EXPORTS 73
by the sudden call of Europe for war material. On page 403 of the review we read:
. • • Sir George Paifih has estimated that the item of freight and insurance charges is probably not more than $25,000,000. Competent statisticians have pat our annual net return on indebtedness abroad at $300,000,000, — ^from which a deduction of $50,000,000 should be made for returns on American capital employed in foreign countries. Adding to these offsetting items the remittances to relatives and friends of the laborers, the statisticians figure that from the face figure of our favorable balance there should be deducted perhaps $500,- 000,000. On this basis we should for 1915 have a final net balance in our favor of more than half a billion dollars.
How Will Europe Settle With Usf
This does not however allow for the returns from foreigners of our securities which thej have held and now sell back to us. The total of our securities held abroad is generally estimated to be about $6,000,000,000. It is certain that during the last few months a considerable fraction of this great total of bonds and stocks has been sold back to Americans, although the situation is too com- plicated to determine just how much. But at any rate it is difficult to see how Europe will settle her growing balance of indebtedness to America in any other way than by returning yet more of these securities. The summary way of settling the current debt would be by sending gold to New York, but in the first place the countries at war wiU not give it up, and in the second place it would not be desirable from our own point of view, as we have a plethora of gold at present.
It may fairly be inferred that the figures representing securities and letums therefrom are for normal conditions just before the war. It is most instructive to note that the statisticians show a substantial balance of the international debit and credit account for the normal years. They say about 500 millions should be deducted from the face figure of our favorable balance^ and this lacks only one tenth of the average balance of trade for the four normal years. About one half of this they account for through our item 2^ and for the rest items 5 and 6 are men- tioned^ although we suspect that item 4 for normal years was also included.
So much for what the figures show us as to normal or " running " conditions. That half of the billion-dollar balance not accounted for at the end of 1915 is the temporary balance which will be^ must be, wiped out when we are able to average up the account with a few of the years yet to come. The transactions of 1915 are especially incomplete. But we can not insist too strongly that this temporary balance is not the so-called "balance of trade.*^ The one is a balance about to be settled, the other is a running balance that will never be settled. Such a temporary balance can be counted as neither favorable nor unfavor- able, for if the fact of having something due us is favorable, the pay- ment of the due is a cancellation of the favor. No one will contend that it is favorable to a creditor that the debts he holds should never be
�� �
