She must borrow. And in one way and another she will satisfy
this necessity by borrowing in the United States.
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.
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