The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1914-08-06
APPALLING RESULTS
| A EUROPEAN WAR
EXPLANATION OF FINANCIAL
EFFECTS UPON SECURITIES
AND INVESTMENTS.
(San Francisco Chronicle)

| San FTduclSCO SiIOHlCle)
A general European war at this
time would almost certainly, anc
surely, if long continued, have resul,s
which would be appalling.
We do not refer to the slaughter of
the battle field or the ravages OF dis
ease. They might easily be less than
in earlier periods, and, at amy rate,
depleted population quickly repro
duces itself. 1t seems brutal to write
in that way, but it is an economic
|fact-there is much that is brutal in
|economics-that the direct loss of life
lby war, even though it be of the fit
test, is not the cause of the greatest
misery inflicted by modern war
The burden of taxation, which re-
suits from the economic waste of war,
continued through successive genera
tions, causes more misery, and ult-
mately more loss of human life, than
all that occurs during the period of
hostilities. And when, as in most
European countries, the burden Of
present taxation is almost at the limit
of endurance, there is a possibility of
general reputation which would
break up the financial foundations Of
| the nations. To an extent of which
the multitude has not the slightest
comprehension, the livelihood of poor
| families depends on the continued
solvency of the great nations. And,
among these, the United States, and
possibly Russia, are the only nations
which are safe.
First Effect of War;
The first effect of great war is a
universal demand for money. The
ibelligerents offer great bond issues,
which patriotism inspires their people
to absorb. TO get money to buy ma
tional bonds, they Will sacrifice other
securities. That at once reduces their
price. Reduction of price impairs the
security Of loans upon the pledges of
such securities. That results in call
upon debtors for more margins or for
payment of the loans. That means
AlolC pei SCIdIIDllIS LII money,
Which still further reduces the price
Of bonds and impairs the margins of
more loans.
: OF course, patriotic desire to help
ones government by buying its bonds
is but one of many causes which in
duce selling in the face of war
scare. 1t is, in fact, probably the least
prominent cause. A general war in
terrupts a multitude of financial OPP
erations in many countries and Gre
ates demand for money.
Danger of Panic.
And probably the greatest of al.
causes is the fear of what may hap
pen. Whoever is in debt-and nearly
all business men are in debt-rushes
to get out of debt, if his margin of
safety is small, and their creditors
are, OF course, more eager than the
Debtors And, as in sucn cases, the
terror of one creates terror in others,
there is always danger of panic.
That there is such danger now in
Europe is shown blythe prompt clos
ing of the continental bourses. That
the public quotation of fall
ing prices, and, by so much, reduces
he scare. 1t also postpones settle
nents among members of those ex-
changes who are bound by its rules.
The first effect upon this country
IT great European war is necessarily
he Hering on our exchanges of Am
'rican securities of which enormous
Quantities are held in Europe, There
las been a good deal of quiet selling
or months past by European holders,
Who do not like our ways The war
care at once accelerated that move
nent. They will be bought at a price
nd the gold RENTED. 1t Is moving
ow.
Compensations Of War.
But war has it's economic compen.
atoms to neutral countries. A CEN
1ry ago the greatest benefit to us of
he Napoleonic wars was practical
Of the carrying trade on the
cas-. Ae we have not the ships, we
hall not get that now.
But war Is waste, and armies are
consumers of everything. A general
ar creates a demand for all kinds of
but especially for food
roducts, textiles and munitions OF
ar. Prices of commodities, therefore,
up, while prices OF securities go
own. And that continues until the
ovements equalize each other in \
eutral countries-that is, the profitr/
| the commodities which we sell to
e belligerents equal, and, in the end,
'ssibly exceed the losses on stocks
Id bonds.
With this general statement Of I'M
'rlying principles, our readers should
able to interpret the news from day
day and understand, for example,
ny the price Of wheat goes up while