T is well to speak of "depreciated currency" rather than "low exchange" in connection with the European countries, as "low exchange" gives an idea of being able to buy cheap, which is not the case generally. Before the war, the franc was twenty cents and the guilder forty cents, and no one spoke of the franc being lower than the guilder. It simply had a different value in gold and in purchasing power in the world's markets. Now, one speaks of the lira being "lower" than the franc; yet neither has any definite value in gold, the lira simply having less value in purchasing power than the franc, just as formerly the franc had less than the guilder.

What in general has caused the depreciation of currency? Simply because the governments, due to emergency needs, spent more money than they could or did raise by taxation. When a huge amount of money is borrowed and spent, naturally prices rise, which is only another way of saying money depreciates. In the case of the neutral countries, the money was borrowed and spent, not by their own governments, but by the warring governments. The same effect resulted, but although violent, was more temporary, as there were no huge debts and post-war expenses of government left to deal with, and the result was a collapse in prices and business, with appreciation of currency. This is true of Switzerland, Holland, and the Scandinavian countries, and England seems partly in this class, due to very heavy taxation and greater wealth. The debt of France is greater in francs than her entire pre-war wealth measured in the franc of that day, and she is now no richer than before the war. The total income of all capital would be needed to pay the income on this debt in gold. Naturally, it is and will be for a long time paid with francs of less value than formerly.

Prices and Exchange Rates
Again, it is idle to talk of this country

being swamped with imports from countries of depreciated currency if prices are no lower when measured in dollars, and the relation between prices and exchange rates is remarkably close. When prices fall, exchange goes up, and vice versa. Temporarily, differences may arise, but there is constant adjustment, and where exchange remains reasonably stable, one may be confident that prices are about the same, though of course particular types of merchandise are often cheaper in one country than another, especially if there is a tariff on that type. Imports are taken in exchange for exports, or for money owed. In the long run, a high tariff stops exports as well as imports, or makes it harder to pay debts, causing more goods and not less, to be needed to pay the debt. Of course, certain articles may be kept out and more of others taken in. Temporary conditions may cause violent fluctuations in imports and exports, as, for example, during and after the war we exported twenty billion dollars' worth of merchandise in return for stocks, bonds, and debts, and many exporters found to their sorrow that some debts were bad. It will be many years before we receive back what we sent out, but some day it will all come back with interest, disregarding unpaid debts and invisible imports (services received and money spent by travelers), and further investments and loans will only further postpone and increase our future imports, or result in loss.

Much is heard about balancing budgets. A balanced budget means that the government has stopped borrowing additional money and that the cause of currency depreciation has ceased. In France and Italy, although the budgets are not balanced, it would appear that currency depreciation had ceased, at least temporarily, but the governments must in the near future meet expenses from taxation if further depreciation is not to follow. The actions of the people by saving as individuals may well

counteract the action of the government for awhile, and other economic influences have temporary effects on prices.

Internal and External Debts

The debts of the nations are of two kinds, internal and external. The internal debts are payable in the currency of the country, and are in reality reduced by the amount that the currency has depreciated. In France and Italy they are so enormous, and would require such heavy taxation if paid in gold values, that this alone would seem to necessitate payment in paper currency, or in gold currency of a new parity for many years to come. The wealth of Great Britain is probably sufficient to make it practical to pay on the old gold standard, if once reached. Should wealth increase in the next few years to a considerable extent, these debts may not loom up so large. The external debts have two features not in common with the internal. First, they must be paid in gold, and cannot be lessened by the debtor nations. Second, they are increased in reality by every restriction on trade, such as embargoes and tariffs of other nations, because the means of payment is rendered more difficult or the taxes, at least in part, must be indirectly paid by the debtor government and yet are not deducted from the debt.

Living conditions in Western Europe have improved considerably since the close of the war, there being little evidence of any lack of proper food or clothing. Transportation is comfortable and reasonably cheap, and heat and light are plentiful. There is not, however, the appearance of wealth that is , so evident in this country. Automobiles are comparatively few, and most of the splurging, especially in Paris, is done by Ameri

cans.

Political and Business Conditions

Internal political conditions show very great improvement. There has been a reaction against Bolshevism, and trouble from sources of unrest seems to be on the wane. Also, the governments are gradually stopping the spending of borrowed money on doles and subsidies while taxing heavily, and are gradually nearing the point where both ends can meet, that is, expenses be met by taxation. This is emphatically not true of Germany.

Business, as here, has felt the reaction from inflation, and has experienced falling prices and falling wages, with the accompanying unemployment, in all countries, with exchange little depreciated. This is not so true in France or Italy, although the change

from war to peace and the aftermath of speculation has caused considerable business trouble. Germany again is in a class by herself, with constantly rising prices and wages. There are two factors that will hinder very materially any revival of business. One is tariffs and embargoes on exports and imports, the other the settlement of the German reparations and inter-allied war debts. European countries are not self-sustaining, but are dependent to an extent that is hard for us to realize on foreign trading. We have grown so accustomed to the blessings of free trade throughout the United States that it is hard to imagine the conditions that would exist if New England and New York were independent governments, with their own tariffs, language, and law. As a result, the harm that can be done the industry of one country by the laws of another is very considerable. One example may be of interest. Norway, a nation dependent largely on shipping and fishing, had very close trading relations with Spain and Portugal, importing wines, while exporting fish and rendering shipping facilities. She passed a prohibition law excluding Spanish wines. Spain, in retaliation, placed an embargo on Norwegian fish and raised docking charges on Norwegian shipping. The result was very serious for Norwegian business in general, the effect being felt in all lines of trade.

Of course, Europe has always had this condition, but it does seem as though far more restrictions of one sort or another were in existence than previous to the war, and real obstacles placed in the way of business at a time when, due to the general dislocation of trade, it is least able to stand further troubles. We ourselves, with our high emergency tariff and unknown permanent tariff, are a shining example of this type of restriction on the business of other nations.

German Reparations

The German reparations and inter-allied debts are and will be a source of great economic troubles and changing markets, especially when combined with tariffs, and are also a great source of ill feeling. Both present new features in economic relations between countries. Formerly the creditor nations of Europe, having less use for their surplus capital, exported this to the undeveloped nations of the new world resulting in the building of railroads, machinery, etc. The earnings of this capital were repaid in the form of raw materials produced largely by means of this capital, and the borrowing

nations received great benefits, in addition, in the aid given for the development of their natural resources. These debts are owed by nations who have received no permanent economic benefit for the money spent, and who have no great natural resources whose development can repay the money owed. It would seem that the result would be a lowering of the standard of living and payment by labor. However, this very lowering of the standard of living will make it harder to pay, will lessen purchases, and do harm to business in general. One other factor of importance is that many of the former loans were repaid by earnings of enterprises. These must be repaid by taxation, a more difficult and wasteful method.

How much Germany should be able to pay is anybody's guess. However, the payments are spread over a long period of years, and to be continued, must be paid from income derived from taxation and the funds obtained in payment for exports. The result would be that Germany must become a great manufacturing nation, exporting manufactured goods in hitherto unknown quantities to the nations of the world-she has no great undeveloped wealth to pay with. There are no signs of this. Germany has paid so far by selling paper marks by the billions to speculators all over the world, and the loss suffered by these speculators has been gain to Germany, and the proceeds used to pay. In addition, by continual purchase of foreign currency, she, has so lowered the external value of the mark below the internal that goods on hand are exported at a real value that they cannot be replaced at, and Germany is left so much the poorer. Both these means of payment must be nearly at an end. There seems no hope of paying by taxation, and it is likely the payments will cease in the not too-distant future. In this connection it may be well to point out that depreciating the currency in some respects resembles a capital tax on all savings in the form of debts, including bank accounts. By this standard, Germany has obtained 95 per cent. of all such savings, and there is little left to obtain by this means. The logical result would seem to be an impoverished country and a bankrupt government, so far as payment in any currency, but one they could print, was concerned.

The Inter-Allied Debt Problem

The inter-allied debt is a complicated question-Italy and France owing Great Britain large sums, and all three owing the United States large sums. Perhaps it is simplest

to consider our position. Our government is owed about eleven billion dollars, the larger part of which must be paid either directly or indirectly by France. Also, our individuals have bought six or seven billion dollars' additional securities, partly our own securities formerly held abroad, partly new foreign issues. To get an idea of the size of this, it may be well to remark that the interest alone will almost amount to about our average pre-war cost of government, including expenses of army and navy and pensions. So far, the interest on the private loans has been met by further borrowing. The interest on government loans has simply piled up. If we are to be paid, we must soon take payment in an excess of imports over exports. The economic position of France, in particular, has completely changed since before the war, and it is no small problem that the French have to face if their debts are to be met externally. They can be met only by exports in excess of imports on a very large scale, and that method is rendered even more difficult by tariffs of other nations.

Considering the moral side alone of these debts, it is safe to say that they arose on account of war expenditure, and at a time of high prices. There then arises the question whether we should accept payment for material used by allied soldiers which would have been used by our own troops had we been prepared to send troops when we first declared war, and second, whether we should accept payment at, say, twice the normal price.

No attempt has been made in this article to cover the situation, simply certain points that may be of interest have been dwelt on, and one must realize that the political and moral phases are of more importance than the economic. Europe needs a Russia with an honest government and a people who have the rights enjoyed by the people of other nations. She needs to see her government stop waste and meet their obligations from their income. She needs a flow of trade unrestricted by constantly changing laws and a better feeling between governments and classes.

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Plans are in progress for the organization of the Westwood Trust Company at Westwood, N. J., with a capital of $100,000.

The new Commercial Trust Company of Gary, Ind., has opened for business with a capital of $100,000, surplus, $10,000.

WILLIAM B. CARDOZO WILLIAM A. DUNCAN HENRY KING SMITH

SAMUEL SLOAN

TRADITIONS OF OLD NEW YORK LIFE INSURANCE & TRUST COMPANY WILL BE PRESERVED

Assurance is forthcoming from the executive management of the New York Life Insurance & Trust Company of New York, the first corporation in the United States to be incorporated with the words "trust company" in its original charter in 1830, that the policies which have kept this institution distinctive during its long career, will not be submerged as a result of the announced merger with the Bank of New York. As a matter of fact the consolidation of one of the pioneer trust companies in the country with the oldest bank in New York will serve to strengthen as well as to broaden the functions of the merged institution which will operate under the trust company's charter as The Bank of New York and Trust Company. The century old relations which have been perpetuated through succeeding generations of representatives on the boards of trustees will make for increased prestige. The clients of both institutions will find the same intimate atmosphere to which they have been accustomed.

The plan for amalgamation, to be ratified at special meetings for amalgamation of shareholders, call for the declaration by

each participating institution of a $500,000 stock dividend. The Bank of New York has $2,000,000 capital stock and each stockholder will receive one and one-quarter shares of stock in the new company for each share now held. Life Insurance & Trust Company, having a capital of $1,000,000, will similarly each receive one and onehalf shares.

Under the merger plan of Bank of New York and New York Life Insurance & Trust Company, the Bank of New York will forfeit its national charter. The new institution, as the Bank of New York & Trust Company, will operate under the special State charter of the trust company granted in 1830. The Clearing House number of the Bank of New York, No. 1, will be retained. To carry out the plan, a deposit agreement has been prepared, so that stockholders may deposit their stock with a committee, for transfer, and frequent stockholders' meetings will be unnecessary.

Ralph M. Johnson, formerly General Eastern Agent of the Chicago & Northwestern Railway, has been appointed assistant manager of the branch office at Madison avenue and Sixty-third street, which the company expects to open in September, and Owen H. Smith, has been appointed assistant secretary.

P

OSSIBLY in no other department of a bank does personality count quite as effectively as in the Trust Department and especially important is it in the organization stages of such a department. To build up a comprehensive, smooth-functioning rust Department, to secure the business in eight and constantly to increase the scope and service of such a department, to convince the bank's customers of their need of this service and to draw in new customers for the bank through the functions of trust business-this is a man's size job. Needless to say, your personnel, particularly your choice of a trust executive, is paramount.

The officers can direct customers to the trust features and persuade their personal friends of the need for such service, but it is the trust executive who must finally close the transaction and secure the name on the dotted line. He must be a judge of character and able to recognize types on sight and he must also be adaptable and capable of an immediate right-about-face in his method of approach. Patience, tolerance and a broad viewpoint are also essential in the building up of a successful Trust Departnent.

It is, after all, the human touch which vins friends and customers and a successful Trust Department must have a distinct personality. There is still a lot of human nature in the world and perhaps in no other connection is it so manifest as in the intimate association necessary to secure trust business. Many people will always regard a will as a death warrant, while a living trust spells to most, decrepitude and incompetency. Broadcast trust advertising is doing much to break down the barriers among the educated, but in most manufacturing cities trust business is by no means limited to that class. Much is being accomplished, in my opinion, by the nation-wide advertising campaign of the banks having fiduciary pow

ers, as projected by the Trust Company Division, American Bankers Association.

The Stanowskis, Cicihots, Ching Wings, etc., are just as good prospects for trust business, on a smaller scale, of course, as the heads of the corporations for which they work and much greater is their need for safe and enlightened service. The poor man's will needs just as careful handling as the rich, and the stranger within our gates requires even more diligent attention in the administering of his estate than the average American citizen. This is good business, too, for many a lucrative trust may be the outcome of trust literature sent to some un