Evening star., 1932-08-07

De COilSlQGIeO d COllStqucIlCG VI SOll-
ditions within the United States, Of
overexpansion, including overspecu-
lation, among our own people, accen-
tuated by the drought of the Summer
of 1880 From that we were in the
way of recovering when, in the Spring
| Of 1881, series Of shocks from Europe
/ began, first with the collapse of Aus
trian banks, then with the crisis in
Germany in June. 1881. and finally
with one of the most disturbing events
| in all financial history, the fall of the
British pound in September last.
From all that we are now completely
/ free Nothing further from Europe can
again seriously set us back. Moth
| ing like that is now likely to happen
| in Europe, and even If it should It
could have no effect on us. We are
free from shock from Europe for the
best of all reasons that We have paid
Europe aI the debts due from us
Some time ago we Americans owed
Europeans balance lin short-term
obligationsj of $3000000 900. To that
extent we were in the position of a
man owing notes at the bank. Europe
fell into the state of mind Of panicky
banker and started to collect.
Europe demanded, and took. gold
from us in large quantities. Europe
sold American securities, and we were
obliged to absorb them, with conse-
quent low prices on our markets. Eu-
rope, feeding on its own fears, began
to think the American dollar might
go the way of the British pound and
sold the dollar short" in large guam
titles. All that we we're obliged to
withstand. That vas when, on June l,
President Hoover went before Congress
to expedite actions which should, as
he said, assure the integrity of the
dollar. Congress acted fairly promptly.
Storm Is Passed.
All that storm from Europe we with
stood. We withstood it by paying
Europe substantially all the three bill
; lions we owed her. America is now in
the position of a man who has paid
of the nervous banker. From that
source we need have no anxieties.
Europe can ask us for no more gold
. because we owe her none-actually
Europe, recovering from her panic
fears, is now shipping gold to US.
Europe can throw no more American
securities on our markets, because she
had already thrown all that were for
sale-here again Europe is now buying
our securities.
With Europe paid of we are now
free to resume the recovery that was
; already beginning in the Spring of 1881
when the shocks from Europe began.
We must begin now, Of course, from a
lower level than where we then were.
All that is said here is that we seem
free from any further shocks that any
body, however vatchful, Is able to see,
! We are not subject to any from abroad.
! for the reason given. We are freed from
! the danger OF SHOCKS AT nome Dy Cne re
construction Finance Corporation. For
that matter, our possible domestic
shocks are behind us. Dribbling bank
! rlptcies of businesses there will be here
: and there, possibly some considerable in
size But no more Of the sort Of shock
that would set us deeper in depression.
! To say all that is, of course, far from
! saying that boom times are coming
! right away. After such an experience,
after such a devastating national f1nan-
. cial sickness, it is hard to conceive
! that our recovery can be rapid.
What is needed now is confidence
not confidence that 1888 is going to be
the duplicate of 1929, but confidence
; that the worst IS over, that men can
r begin to buy and sell and trade ana
7 hire and manufacture with assurance
: that there will be no more shocks.
S There is plenty of material for pros
perity in the United States, plenty OF
[ buying power Many men, If they will
: examine their own state of mind. viii
find that their hesitancy about buying
just now is due. not so much to fear
! about the present as to fear about the
D future. What they fear is that next
! year their incomes may be even less
than now.
If the whole of the people could get
! rid of that fear at once, we should
have a very different state of business
in the United States. There is an i'm
mense accumulation Of need to buy.
. Steel manufacturing is going on at
! rate so low that, as it has been put,
! ! it is not equal to the destruction by
! rust. Automobiles for three years past
have been in process Of wearing out az
. ! a rate about twice the rate OF new
manufacture. Sooner or later that VOID
will be filed up. Sometime in the
! future we shall again have volume OF
,, business as great as in 1928.
World Trade Needed.
What is said here is not meant TO go
too far. We can see the immense Volo
of untitled demand, of needed renewal
! within our own country. On that we
! can count, ard it is a good deal. 1t Is
! enough to account, sooner or later, for
. a fair-sized boom. But attainment OF
: our real capacity, achievement OF per-
, manent new growth and state OF busi-
ness higher than ever before, must await
normal condition in international
trade. That may be a considerable time
in coming.
, BY the series of business storms that
! have taken place in Europe, Asia, South
America and elsewhere, extremely ser1-
GUS impediments to international trade
have been created. The changes in the
, purchasing value Of many currencteS are
alone enough to constitute dams in the
channels of trade. The debts due our
Government from European govern
ments are an obstacle. The tariffs which
| one scared country after another have
set up will make normal international
: trade impossible so long as they last.
The overcoming of these obstacles will
take long time, and until they are
Strengthened out the United States and
, every other country will fall short Of
its full potential prosperity.
There have been FERROUS lesson
this depression that she country shoLLsS
take to heart and LONG remember. Some
things have happened that should never
! be repeated. The wave of failures Of
, banks has been unforgivable. The
| writer Of this article set out, some little
time ago, to find why it Is that we
have bank failures in America, whereas
nations like Great Britain and the
Scandinavian nations can go through
experiences as serious ours with no
bank closing and no depositor suffering
loss. The answer, very prompt and
definite, was given by a high financial
Official Of the Government.
The answer lies in characteristic of
our form of Government With us
banks can be chartered by either the
Federal Government or by the State
governments The banks have two pos
sible masters, and they play of one
against the other If the Federal Gov
} ernment sets ouS o. make laws and rules
so strict that no bank can fail, the
bank says, In effect, VERY well, we
won't stand for that; we win get our