Great Britain, when the United States entered the war, pegged the pound sterling in New York at $4.76-7/16, which means that Great Britain through Morgan and Company, the agent of the Bank of England, engaged to buy all drafts on England payable in pounds sterling at $4.76-7/16 for each pound sterling on the face of such bills. This was accomplished by the United States Treasury furnishing the money to Great Britain against British bonds, which enabled Great Britain and British merchants to buy in the United States the goods she required without paying usurious rates of interest for such credits. Except for the backing of the United States Government the pound sterling would have been most seriously depreciated in the United States and in the entire world.

Great Britain, the wisest of all financial countries, thoroughly understood this problem and put the pound sterling within two per cent. of commercial par—for the purpose of protecting Great Britain against the gigantic loss due to an adverse international exchange. The United States must pursue the same policy and make it effective with other countries. She has no adequate organization by which it may be accomplished.

It might be said—why do not the great New York, Chicago and Boston banks take steps to protect the United States against this loss thro the depreciated dollar?

The answer is—It is none of their business.

The answer is—They handle these bills as commodities coming over their counter; they buy them and sell them at the market, and the market is fixed by persons who appraise the matter purely from a standpoint of profit, and commissions based on an estimate of implied risk. Banks buy Spanish pesetas and sell Spanish pesetas to other banks all over the world; they do not look at the matter from a public standpoint, and it is not to be imputed to them as a fault because they do not regard this question from a public point of view.

Since the war arose gigantic volumes of foreign securities have been placed on sale in the United States which serve to protect them against an adverse exchange in the United States.

By these means other nations have undertaken to protect themselves against an adverse balance of trade in the United States due to the great shipments of goods from the United States. A similar policy is necessary for the United States to protect itself in turn.

It will thus be seen that the United States has loaned its Allies five thousand, five hundred and nineteen millions, and that there have been floated in the United States in addition gigantic volumes of securities of other nations, amounting probably to a still larger sum. In addition to this we have bought from Europe and paid for several billion dollars of American securities held in Europe.

We have also met the cost of conducting the expense of the United States in preparing for war on Germany and Austria.