The inquiries which I have made here about financial conditions disclose an international situation which is most alarming to the financial and industrial outlook of the United States.  England has not only to pay her own war bills, but is obliged to finance her Allies as well.  Up to the present time she has done these tasks out of her own capital.  But she cannot continue her present extensive purchases in the United States without shipping gold as payment for them, and there are two reasons why she cannot make large shipments of gold.  In the first place, both England and France must keep the larger part of the gold they have to maintain issues of their paper at par; and, in the second place, the German U-boat has made the shipping of gold a dangerous procedure even if they had it to ship.  There is therefore a pressing danger that the Franco-American and Anglo-American exchange will be greatly disturbed; the inevitable consequence will be that orders by all the Allied Governments will be reduced to the lowest possible amount and that trans-Atlantic trade will practically come to an end.  The result of such a stoppage will be a panic in the United States.  The world will therefore be divided into two hemispheres, one of them, our own, will have the gold and the commodities; the other, Great Britain and Europe, will need these commodities, but it will have no money with which to pay for them.  Moreover, it will have practically no commodities of its own to exchange for them.  The financial and commercial result will be almost as bad for the United States as for Europe.  We shall soon reach this condition unless we take quick action to prevent it.  Great Britain and France must have a credit in the United States which will be large enough to prevent the collapse of world trade and the whole financial structure of Europe.

If the United States declare war against Germany, the greatest help we could give Great Britain and its Allies would be such a credit.  If we should adopt this policy, an excellent plan would be for our Government to make a large investment in a Franco-British loan.  Another plan would be to guarantee such a loan.  A great advantage would be that all the money would be kept in the United States.  We could keep on with our trade and increase it, till the war ends, and after the war Europe would purchase food and an enormous supply of materials with which to reequip her peace industries.  We should thus reap the profit of an uninterrupted and perhaps an enlarging trade over a number of years and we should hold their securities in payment.

     On the other hand, if we keep nearly all the gold and Europe cannot
     pay for reestablishing its economic life, there may be a world-wide
     panic for an indefinite period.