Evening star., 1932-10-05

depression began. The earthquake
started in Europe; the gold Of Europe
was not drained. 1t has increased in
total every year since the passage OF
the act and is right now l,500, ,00O, 900
greater than when the act was passed,
and the tariff is still on. 1t has been
my daily task to analyze and know the
forces which brought these calamities.
I have had to look them in the face.
They require far more penetration
than such as this assertions indicate.
The shocks which rocked these ma
tions came from profound depths;
their spread gave fearful blows to our
own system. finally eliminating last
october in what had they not been
courageously met with unprecedented
measures, would, because of our pc
culier situation. have brought us to
greater collapse than even other
countries.
Drained Us Of Gold.
The first effect Of these shocks on
us was from foreign dumping Of
American securities on our markets,
which demoralized prices upon our ex-
changes, foreign buying power stag
mated because of their internal paraly-
sis and this in turn stifled the markets
for our farm and factory products, in
creased our unemployment, and by
piling up our sllrpluSes demorallzed
our commodity prices.
The frantic restrictive measures on
exchanges and the abandonment Of
gold standards made it impossible for
American citizens to collect billions OF
the moneys due to US for goods which
our citizens had sold abroad, or short
term loans they had made to facili-
tate commerce. At the same time clti-
zens of those countries demanded pay
ment from our citizens of the moneys
due for goods they had sold to our
merchants and for securities they had
sold in our country.
Before the end, foreign countries
drained us Of nearly billion dollars
of gold and vast amount OF other
exchange.
Then we had also to meet an at
tack upon our own flank by some OF
our own people. who, becoming in
fected with world fear and panic,
banks and boarded it from the use of
our own people. to the amount Of ST.
500 100000. This brought its own
train of failures and bankruptcies.
Even worse many of our less patriotic
citizens started to export their money
to foreign countries for fear we should
be forced onto paper money basis.
All this cataclysm did not develop
at once; it came blow by blow; its
effect upon us grew steadily, our diff
cuities mounted higher day by day
This is no time to trace its effect
stage by stage. No statement of mine
could portray the full measure Of perils
which threatened us.
Three Invisible Periis.
Three of the great perils were in
visible except TO those who had the
responsibility Of dealing with the situa-
Iion.
The first of these perils was
the steady strangulation of credit
through the removal Of three billions
of gold and currency by foreign drains
and by boarding from the channels of
our commerce and business. And let
me remind you that credit is the life
blood of business. of prices and OF jobs.
Had the full consequences OF this ac-
tion been allowed to run their fun ex
tent it would have resulted. under our
system of currency and banking. in
the defiation Of credit anywhere from
20 to 25 billions, or the destruction OF
nearly half the immediate working
capital of the country. There would
have been almost a universal call for
payment of debt which would have
brought about universal bankruptcy, be-
cause property could not he converted
to cash, no matter what its value.
And there were other forces equally
dangerous. The tax income Of the
Federal Government is largely based
upon profits and income. AS these
profits and income disappeared the
Federal revenues fell by nearly one
half. and thus the very stability of the
Federal treasury was imperilcd. The
Government was compelled to borrow
enormous sums to pay current ex-
penses.
The third peril, which We escaped
only by the most drastic action was
that of being forced off the gold stand
ard I would Like to make clear to