even more.

As one of the primary results of the war, the wealth of the world has been redistributed. By the natural processes of wealth concentration, the United States has become very rich. Other nations in the long drain of war have become relatively poorer. Credit must be the instrument by which wealth accumulated in one place may in reality be used in another until gradually and by processes less violent than those of war, the wealth of the world will again assume the more natural distribution. The subject covers a very wide field of poltical and economic thought, but we purpose here to discuss only its economic phases.

Liabilities of Our Allies.

The direct and indirect costs of the war have been estimated at $260,000,000,000. There has been no catastrophe in the world's history which has even approached this war in the destruction of capital wealth. Every European belligerent is burdened with colossal indebtedness. England's national debt on March 31 of last year amounted to $37,000,000,000. The gross national debt of France is approximately $36,000,000,000; that of Italy about $12,600,000,000, and that of Belgium $2,600,000,000. These figures represent a per capita debt for England of $782, for France of $900, for Italy of $350, and for Belgium of $346. And this indebtedness, of course, does not include the damages and losses sustained by the people of these countries.

They are appalling figures, especially when considered in connection with the magnitude of the ruin wrought by the conflict, the industrial and financial chaos, the depleted man-power, the impaired morale of Europe. Certainly they offer convincing proof of the crying need for material assistance from the United States, the world's great reservoir of credit and raw materials.

Some Assets of Our Allies.

But let us consider briefly some of the assets of our Allies and their prospects for financial and economic rehabilitation.

The national wealth of Great Britain is estimated to be $120.000 000,000, and her national income at $15.500.000.000. More than $5.000.000.000 is due England for advances made to Allies and

the Dominions of the British Empire. In addition, England may still be able to count upon an "invisible credit balance" of around $1,500,000,000, as compared with $1,800,000,000 before the war, derived from her extensive investments abroad and the exceptional banking and shipping services which she rendered the world. It is estimated that English investors still own about $15,000,000,000 abroad, despite the heavy liquidations they were forced to make early in the war. Thus it is only in her actual trade that England finds her credit position seriously impaired. But it is significant to note that she has made rapid strides recently toward the regaining of markets temporarily closed to her during the war and that her exports are once more mounting.

France, it is true, has suffered grievously from the war. Her northern provinces, the richest in natural resources and in industrial development, have been ruined. But with the same heroic spirit which inspired the army of that country to determine at the Marne that "they shall not pass," the nation set about re-establishing its destroyed industries in the south of France, even while it fought for its very life and was bleeding white. It should be recalled also that the regaining of Alsace-Lorraine and the hold over the Saar Valley give France between 40,000,000 and 50,000,000 tons of coal a year and some 15,000,000 tons of iron ore, as well as largely increase her cereal production. These assets will play a very important part in the rehabilitation of France. And if France has increased her paper money by 30,000,000,000 francs during the war, we should not forget that the world has not yet ceased to marvel and admire French thrift, which enabled France to pay off the colossal indemnity imposed by the Germans at the conclusion of the FrancoPrussian war within three years. That national trait must be reckoned with in considering France's present financial situation.

Belgium's record of financial and industrial achievement in the past is her surest guaranty for the future. Although the recent destruction and dismantling of manufacturing plants, railways and equipment in the little kingdom is proving a serious handicap to Belgium now, it is becoming increasingly evident that with adequate assistance production generally may be resumed much more promptly than seemed possible only a few months A recent report by the Central Industrial Committee of Belgium, made after an exhaustive investigation, shows that in many industries which suffered complete or partial suspension during the war, production can be resumed as rapidly as raw materials are made available. Moreover, no tall production was suspended. of course. The coal mines, for example, generally speaking, were kept intact. The damage to glass

ago.

Attorney and Counsellor at Law

1552 Penobscot Bldg.,Detroit, Mich. Commercial Department fully equipped or aggressive handling of Collections and Bankruptcy Matters.

SPECIAL ATTENTION TO obate Law

Representation of non-resident heirs Searches for missing heirs and legatees Recovery of unclaimed funds and estates Trial of contested causes of any nature Taking of depositions

REFERENCES

NEW YORK-The National City Bank, 55 Wall st. Hon. Daniel F. Cohalan, Justice of the Supreme Court.

factories was slight, and only about 10 per cent of the flax, hemp and jute spindles were destroyed. In many essential lines the managing organizations were preserved and new ones effected with a view to hastening the process of rehabilitation after the liberation of the country. Chief Assets of Allies.

I have called attention to these assets of our principal Allies because they must be considered along with the liabilities. I have not mentioned the indemnities which the enemy must pay, because it seems to me that, regardless of the amount of such indemnities, and even if they were paid in full immediately, the chief assets of England, France, Italy and Belgium, as well as of our other Allies, exist within their own borders and within the people of those countries.

It is essential for us to remember that important fact, in view of the demands which are now and will increasingly be made upon us for the extension of credits to the peoples of Europe. It is evident that our aid will not be in the nature of charity-which our Allies would not accept, were we inclined to render it upon such a basis. It is the best guaranty that, while our service will be of a practical humanitarian character, our service will also be profitable, inevitably, directly and indirectly. Our Allies would accept aid only upon a strictly business basis.

It has been the good fortune as well as the duty of the United States in recent months to participate largely in the extension of credit to our Allies, and we stand today as one of the two premier creditor nations.

When peace has been definitely established, we will be called upon to continue that service by the extension of additional credits through private channels, with government co-operation and moral support. In the immediate future this is going to be our paramount duty and afford us, as well, as great opportunities to help as did the war itself.

We cannot fail to take advantage of this opportunity, nor can we shirk the responsibility which it involes; but it is not going to be an easy task, because in the last analysis, it must depend upon the support of public opinion in the United States. This support can be obtained only by careful education. In the immediate future and for present needs, we must extend credit abroad on a short-term basis, similar to that of the recent $50,000,000 Belgium credit. But, before the maturity of these short-term obligations, perhaps within a year, we must put

of the United States, and of the States of New York, Connecticut, Illinois and South Dakota.

Notary Public for the State of New York and Commissioner in New York for California, Connecticut, Illinois, Massachusetts, New Jersey, Ohio and Pennsylvania.

REFERENCES

HARTFORD-The Hartford - Connecticut Trust Co. Hon. William S. Case, Justice Supreme Court.

ourselves in position to extend long-term credits in a safe and substantial manner. A plan of organization for the accomplishment of this latter purpose is now under way in this country and in Europe.

The banks in the larger cities of the country have been, or soon will be, called together for the purpose of co-operating in the distribution of foreign securities whose maturities extend over considerable periods. In the countries abroad similar financial co-operation is now being organized to work with us here. In this work the members of your association can be of inestimable value in a very practical manner. The task is going to be greater and will demand the best talent in the country. It is going to require above all things confidence in human nature and in the unfailing ability of people to work out their salvation when favorable opportunities are afforded.

We are not unmindful of the fact that the situation abroad is not good, but it is not abnormal under the circumstances, and after years of war anything but a depleted situation would be abnormal. Furthermore, it is natural for all peoples to be optimists and workers and producers, and with the economy and care in living, which necessities of the hour have developed, and with the safe and sane help and co-operation of this country, they are bound to work out a satisfactory solution.

But we cannot rise to the occasion unless our domestic credit is sound, unless the factors which create that credit are functioning properly, and that means that business must be permitted to thrive and prosper. Our governmental authorities must recognize this as the paramount need of the hour.

Practicality Must Supplement Idealism.

There is no dearth of political idealism in the United States, nor lack of able spokesmen for our national morality. Only posterity, with the advantage of perspective, can properly appraise them; certainly, I shall not attempt to do so. But there has never been an occasion when practical, constructive, business leadership was at a higher premium in this country than at present.

If we are to keep pace with the accelerated movement of the new period, we cannot permit Lilliputian ideas to bind our industrial Gulliver. And that is what those who seek to return to prewar conditions and restraints are advocating.

We may expound our national idealism to the world with all the zeal of modern crusaders, but

| 518-816 Hammond Building

me:

unless we supplement it with practical efforts based upon the fundamental principle of helping other peoples to help themselves, our idealism will utterly fail of its purpose. And I contend that the best way to make such practical humanitarianism possible is to free business of its present and pre-war obstacles, for, if the war has taught us anything about economics, we have awakened to a realization that all nations are independent, that the prosperity of each is contingent upon the prosperity of the others, that productivity does not enrich one people or class alone, but all humanity as well. If this country, therefore, is permitted to utilize its industrial resources, strength and individual initiative in a measure commensurate with the demands of the hour, we will put at the disposal of the world one of the most efficacious of stabilizing forces.

Consequently, no Congress has faced more important tasks and graver responsibilities than those devolving upon the present one.

And the sooner it undertakes the solution of the vast problems now awaiting its consideration the better.

War never called for truer patriotism and more conscientious regard for the nation's welfare by Congress than are demanded by existing circumstances. There must be no partisan politics to obstruct our national, economical development. We are facing a new era in legislative duty and administrative service as well as in business, industry and finance.

There seems to be no doubt that one of the first duties which Congress must assume will be a revision of the whole range of war and income tax legislation-at least, as to the practical workings of those measures. It appears very clear, for instance, that there is much duplicate assessment under the Revenue Act of 1918, and the present income tax handicaps enterprise and penalizes success, with the inevitable result of retarding trade improvement.

Government Economy Imperative.

The government must awaken to the fact that we cannot continue to do peace business on a war-cost basis. Common sence, but rigid economy is imperatively needed. Business men today are learning the meaning of Benjamin Franklin's sage observation, "Gain may be temporary and uncertain but expense is constant and certain." And were he alive now he might amend his epigram by adding, "thanks to government extravagance and sociological experimentations." fact, we are discovering that the economic cost of peace is almost as heavy a burden as the economic loss of war.

In

Consequently, it would have been far more sensible and serviceable if the government had stabilized expenditures, under a proper budget, instead of vainly endeavoring to stabilize the

prices of commodities, for every unjustified and reckless expenditure by the government not only adds to the already heavy burdens of the taxpayer but also increases the cost of living and exacts a monetary tribute from those who can ill spare their earnings for a so-called "paternalistic" government to squander.

The fact that seven months after the signing of the armistice the war expenses of the United States have continued without abatement demands prompt and effective measures of economy. In April, the government's expenditures were approximately $1,420,000,000, as contracted with $1,190,000,000 in February. They were $1,096,000,000 in May.

The Railroad Deficit. There was certainly no justification for the Railroad Administration granting blanket increases of wages to its employes aggregating $900,000,000—and I advocate giving to labor all that it is justly entitled to-when the deficit of the railroads under government control was increasing daily at an alarming rate, and when the roads were unable to pay their material bills, That despite very substantial rate increases. certain classes of railroad employes were entitled to larger wages was undeniably true, but that the government proceeded upon an extravagant and unscientific basis in making general wage awards without due regard for specific cases is equally true.

And I respectfully invite your consideration of the estimate recently submitted to the House of Representatives by the Director-General of Railroads, which set forth that the government will require $1,200,000,000 to meet the railroad deficit for 1918 and to finance the requirements of the roads for 1919. In presenting this estimate, the Director-General called attention to the fact that the operating deficit of the railroads for 1918 amounted to more than $236,180,000, and that, I quote his own words, "$486,000,000 represents the aggregate loss to the government up to April 30,1919." What the loss may total before the roads are returned to their owners by the end of the current year, as President Wilson has announced will be done, is a matter of speculation which does not appeal pleasantly to the imagination of the already heavily burdened taxpayers.

Some indication of the prospect, however, was given by the April deficit of $58,000,000, and by the Director-General in another statement, in which he said: "There has not been included in the months of January, February and March (of this year the sum of approximately $6,000,000 per month for back pay on account of wage orders recently issued. These amounts of back pay will appear in the next few months, and, of course, will result in diminishing operating income for those months."