The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1921-09-11

THIS Is tho third Of a series Of
five articles on 1.-THE Economic
Outlook for Europe and America"
by J. NJ. Keynes, the noted British
author. He disciisses "The Depres-
,siom in Trade" The other t,ro ar
tiolss soiu appear IN sneeeeding Is
sues of The Sunday Washington
Times.
IAN TRANSLATION rights reservsd:
. Copy light by the author In the United
KinEdem. Canada and the unHee
IN HE war. affairs in Russia.
the economic decay Of Cen
tral Europe. have contributed
to the worlds impoverishmspt and
win hinder the recovery of our
standards Of life. But do not
think that these are the main ex-
plantations Of the recsnt trade do
preston.
Tho general movement Of the
material prosperity Of the world
may be up or down. and the war
may have brought to q pause q
long movement upwards. But su-
perimposed on this are the fluctua-
lions Of tie credit cycle.
What we have been suffering
from lately has been an exception
ally severe .cyciicai fluctuation." an
explanation which at least affords
this consolation. that the disease
is necessarily temporary.
The causes Of such fluctuations
are various and disputed. Like its
predecessors, the recent depression
has been OF complex origin. But q
bad season in Asia and the miscal-
culations Of merchants have played
the biggest part.
No doubt the war has been IN
directly responsible. because the
severity Of the crisis has been due
to the exceptional range Of miscaI-
cuiations. which the terrific fluctua-
tons In prices consequent on the
budgetary policies Of governments
have brought about. and ,,lso by
the inapplicabiiity Of prewar stand
Ids AZ a guide to what vas nor.
nal. These helped business to lose
its bearings. and to drift far out
Of its course.
CRISIS STARTED IN JAPAN.
II We look back eighteen months,
II Is obvious how greatly tho trou-
bles Of traders have been due. not
so much to the intrinsic situation
as to grave miscalculations about
II. Tho crisis commenced. not in
Europe. but In Japan. Thence It
spread to the United States. next
to England, and last Of all to con-
tinentai Europe. which has not, at
any time. experienced its full So
verify.
Big business In England was not
basing its plans In the spring Of
1920 on the expectation OF doing
q large trade with Turkey. Russia
and Central Europe-althoush this
particular characterization may have
played q rather larger part In the
United States. where the banks
have developed intelligence depart
ments which make q special point
Of keeping their GENTS misinform-
cd about European conditions.
What upset British business was
the sudden drying up Of the over.
seas markets, India, China, Aus
tralia, South Africa and South
Americs; and It was the collapse
OF the exchanges between London
and many Of these 7centers rather
than Of those between London and
the continent Of Europe that threw
out the calculations Of the bust
ness world
This fact Il 10 striking and %
little appreciated a. to deserve
illustration by figures. II we COM
pare February /, 1920. when the
boom was stu In full strength.
though drawing to an end. with
July /. 1921. we find that the
French and German exchanges on
London had actually improved at
the later date: that the dollar
value Of sterling had also improved
slightly; but that the value Of the
currencies Of India. China. Argen.
tine. Brazil and Chile in terms Of
British sterling had fallen by 81
per cent, 50 per cent, IS per cent.
50 per cent and 81 per cent re-
spectively.
Such movements are catastfo.
phic. Judged by the exchanges. II
Is these countries. not Europe.
which have been the storm centers
OF the trouble. There have been
times when remittance to London
both from South Africa (since
cured and Australia (still difficulty
was scarcely obtainable. The world
10 inter.relatcd and all quarters
play their part; but such figures
a. these deserve more emphasis
than they usually receive.