The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1921-10-10
THE BROKEN EQUILIBRIUM.

IN an ADDRESS DeIOre the american
Manufacturers Export association last
week, DR.. B. NJ. Anderson, economist
of the Chase National bank of New
York, set forth with remarkable clar-
ity the causes leading to what he
styled the broken equilibrium in the
economic situation of the world.
Before the war, said Doctor An
derson, taking the world as a whole,
goods were, by and large, produced in
right proportions. Supply and demand
were in a state of general equilibrium.
There was an ebb and flow of produce
ton and consumption; here and there
minor EMBELLISHMENTS occurred, but
on the whole there was fairly stable
balance. If a temporary excess Of
some kind Of commodity appeared. its
price went down: that checked its
production and increased it's consump-
ton. Labor was released from pro-
ducing it to go into other industries
where prices were higher and where
scarcities were greater, and the NAL
adjustment quickly disappeared. The
large general classes of goods, fin
ished manufactures, foods, raw ma
terials and such services as transport
tation were fairly we'll balanced and
| fairly well proportioned.
The war, he pointed out, has broken
this equilibrium. Europe used to be
the worlds great center for rnanufac-
turing and the worlds great market
for foods and raw materials. During
boom, Europe, no longer producing IN
| large quantity, continued to consume
| in great quantity, drawing in foods
and finished manufactures on a great
scale, tho ceasing to draw in anything
| like the normal amount of raw mater
! ials. With the growing inability of
the outside world, and particularly
the United States, to supply Europe
with goods on credit in view of the
| gigantic debt already piled up, great
disorder came. The situation was i'm
mensely complicated by the inability
| of the raw material countries, the
| United States India, South America
and other parts of the European
world, to dispose of their raw mater
ials. Unable to find an outlet in Eu-
rope, the raw materials of the world
were concentrated upon the United
States. We produced them here, ana
the outside world poured them in upon
us in unprecedented volume.
Our manufacturing capacity, ex-
panded tho it had been by the war,
was wholly inadequate to take care
of so great mass of raw materials,
and there came a great collapse IL
raw material prices. European re-
vival since the war has been more
manifest in agriculture than in manu-
| featuring, and in 1920 we exported far
! less of foods to Europe than we had
been exporting in the years inmedi-
ately preceding. The throwing back
on our domestic markets of a great
volume of food products broke the
| prices of foods also very violently.
With the break in price of foods and
raw materials, the buying power of
the producers of foods and raw mate
rails was so greatly curtailed that they
could not buy at prevailing prices any
thing like the volume of manufac-
tured goods which even the reduced
manufacturing capacity of the world
was turning out, and there came q
crisis for the manufacturer also.
The trouble, he held, was not, how
ever, overproduction. The world is
producing far less than it produced
before the war in the aggregate. The
trouble is maladjustment due to Eu-
ropes Withdrawal from her position
as the worlds great producer of man
ufactures and as the worlds great
market for foods and raw materials
"a really fundamental solution 81
the present business problems said
Doctor Anderson, therefore, must in
volve aiding Europe to get back upor
her feet and to resume her place al
the great manufacturing center
do not mean that 1914 conditions mus
be restored. It is probable that We
shall continue to devote a greater
proportion of our energies than before
the war to manufacturing and that we
shall absorb from the -Europea'
world a greater proportion of raw ma
terials than before the war. But We
cannot begin to work up all the raw
materials that the world is now pro
ducing. The raw material countries
with the exception of Russia, havt
been little injured by the war: many
Of them have been stimulated. Thu
great damage of the war has beer
done in the manufacturing centers
and the equilibrium is to be restored
by bringing about a revival of thos'
manufacturing centers."
The city of Boston. it is reported