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Page:Popular Science Monthly Volume 86.djvu/369

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THREE years ago it would have been a comparatively simple matter to address you upon the foreign trade of the United States and how best to promote it, the topic named in your secretary’s courteous invitation. But a change came with the Balkan war and the resulting strained financial conditions, accumulation of public debts, private hoarding of money, and curtailing of loans in fear of a general European catastrophe. One of the prominent business men of Europe wrote me at that time that we might look for a great war, involving most of the European continent, about 1914, and he added that he was preparing for it. Well, his war has come, the most inexcusably diabolical that has cursed the world since the creation, involving the heaviest loss of life and of property. European statisticians estimate the average daily cost of it, including property and trade destroyed, from fifty to seventy millions of dollars, and the killed and wounded at from twenty to thirty thousand a day.

The nations now are so closely linked together that our hemisphere has already had to bear a portion of this heavy cost, and more yet awaits it, but our yoke will be easy and burden light compared with the crushing weight that has fallen upon Europe. Our country is on the whole happily situated compared with any of the warring nations, but when it is considered that three fourths of our exports had been taken by the nations now at war, and that they had financed most of the other fourth, it will readily be seen why our export trade is crippled, except in articles needed for war purposes.

At the outbreak of the war our indebtedness to Europe, mainly for loans to aid our railroads, amounted to over five thousand million dollars, several hundred millions of it falling due within four months. Thanks to the Federal Reserve Act and our improved currency system, which came at just the right moment, even as a godsend, to restore confidence, we were saved from the throes of a great panic. The Stock Exchange remained closed, fearing a large unloading of securities from Europe, but there never was any real danger of that. Our friends there felt that their money was safer when invested in this country than anywhere else.

That the causes of financial crises are largely psychological is almost a truism, so abundant are the proofs of it shown in every business panic; and even, as at present, without a panic. For instance, people are jubilant over the New York bank statement of over a hundred millions in excess of legal requirements on the 18 per cent. basis, when under the previous 25 per cent. basis the same reserve would be some millions