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HAVE THE WARRING POWERS FINANCIAL
RESOURCES TO KEEP ON FIGHTING?
BY ROGER W. BABSON
(Banker and statistfcian and student
of international economies.)
In nearly every war in modern his
tory the banker has held a position
second to none. Not only is it a
problem for nations at war to pay
off huge debts after the war is over,
but greatest of all is the problem of
RAISING, at the moment, the vast
sums which are necessary to carry
the contest to a successful finish.
When we reflect that the cost of
the present war is over $20,000,000
every day a cost more than four
times that of the Russo-Japanese
war or double the Franco-Prussian
war and that if it continues for only
nine months the total cost will equal
the civil war, which last four years,
we may well ask, How is this pro
digious sum to be raised, and, most
important of all, which side will be
able to pay the longest?
The European nations have real
ized the importance of this question
and have been making tremendous
efforts to strengthen their positions.
The United States, moreover, has
been a heavy contributor to this
preparations. Large shipments of
gold have been taken from the coun
try during the past year, much of
which has cost the importers dearly.
This gold, supposedly, was placed in
the respective government banks.
While England's bank reserves are
comparatively low, she has a great
source of supply in her South African
mines and other investments abroad.
Her foreign trade and industries are
but very little impaired. Little by
little the financial strain in this coun
try is easing, so that before long she
may be able to realize on her vast
holdings of American securities, or,
at all events, they can be turned into
food and many other necessities for
carrying on the war. Moreover, her
.colonies, notably Canada and India,
would stand between their mother
country and actual want.
While not so fortunately situated.
France is still in a strong financial
position. That France was not
caught napping is evidenced by the
enormous gold reserves which she
has built up and which alone are
now more than double those of Ger
many. French industry, to be sure,
has suffered severely, and her for
eign trade has never amounted to
much; but her people, like the Eng
lish, have vast sums invested in for
eign securities, which may soon be
used to purchase foodstuffs and oth
er necessities of life. Moreover, the
sums of gold which have been hoard-'
ed by the French people ever since
the money scare caused by the Bal
kan crisis have excited world-wide
comment. Certainly, in View of these
facts, a money famine in France can
not soon be expected.
Russia has followed much the same
plan as France in her war prepara
tions, namely, she has planned for a
long "rainy day" and has piled up
gold reserves which nearly equal
those of the French. Certainly, the
enormous army which she has in the
field is a tremendous expense, but
there is very little danger of the
fighting being carried otno Russian
soil, so that she, like England, has
a great advantage in this respect.
Her country, moreover, is so large
that in only a small section is indus
try greatly affected, and her great
coal mines and oil wells are a con
tinuous source of wealth. These fac
fighting being carried onto Russian
is not so far inferior to her allies
in financial resources as we are led
But what about the Germans?
Certainly it is not consistent with
their wonderfully scientific prepara-
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