Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1921-10-06
Faith in Economic
Reconstruction of
Europe by Big Banker

Europe by Big Banker
Los Angeles. Oct. 5-Hope Of Eu-
ropes complete economic reconstruc-
ton, judged by the lessons of his
tory. was expressed here today by
Alexander D. Noyes, financial editor
of the New York Times, in. an ad-
dress before the convention Of the
American Bankers Association. The
judgments of financiers and other
business men who have been predict
ing "a ruined Europe or a bank
rupt world" he said, were distorted
and not only misread economic his
tory but misunderstood 1.-The human
element in economic progress and ig-
nored certain facts in European
finance of this very year."
1.-THE country and it's banking in
terests know now, and very much to
their COST" said Mr.. Moves, "how
completely the whole situation was
misjudged in 1919, an illusion based
on the assumption that there was no
limit to the rise of prices and that an
enormously increased trade with Eu-
rope, Asia and South America could
be continued indefinitely on the basis
of those prices and of a preposterous
imitation of credit at American banks.
But if the business community was
totally wrong in it's view of the
worlds outlook when every one was
optimistic two years ago, how can
We be sure that the almost unquali-
fled pessimism that has prevailed
more recently has any better justi-
flcation?" The speaker said such
ill-judgment is characterized by alb
sence both of historical perspective
and insight into the forces which
make for economic progress.
Despite the fact that Germany and
Austria have been notorious sin
ners" in their unprecedented paper
currency imitation, indicating appar-
ent economic chaos, the speaker
pointed out that the United States.
France and other countries had
passed through similar postwar ex-
periences and had recovered.
TT is a strong perversity which has
blinded so many people to the fact
that these very states of ours, now in
the American union" declared the
speaker, were almost the first of all
to try the paper experiment of Ger
many and Poland and to repudiate
the paper when it had sunk to moth
ing. We know their subsequent his
tory under the sound money and the
sound government of the American
constitution. The 40.000.000,000 francs
of paper money issued by revolution
airy France was entirely repudiated,
yet France under the sound money
government of Napoleon, less than 10
years afterward became the most
powerful and prosperous nation Of
Europe. The real wealth of a nation
lies in its natural resources and the
energy of it's people. A nation can
not be economically ruined so long as
it continues to possess these re-
sources but the facts do not prove
that government can resort to re-
pudiation without FORGETTING it's right
to govern and they do not in the
least set a pattern whose imitation
great European nations such as Eng
land, France and Italy could consd-
err"
A very notable change began in
1921, Mr.. Moves said, when England
took the first steps to gain control
of it's war time currency notes. The
minimum of G36S,200000 outstand-
ing in December. 1920. he declared,
had been reduced to G316.000,000 or
nearly / 5 per cent. The paper money
issues of the Bank of France which
| in November, 1920 were 39,60O,0 100000
francs had been reduced $500. 900
francs within 10 months. Consider
ing how gradual the process of cur
rency contraction always had been in
the past, the speaker expressed the
opinion that it is "a very remarka bic
achievement"
Does anyone seriously suppose"
he asked, that if sponge were
passed over the paper obligations
of revolutionary Russia-nominally
valued now, 1 believe, in trillions-
and if the present group of fanatics
at Moscow were replaced by a sane
and intelligent government, Russia
would not be one of the great eco
nomic powers of the modern world ?"
Mr.. Noyes said that the vital ques-
ton today is 1.-The REIMBURSEMENT, the
rehabilitation and the economic re-
construction of those half dozen
European nations on whom fell the
full shock and strain of four years
conflict" He said that no more diff .
ficult and battling problem has been
presented in at least a century but
that the restoration of national
credit, the resumption of gold pay
ments and the bringing of interna-
tional exchange to normal basis
are possible of achievement Judged
by experiences of the past, he was
confident a correct solution would be
found
This is not by any means the first
time that economists have proved
that war could not be paid for" he
said. But the predictions have new
err heretofore come true; on the con-
trary, it is strange testimony of
history that after the period of re-
cuperation. longer or shorter as the
case might be. even the belligerent
nations turned out to have become
richer and economically more pow
erful than ever before, the worlds
trade larger than ever before and
prosperity and accumulated wealth
greater than ever before. In this 1
am not giving theories or arguments
but well-known facts with which ev-
cry one is familiar. He added:
These older prophecies of perma-
nent economic ruin rested on two
fallacies-first, that trade could re-
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