Dollars

Front matter

Class :

Book J

f

II. Exchange

What is money ?

Money is an instrument of exchange of conventional value in the form of metals, more or less precious, and paper, which represent merchantable productions and wealth with a conventionally organized system of international monetary exchange known as banking.

All these conventional systems have the Government's official prestige, the Government being the representative of the people's power, and official manager of the national wealth and production of each country.

The exchange in trading power of national wealth (production) of each nation is reflected in the international exchange.

Then, in order to give a value to money we must have production to sell.

Consequently, productive countries can accumulate the money of the non-productive countries whose lack of production causes the depreciation of their monetary system in foreign exchanges.

* * *

If we compare France with Germany now, we find that while behind the franc there is a very limited number of factories, insufficient labour, and very limited production of raw material, with no encouraging future prospects, behind the mark there is an unlimited number of well-organized factories, with sufficient skilled labour waiting to start and produce.

But Germany needs raw material "which America can furnish.

German money at the moment representing no production is almost worthless, but it can regain its worth as soon as production starts.

Germany's well organized pre-war foreign Trade will start once more to export and sell its productions and to import foreign valuable money which represents wealth.

America is now face to face with this dilemma, i.e., whether it is her duty to promote the interests of a dangerous competitor who possesses so many advantages owing to her monetary system, her labour conditions, her traditional experience and reputation, her hard-working people, her organization which in pre-war days controlled the world's Trade, and finally, her geographical situation. But the fact is that Germany is an asset for the Allies, being their debtor, and as the Allies in turn are in the position of debtors to the United States it follows that someone must help Germany to work and pay in order that the Allies may discharge their duties to America by means of the German payments to themselves. Hence, by not helping Germany, America hurts herself and ruins her Allies.

But from another point of view it is of vital necessity to America, and may be its duty, to help Germany now and control its trade.

America can furnish Germany with the raw materials and take payment in manufactured goods, thus giving immediate value to the German exchange.

The German export Trade possesses a complete organization with special buyers for each country, and its reputation abroad stands very high indeed.

Germany cannot remain indefinitely in its present state.

If to-day Russia is a danger for Europe, and later a danger for America, it is clear that Germany will serve as an intermediary to spread the contamination.

Is it seriously proposed to abandon a nation counting scores of millions of inhabitants to misery and starvation ?

America is protecting her own trade only for the moment, and it is certain that a clever rival and competitor, which is England, will get hold of the German Trade.

*

Immediately on the conclusion of the Armistice England started a large trade with Germany and the doors are now shut on America owing to the exchange.

The non-trading with Germany now is a negative protection for American trade.

Furthermore, America has a sacred duty to help now as amongst her best citizens are no less than twenty millions Germans or citizens of German origin who have contributed largely to America's wealth and glory.

*

Why is the German paper money which represents a certain wealth considerably lower in value than the French ?

Because of speculation.

Speculation begins the moment a nation loses its national self-respect through defeat in war.

War is a commercial struggle, a competition for the control of the international trading exchange.

Germany to-day resembles an honest trader on the verge of bankruptcy : it has lost international credit and confidence, but still possesses all the strongest vital elements in abundance.

Europe can never regain its trade equilibrium while Germany remains a wreck, with Austria in agony and Russia a source of international danger.

It is of the utmost importance for the common welfare of Europe that Germany shall have help to economic success.

Results will show that Germany once more started on the upward grade would effectually suppress the Russian danger and restore Austria.

If this war had, as its chief aim, the suppression of Prussian militarism with its basic principle, that might is right, and if the present American policy unwittingly results in the torturing of innocent people misled and deluded by a gang of autocratic despots, surely the German people to-day have every right to be helped ?

America's entry into the war was advertised as a moral crusade with a mission to make the world safe for democracy,

Moral principles are imposed by self-sacrifice and altruistic work, and not by force and brutality, which mean the negation of all humanitarian principles.

But if this war, while suppressing Prussian militarism has created a golden militarism, an around the gold autocracy with the same slogan Gold is Might and Right, dare we not suggest that this great struggle has been in

America at the moment guided by a few war millionaires has committed moral suicide, and the American people, alone among the nations of the earth in their ignorance of the words " hate " and " revenge," are now trying to employ the same principles of moral decadence for the annihilation of which the flower of their manhood offered their lives.

Those who love and esteem America must pray that the spirit of Roosevelt, of some real American patriot, may guide her and keep untarnished the glory of that gigantic struggle in which she poured out her blood and treasure for an ideal ; may purge her of those infamous trading gangs whose nefarious practices abroad have besmirched her fair name ; and may help her to stay with the Allies in their mission of healing and guarding the helpless, until the end.

III

If every American business man engaged in foreign trade were to write the story of his experiences, there would be a consensus of opinion that the ruin of American foreign Trade and shipping was entirely due to the policy of the Government.

The Armistice followed after a business deadlock which ruined thousands of exporters.

The newly created ambition for foreign Trade was gradually dying out.

*

* *

Before the Armistice when an export licence was granted, an import licence was required, and when this was obtained the shipping permission was indispensable. In the meantime, the export licence was expiring, or the credit or the import licence cancelled, or some new restriction or prohibition announced; thus was American Trade penalised.

American commerce was placed under the control of Foreign Allied Commissions, which granted permissions and privileges according to the financial and political standing of the exporting house.

We know how the clever British letter of assurance system, controlled by the British Admiralty, protected its own trade before that of others.

Abroad I met several American business men going on their business pilgrimage full of a touching faith in that mythical period of reconstruction so ably advertised by the American trade preparedness.

The most sceptical of business men seemed for the time imbued with a confidence inexplicable in its sincerity.

But unfortunately for them, the President had already prepared the catastrophe of the exchange.

I obtained permission from the United States Shipping Board during the war to build five wooden steamers under a foreign flag in connection with a shipbuilding company located in Seattle.

The price fixed by the United States Shipping Board was one hundred and sixty dollars per ton dead weight.

The European buyers confirmed the deal through the Bank B.B.B.

The President of the Shipbuilding Company was the shipbuilder himself, a plain and good hardworking carpenter.

Some Europeans connected with a Foreign High Commission induced him to join a broker to whom they were supposed to pass an official order for these vessels at one hundred and eighty dollars per ton.

The poor American worker was fooled to that extent he lost his opportunity for this one hundred and sixty dollars per ton deal, the Armistice surprised him with empty ways and the drop in the price of wooden vessels finished the balance.

I remember his innocent attitude and his plain answer to my just arguments.

You are not a Frenchman — he is.

Being a Frenchman at that time meant for the Americans a super-man !

* *

The huge plans set on foot for preparedness and Trade propaganda, with special Trade commissions, exhibitions, travellers' service, and similar things, have come to nought owing to the exchange.

America has much need of foreign Trade organization — her present prosperity is false.

The huge American productions must either secure a permanent outlet and a gradually increasing volume, or be restricted very seriously.

But America must not wait till the last moment.

* *

The Exchange now began to destroy business. At first there were rumours that the Exchange would be re-established.

Buyers were advised by their banks to wait.

America is here to help.

Wait !

But meanwhile the dollar went higher and higher. . . .

No patience, no nerves on either side.

Stubborness and mistrust which brought heavy losses to American and European private Trade.

No union between American banking and trading.

In Europe banking promotes Trade, which means credit.

In America trade creates banking, which means cash.

When an American bank is closely interested in some foreign business the results are disastrous.

American banks look at business from a different angle to that of the European banks.

Americans were spoiled by the excessive war profits — they learned the meaning of profits, but have yet to learn what losses mean.

Now they start to make their serious training in foreign Trade and finance, and if they find the effects of the exchange discouraging, the responsibility is their own or rather, their Government's.

Paris became for a period after the Armistice the European commercial centre.

The headquarters of the official commissions for the Peace Conference, and all the Trade commissions were located in Paris.

Business propositions poured in from all parts of the globe.

Germany was still closed.

Roumania was open for large business.

England, Canada, and Spain took advantage of the American situation and accepted all the transactions refused by America.

I succeeded, personally, in closing a deal for a large shipment of raw sugar for Galatz, to the value of one million two hundred and fifty thousand dollars, payable in dollars against shipping documents, and another with the Roumanian Government for a large quantity of shoes, payable in Roumanian Government Bonds, which deal, refused by my American bank, was taken up by a

Canadian bank, which later took another contract for six hundred thousand pairs.

Some other propositions, the one offering twentyfive per cent, cash, and the balance guaranteed bybanks, and deposit in Roumanian money and Government bonds or real estate mortgages, for permanent sound business, and the other based on similar terms for the establishment of a shipyard in Roumania, and supplies of all kinds of structural material and machinery in connection with a first-class old banking house, were unacceptable, being considered too complicated for American Trade mentality, but were taken by other European banking houses, and especially British.

Paris is not a city in which Americans can acquire the necessary training in foreign commerce, nor is it the place in which American officials can best study European conditions and opinions.

Paris is a city of pleasure.

We know from experience the kind of life which large numbers of Americans pass in Paris, located in luxurious hotels, surrounded by pleasures and distractions of all kinds.

An American news correspondent has placed on record his views that the American in Europe loses his morals and his ethics, and returns home a different being ; but in this context the word Europe must be replaced by Paris to be entirely correct.

Certain Americans, intoxicated in every sense by the luxury of their living, write their opinions about European Trade conditions !

* *

It must be admitted that the French people are not a business people, as the English and German people are. America must very soon decide her Trade policy. France has always been the victim of other nations in her Trade relations.

Before the war German Trade was at home in France — may be it will be so again.

The woman in France absorbs all the vitality and activity of the man, for whom pleasure is before business.

She is his only life ideal.

The French people are too refined for the Americans.

They do not understand business as the Americans understand it to be a reality.

IV

France before the war was exporting capital to every country, financing foreign enterprises from Panama to Alaska, from South America to Russia, from the Far East to the Near East.

French engineers and contractors contributed largely to the world's progress and civilization.

French contractors and capitalists were the pioneers of the world's engineering achievements, and in that capacity American Trade must study thoroughly the advantages to be gained by having as co-operator a nation which was, is, and will be, the leader of the most important engineering enterprises in the world.

America has many lessons to learn from Europe in the matter of her foreign Trade.

Without sacrifice and courage foreign Trade is impossible.

A French contracting company with which I was connected before the war, advanced over sixty million francs to Servia, for her second war against the Bulgars in the first Balkan War, being interested in large railroad contracts in Servia — this meant a real sacrifice on the part of the company — and the same company deposited a large sum as guarantee to the Bank of Creta for a railroad franchise, despite the unsettled conditions in Creta in 191 2, where revolutions were almost daily events.

Such acts show unusual business nerve and courage.

America's domestic Trade is well organized, but its foreign Trade is yet in its infancy.

Happily, America possesses healthy and strong youths in abundance, dowered with ambition and intelligence.

America stands unrivalled for her business system.

Foreigners in America are confronted with a stubborn resistance to their procrastinating business methods.

In America business men look for immediate results — quick returns.

For them the expressions " will be " or " has been " have no signification.

What is to be done at the actual moment is the only thing that matters.

The European who is wont to build airy speculative propositions will find himself suddenly brought to earth by the terse request of his American friend to come down to business.

A High European Emissary was telling me, they don't

give us any time to reflect or to decide : you have to answer

at once "yes " or " no."

Very few of the new American export houses are well-organized.

They are still very much behind compared with the German, French, or British houses.

In those American houses in which the managers and personnel are of German origin, the methods and organization are best.

In those large war concerns whose business grew to such proportions as a result of hostilities in Europe, a looseness of control was noticeable, and owing to want of business discipline heavy losses were made in foreign business.

Several exporters made very substantial profits in business due entirely to close personal control, but being obliged by the growth of their Trade to delegate their powers to others, soon found themselves, owing to serious losses, obliged to reduce their organization within the limits of personal control.

This shows that a well trained and reliable personnel for foreign Trade is rare in America.

A well-known American business man, adopted the system of having partners instead of managersthere are, ten or twelve partners closely interested.

The success of the firm is entirely due to this system, which was also successfully worked in France and Germany

I have known managers of large concerns who have taken propositions to rival concerns where they found a better salaried position.

The system, popularly termed " double-crossing," is the rule rather than the exception.

The personnel of the old German American houses, which passed by force into American hands, were replaced by non-experienced staffs of young managers.

These old houses owed their marked success to the excellence of their staffs, who were zealous, faithful, and above all, experienced in their duties.

I have known a doctor and a musician to have been promoted directors of a large exporting house ! Such are the changes brought about by war conditions. The prejudice and ill-will shown to the so-called American aliens developed to such an extent that injustice to the non-responsible American alien citizen was pushed to extremes in many instances, with the obvious intention of appropriating their businesses.

A certain class of American grafters became capitalists with their victims' money.

VI

Europe, and especially France, were over-advertised or falsely advertised by the official war propaganda in America.

France served as an inspiring ideal during the war for every war purpose, not only in America, but everywhere.

The American business men located in Europe during the war and accumulating easy money there, were contributing to dispel this ideal, and were preparing their countrymen for America's entry into the war, which was hailed with enthusiasm as a great money-making opportunity.

During the period immediately preceding America's entrance into the war, Governmental restrictions on both sides (British letters of assurance, import licences, export licences, special freight permission, special shipping permission, special insurance, etc.), and the establishment of the so-called Allied High Commissions rendered foreign business very difficult, if not impossible.

The Shipping Board Emergency Fleet Corporation and Chartering Committee controlled the entire shipping and ship-building business while the War Trade Board, Food Administration in connection with the Cable Censor — both shipping and merchandizing — controlled American business entirely.

Severe control from the Allied official commissions, and especially from the British, was imposed upon American foreign Trade.

The policy of the American Government towards its own Trade was disastrous, and its ill effects are now felt by the entire world, and especially by Europe, and later on America herself will feel them.

Every American business man at home or abroad considered Europe a commercial heaven.

The Armistice came and the expected continuance of this gold-mining enterprise stopped short, due to the American want of experience, miscalculations, exaggeration in political methods and plans, and to international schemes of such huge proportions, as to place them beyond the grasp of a European mentality tired after five years of warfare and eagerly awaiting a fresh display of that altruistic generosity promised by America and practised by her during the war.

America's failure to fulfil these hopes ; all these political misunderstandings, aggravated by the nonsigning of peace; the unsettled European situation and exchange, created a Europe hostile to everything American, and this hostility was cleverly fanned by political trouble-makers and speculators who, profiting by the inevitable mistakes made during the war, struggled by all means to keep American Trade entirely out of Europe, giving the European Trade to understand that American Trade must be considered only in the light of a present necessary evil (Europe being obliged to buy from America as at the moment she could not buy elsewhere) and to the American Trade that Europe is a worthless field for its business operations.

The American business man after the Armistice, confident in the political influence of America in Europe, certain of continuing his war profits, and influenced by the travelled American opinion in the belief that Europe, exhausted during the war, would need American assistance and protection more than ever, started his business trips around Europe, only to find himself face to face with a terrible reality created by his own Government, and an equal terrible reality in finding himself in the presence of a commercial atmosphere where business was difficult, if not impossible, and where the impatient American temperament found itself in collision with the super-easygoing European man of affairs.

American business men need training in patience if they want to be understood in European business, which is really a large asset for American Trade.

In Europe those Americans established in business during the war are slowly disappearing.

They have not the patience to stay and struggle during this critical period created by their own domestic politics to the utter ruin of American foreign Trade.

War enthusiasm with its nice moral phraseology, and the inspiring belief that America was about to control the world's trade, and shipping, have given place to depression, disappointment, disillusionment and mistrust. False ideals and illusions created during the war are disappearing. Misrepresentations and miscalculations are now evident.

This class of American population — practical business people representing all classes and categories of the American trade and shipping, who look at things only from the money-making standpoint — is now visiting Europe for business, and no one can blame them.

*

The new American generation must needs be educated, to specialize in European business where special training is indispensable.

European methods must be studied thoroughly if American Trade would accomplish what the European trade claims to have done, i.e., to have established a trading method with just and satisfactory results to buyer and seller,

*

It is a fact that with every transaction where one of the contracting parties takes advantage of the other, it ends in trouble for both, especially in foreign Trade.

Two rights have to be respected, the one of the seller, and the other the buyer, and both rights are of equal importance.

*

European buyers must come to a complete understanding with the American sellers.

This means confidence.

To-day commercial mistrust is the dividing spirit. Buyer or seller is asking too much.

It is just that European buyers should ask to be guaranteed for the proper handling of shipments, for deliveries, quality, packing, etc., when the American sellers are insisting upon cash payment or guaranteed payment.

The American sellers are not to be blamed for not granting any long credits to European buyers regardless of their financial standing, but they are to be blamed, and the American banks also, for not accepting transactions properly guaranteed by European banks.

There is an unjustifiable mistrust on the part of the American banking institutions toward the prominent European banking institutions, which represent the standard trade and wealth of each nation.

Many of these banks have been pioneers of the world's

finances, and promoters of the universal wealth.

*

But if we study impartially the contribution of the European buyers to the American trade, we find that while thousands of them were robbed by a certain class of American traders, a very limited number of European buyers have taken advantage of the present exchange conditions, all their American business having been based upon cash terms.

VII

France before the war was the most important world's financier next to England.

While Germany was the distributor of its own manufactured production, France was indirectly financing the foreign buyers of German goods. #

Despite five years' war France is now developing her own industries and trade, and progressing slowly. France has supported two wars, one as terrible as the other ; the one in the battlefields, the other at home. The French spirit with untiring efforts is struggling now to re-establish the devastated country.

Despite " dry " America, which deprived France of one of the biggest outlets for her wines, and despite France's producing luxuries, now heavily taxed in many countries, and in others prohibited, the French people, left alone, struggle, confident of themselves.

America can hardly find excuses for having abandoned France, which is the only contributor to-day to America's

power and wealth.

In May I visited the devastated section north of France with my American friend, Mr. Isidor Geldtrunk.

The villages were still as they were during the war — dugouts, trenches, and barbed wire, towns in ruins, without inhabitants, and large amounts of munitions spread about in the fields — a picture of desolation and misery which was most expressive, with numerous cemeteries situated near the roads and upon the hills. Everywhere the same picture.

The only inhabitants a few children and very old persons.

Everywhere ruined towns and villages,

*

Three months later I again visited the same places accompanied by another American friend, Mr. Terhune, It was the eve of All Saints' Day.

Many towns have regained their pre-war life. Fields are cleaned up.

People are working everywhere and there is life in every village and every town.

In a large cemetery we noticed French girls placing flowers even on German graves.

*

Belgian post-war efforts were crowned with real success. First, owing to her geographical situation, and to the comparatively good condition in which the Germans left her, believing in their power of annexation.

Belgian people started trading with the Scandinavian countries and Holland, where the exchange is good, buying from Germany at ridiculous prices owing to the low German exchange.

I travelled in Belgium with an official agent, who was on a visit to special German districts, where stolen machinery and material had been accumulated by the Germans. I learned that his mission was most successful, as the German civil population is so disgusted with the German war policy that they betray the whereabouts of any stolen foreign property.

VIII

As pre-war European foreign business was so selfcontained, and as Germany and England were the two chief exporting countries for manufactured goods, a business man engaged in foreign Trade in Europe was not considered educated from the commercial standpoint unless he had had a thorough practical training in the Trade conditions of England and Germany, as these countries held the keys of European Trade.

France was quite a German Trade territory.

Italy and the Near East were mere German commercial colonies, and English Trade depended on Germany for cheap quality goods, she herself holding the supremacy for high quality productions.

German domestic Trade methods and foreign Trade organisations set the standard for European Trade, and Germany accomplished commercially during the past few decades more than the rest of Europe in a century.

Commercial education in Germany was first of all practical and then theoretical.

While a business man in America limits his education to that required for a practical business career, a German business man does not neglect his literary education, and it is to this spirit which aims at perfection, that we owe to the Germans so many creations in system and methods modified and adapted by American Trade.

*

American Trade failed completely in its attempt to control European Trade by its Trust monopoly methods. On the other hand German Trade captured the world's markets by its skill and patience in adopting its methods to the individual requirements of each nation, and by studying the commercial psychology of its customers, and by avoiding the fatal mistake of trying to standardize its business system for all nations.

Take for example German Trade in the Near East, and especially in Greece, where I followed its development for several years.

I held a position in the National Bank of Greece ; the governor of which, at that time, was Mr. Stefan Streit, a gentleman of Bavarian origin.

Under his skilled direction the bank took its place amongst the best in Europe.

He contributed to the foundation of the Orient Bank and the Bank of Creta, and was the pioneer of the modern banking system in Greece.

*

German Trade was protected and promoted during the past fifty years in the Near East by means of the German Consular Service, and as a result, while commission houses representing other nationalities found it impossible to make any headway, German houses accumulated fortunes. The Germans always trusted their representation to their own countrymen, never to strangers.

The Germans have shown themselves to be hard workers and most reliable.

Their commercial education was excellent and their reputation of the highest.

German Trade was quite at home in the Near East, and was worked under a clever system, combining banking and merchandizing.

They created a system of spot deposits, and by this means cleaned out other foreign commission houses trying to do business for future deliveries.

The German manufacturers' agents and Consular Trade advisers knew each merchant in every town, knew his business, his moral and financial standing, and his business activities from the starting of his commercial career.

A travellers' service with exhibitions and samples completed the agents' work.

German manufacturers remembered their customers once or twice yearly sending them some insignificant present which appealed to the Oriental mind, and suggested a certain solicitude which was appreciated.

American Trade lost its splendid opportunities through want of educated and experienced representatives.

American foreign Trade, for unknown reasons, confined itself to France principally, with headquarters in Paris, Paris being in the American imagination (if such exists) an ideal capital, and every American business man on his European business mission felt bound to make a stay in Paris.

I met hundreds of American business men in Paris, most of them leading luxurious lives, and doing so cheaply, owing to the Exchange.

Almost everyone of them was tired out, physically and morally.

Their sound mentalities and happy dispositions were contaminated in an atmosphere of physical and moral degradation.

Women and wine, cabarets, cates and restaurants, good eating and drinking — these were their business impressions.

Almost every American business man leaving the States does so under the impression that the outside business world is Paris.

Rich new countries which are lacking in industries, and obliged to import everything owing to their extreme want, offer vast important fields for sound and permanent business.