Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-08-26

Reviews Forces overcome.
To have overcome this stupendous
crisis is not alone a tribute to the
courage of American. people, but a
proof of our resources A moment
in review of the magnitude of the
forces we have overcome should
strengthen our confidence for the
future and the steps we now propose.
You will reccllect that after a year
of worldwide depression We came
into the first quarter of 1881 with
strong evidences of our recuperation.
During those early months of 1881
the failure of banks decreased by 10
per cent from the previous quarter.
The boarding Of currency practically
disappeared. The signs of resump-
ton of industrial activity and en-
ployment gave us the right to hope
that the country was Fighting itself.
Then there came to us concentra-
ton of catastrophes from abroad
such as We have not experienced in
the whole Of our economic history.
The economic and political democrat
iZation in foreign countries, weak
ened by the great war and the
treaties. together with the general
depression itself, loosened host of
new forces of destruction.
The first evidence of the impend-
ing financial collapse abroad was the
difficulties of the largest bank of
Vienna in April year ago. In rapid
succession were the difficulties of the
National Banks of Austria, of Jugo-
slavia, and finally, of the Reichs-
bank, in the month Of May. The
general panic began in Germany in
June and finally eliminated in draS-
tic governmental DEGREES suspend
ing exchanges, closing of all banks
and accompanied by the failure of
important institutions. Similar Sus-
pensions took place in other i'm
portant areas in Central Europe. The
difficulties were further increased by
the revolution in Spain and revolu-
tons in Peru and other South Amer
lean countries, the latter adding
many further defaults upon foreign
obligations.
England Abandons Gold Basis.
On the 1st of August evidence of
distress in the Bank of England was
indicated by heavy borrowing from
abroad, further emphasized at the
end of August by the large foreign
loans by the British Government
in an effort to protect exchanges.
But the strain proved too great, and
the gold standard was abandoned by
England at the end of September,
followed in october and November
by similar action in Sweden, Nor
way, Denmark, Finland, Australia,
India and Egypt, with restrictions
upon exchange in many other coun-
tries, which equally disrupted inter-
national payments and foreign trade.
In September the conflict in the Far
East began, and was followed by the
suspension Of the gold standard in
Japan in December and the disturb
ing military operations of last Win
ter. During the early months of this
year we witnessed more revolutions
in smaller countries and further de-
faults upon their obligations
In even normal times any one Of
these many shocks to economic sta
bility would have seriously impaired
our economic life and created falls
OF prices and unemployment. The
effects upon us Of each of these in
VaSiOnS were instantaneous. Ameri-
can securities held abroad were
dumped upon our markets. The
prices of our stocks and bonds and
commodities were continuously I'M
dermined. Huge foreign deposits in
our banks were frantically with
drawn. Our own borrowers on COM
moditieS and on securities were
called upon for more margins. The
necessity of meeting these drains
brought pressure on every borrower
in America, whether it be bank or
banks customer, manufacturer or
a farmer, a home owner or a mer-
chant.
HOarding Increases.
Paralyzing fears spread into every
quarter Of our country. These fears
added fuel to the fire through Ma
tion-wide boarding of currency. This
boarding increased to $70,000,000 a
week at the time of the German COL
lapse, but stopped temporarily with
the German moratorium, but rose
to S150,000000 a week after the
failure in England. The demand
for goods Stacked over the whole
world and agricultural prices gave
way entirely. Unavoidable delays
and difficulties In legislative action
added to the fears and apprehen-
sions of our people. AS we look back
over the depression now we find
over $2,400, 100000 was withdrawn
from us by foreign nations and their
citizens, and total of 81 100000 900
of currency was at one time with
drawn by our own citizens from our
own banks.
You know and I know that this
foreign exchange, the gold shipped
abroad, the currency and gold hoard
ed in our own country, Is taken from
the base of the inverted pyramid of
our credit structure and translates
itself into strangulation of the vol
ume of credit from two to ten times
even these huge amounts. Let no
man believe that these are questions
which are of interest solely to big
business. They are the origins of
millions of human tragedies OF
losses, unemployment and distress.
The whole of this 18 months has
been period Of constant defense
and counter-attack against these in
vading forces. The German mora
forum, the German stand-stil
agreement, the advances of our
banks to the national banks OF for
eign countries, the creation Of the
National Credit Corporation, the Re
construction Finance Corporation,
the increased powers to the Fed
eral Reserve System. the balancing
OF the budget, the financial aids to
the Farm Loan Banks, and above
all, the unity and courage OF our
people. represent our incessant &C
ton in defense and counter-at-
tack.
Situation Greatly Changed.
Today that picture has greatly
changed. We can look with asSur-
ance upon the cessation OF foreign
Withdrawals from our country
simply because they have substan-
TALLY removed their holdings and
we have successfully accommodated
ourselves to it. Our strength has
proved equal to the shock although
with many casualties. Confidence
is returning. A return flow of gold
from abroad has begun. Europeans
are again investing in our markets.
With the large prevention OF bank
failures and with relief from for
eign pressure and its constantly re-
neWed fears, the domestic boarding
of ~,,rrapcv hos ceased and Is now