The Washington herald., 1914-10-16
Financial Effect Of the War.
ARTICLE L

.
The great disturbance Of business in our country.
as result of the European war, naturally provoles
thought as to what win be the permanent effect Of
the war upon our.ndustries or to speak more pre-
ciseiy as to the situation in which we shall find
selves when the war ends, both as regards existing
conditions and as concerns the outlook for the future
1t is needless to say that Of complicated ques
tions are presented here and that We cannot discuss
them adequately or answer them with amy dehniteness
in single article
Every one knows what has been the historical and
traditional effect ofwar upon business in the world
considered as a whole War causes an exhaustion of
wealth or capital When the storm is over there is
in order to replensh capital, movement which often
takes place with more or less of a rush. This re-
plenshng or recuperating effort is the second eco
nomic phase of war; the first phase being the process
of destruction that previously occurred. The third
phase has been not infrequently, business collapse
following the period of replenishing boom These
three periods have often been spread lengths OF
time reaching several decades For practical purposes
50 far as the interests of our country concerned
it will only be necessary to think of what is likely
to happen in the two three years Immediately fol-
lowing the cessation of the present war.
II must be considered, FIRST that our people will
profit eventually and to no small extent by the
MIXING which was in progress here for several years
before the war began. 1t is the judgment of our
best economists that by the end of 1919 the United
States had pretty nearly recovered from the panic
Of 1907, and that had Europe remained at peace an
era of prosperity would have set in here As it was
the Balkan war started years ago, and from that
time until the present the international business world
has been convulsed by a European upset-an upset
that really began with the Moroccan embrogiio in
IoII since it was then that the disposition of Ger
many to make trouble in international affairs became
evident. The history of American hnance since the
fall of 1911 has been principally that of the influence
within our borders of European liquidation We have
had our own special troubles to bother US, but our
great adversely has been the continued selling OF
securities here by European holders who were pre-
pairing instnctvely, perhaps rather than deliberately
for the titanic struggle that is now going on.
1t is easy enough to see this now but it was not
so easy before the European war actually broke out
When the war does end we shall find American busi-
ness affairs purged as they never have been before
We shall find nation of 100000 energetic and
enterprising people who have been saving money and
putting brake upon their wheels of industry for the
better part of ten years. There ought to be- almost
inevitably, great starting up again of these wheels
for peculiar and individual to the people Of
the United States
Again there will be quietus put for the first
time in several generations upon the quanttative
theory of money which has vexed the business peaeN
of the United States race of economic teachers
and preachers has grown up here which has ncessant
ly advocated the false doctrine and converted to it
hundreds of thousands of people who think vaguely
and loosely on these matters that the wealth of the
world and prices of stocks commodities, and every
thing else depend upon the quantity of gold IN cir
cuIation in the world or in any particular country
that may be singled out With the end Of the it
will be apparent to everybody that other factors exert
greater influence upon capital interest rates. and
commodity prices than the quantity of gold that is
turned out anywhere, and that these other factors
at all times the permanent and enduring influences
upon prices and values. This enlightenment will be
great blessing.
The rush to replenish capital to re-engage in in
dustry and to re-enter business in general will ne
cessitate, of course, enlarged demand for money
Therefore, of the first effects of the is likely
be continuance of high rates. 1t is well that this
should be So because such an advance in the price of
financial accommodation will limit accommodation to
those whose needs for it are urgent. This is only
another way of stating that vast stimulus will be
given to pretty nearly all forms of productive in
dustry in our country, as well as in Europe; and
corollary proposition is that for some time the home
industries of the United States will not have to feel
the competition of Europe, they felt it in years
preceding. To a certain extent also, the foreign
markets which France, Germany, and England form
ery enjoyed will be lost to them and will be trans
the degree to which this opportunity will profit US
must obviously depend upon our own energy and
foresight
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