Most of the strange and unprecedented phenomena which we have witnessed in the last month, in rapid succession, are due to this pressing necessity of the belligerent peoples to cash in now and trust to good fortune to pay later.  As soon as the war became even probable Europe tried to cash in on our securities.  The pressure for our gold pushed it toward Europe faster than it could move.  Exchange jumped to the gold-shipping point of $4.89 per pound sterling, and did not stop.  In some cases it reached $7.  This was partly due to the desire to get our gold and bolster up a credit structure, tottering before the deadly blow of war; but it was also partly due to the need of ready money for supplies of all kinds.  This need applies not only to the Governments, but to the individual people.  To obtain this ready money they threw back on us the securities they had purchased of us in former years.  They wanted us to take back these titles to future income and give them instead titles to present income.  Had they secured our gold their next step would have been to spend part of it for supplies, and this would have caused any foreign dealers to whom they applied to place orders with us.  The gold then might have turned the exchanges and have been brought back to us in return for our wheat and other products.

This double transaction is in essence one—­a barter of present income in the form of our wheat to Europe for future income in the form of investment securities.  It was interfered with by the refusal of the insurance companies to insure the gold and by the closing of Stock Exchanges against the inundating flood of securities.  The first difficulty, as to transporting gold, has been largely removed by arranging for drafts against stocks of it kept on both sides of the Atlantic.  This will save the need of sending it on risky voyages back and forth, and any final net balances can be liquidated after the war.  The second obstacle, the closure of the Stock Exchanges, is more formidable, but cannot completely or permanently prevent the transactions which so many people on both sides are anxious to consummate.  Curb markets and limited cash sales on the Exchanges themselves are doing some of this business, and, sooner or later, much more will be done, whether the Exchanges are open or not.  Europe needs our wheat and cannot pay for it except with securities, partly because her own industry is paralyzed, partly because ocean transportation is difficult.

What Dumping Securities Means.

Few people seem to realize that the dumping of securities on our shores and the efforts of foreign Governments, such as France and Switzerland, to borrow money in our markets are at the bottom very much the same thing.  They are simply two forms of securing present supplies from America in return for future supplies, the dividends and interest on securities from Europe.