a standard dollar—that is gold; the second is a certificate of proportionate interest in either the mortgage on a property, or in the ownership of that property, as the case may be.
No one would ask that an American householder should repay the mortgage upon his home, which, by its terms, was not due for some years, simply because the English holder of the mortgage suddenly decided that he wanted his money to assist his government in prosecuting the war. No one would contend that it was the duty of the ranch owners of Texas, for example, to repurchase a ranch owned by British interests, solely because of the problems which the war brought to the foreign owners, and yet this is exactly the position which they take with reference to the stocks and bonds of our American corporations. The foreign security holder is either a creditor or a partner in our enterprises. He has gone into them with the expectation of profit and with the assurance that his money is safe. We have done nothing to endanger the safety of his investment, and whatever unfavorable features may have developed concerning the profits of the enterprise arise largely out of the war, which we have not caused and from which we are an innocent sufferer.
There is no moral obligation on our part to repurchase these securities. Such a contention proceeds upon the assumption that we have made an enormous call loan in Europe, and that it is understood upon both sides that Europe may and will call for its repayment whenever home conditions make it advisable. Such a contention is utter folly. American financiers would never have entered into such an-arrangement, and had they been so foolish as to make such enormous call loans, they would have demanded the rate of interest which properly attaches to such a class of loans. The plain truth of the matter is, that Europe has never regarded these investments as call loans. They were made because of the attractive rates of interest which they offered—from 50 to 100 per cent, higher than the rates which could be commanded for call loans. Our European friends have made the extra profit of a permanent investment, and they must now abide by their choice and convert their investment into liquid funds at our pleasure and not theirs.
If we agree as to the ideal and purpose which should be followed with reference to our financial relations with Europe, let us see to what extent this ideal can be achieved. In the beginning there is nothing mysterious or magical about the entire situation. So long as Europe does business according to the terms of her contracts with us rather than postponing payment by moratoria, most of which have now happily ended, there is no reason to fear a further and considerable exportation of gold, in so far
