Evening star., 1932-01-03
ECONOMIC UNREST
TRACED TO LOSSES
FROM WORLD WAR
Other Causes for UnsettIe-
ment in Trade Given by
Economist.
COST OF CONFLICT PUT
AT 80 BILLION DOLLARS
Continuance of Rivalries Among
Nations Has Retarded Recov-
cry in Business.
BY DIR. MAX WINKLER.

BY DIR. MAX WINKLER.
Special Dispatch to The Star.
NEW YORK, January Economic
phenomenas do not always lend them
selves to reliable diagnosis. The num-
ber of intangible elements is usually too
great to justify ones implicit faith in
prophecies, irrespective of the repute
of the prophet.
The remedies prescribed may, there
fore. prove beneficial or futile. They
Will-except by pure accident-in all
probability prove of little or no value
If they are based solely upon the va
rious mechanical devices and imple-
ments manufactured in the countless
economic labor ratories and workshops
An honest economist can, therefore,
do nothing except state what has been
and what, in his opinion, continues to
be wrong, and suggest that inaSmuch
as similar occurrences have been over
come on previous occasions, the dis
turbances of today will also be sur
mounted. Chief among the causes
real and imaginary-of the present
economic unrest, one finds the fol-
lowing:
Losses Resulting From War.
According to careful estimates pre-
pared by an American economist, the
war cost over $50, 900, 100000, gold. To
grasp the significance of this sum, we
need but point out that 1t represents
Is per cent Of the total wealth OF the
United States. Although this huge sum
was consumed within the relatively
short period of four years, it may take
decades before the actual damage is
made good, to say nothing OF the spir-
itual and moral damage, which Is ir-
reparable.
Major catsstrophies have in the past
resulted in the creation of large debts,
which those involved were obliged to
assume toward their neighbors. In
other words, the vanquished was con-
demned to indemnify the victor. To
the defeated, however, indemnity was
tantamount to tribute, which few ma
tions are willing to discharge. AS re-
CARDS the victor, large payments often
make for excessive speculation, reck-
less spending and inexcusable extrava-
gance.
Continuance of rivalrieS and hatreds
among nations, with the resulting lack
of confidence in each other, is ap-
peased by huge military expenditure.
Even the United States, avowedly a
peaceful and peace-loVing nation,
spends a very considerable part of her
total revenue for the Army and Navy.
That such expenditure by the United
States, as we'll as by the rest of the
world, constitutes an objectionable eco
nomic waste, is manifest. Disarma-
ment conferences are held regularly,
and the desirability of disarming is
freely admitted. Each nation, however,
expects the other to lead, and another
conference is the inevitable result.
High Tariffs.
The war has resulted in the estab-
liShment of large number of new
states and "StateletS" on the European
continent.
Each of these new creations, many of
which have been made independent
long before they were ready for such
step, has its own ambitions and de-
sires. 1t aims at economic and finan-
cial independence, having already been
given political independence by the
treaties of Versailles, st. Germain,
Neuilly, SevreS, etc.
We need only recall the Austro-Hun-
garian monarchy, which, prior to the
war, constituted a rather perfect eco
nomic unit, even though. politically, the
dual monarchy was distinctly unstable.
BY virtue" Of the provisions of the
treaty of st. Germain-en-Laye, the
country was divided into countless in
dependent units. Whatever little was
left was also condemned to independ-
ence. To aggravate an already difficult
situation. the most powerful creditor
nations enacted most eXtravagant tariff
laWS-a policy which is being emulated
by other nations TO a greater or lesser
degree.
Commercial history is replete with
instances to the effect that low tariffs
or even free trade need not necessarily
impair or destroy the economic self
sutf1ciency of nations. Genuine COM
petition is beneficial, is conducive to
greater progress, and is, in consequence,
not to be feared. Artificially-
competition, on the other hand. Is ad-
mittedly a serious cause of market dis
organization, and often leads to con-
hlcts between nations.
Unsettled Affairs.
Examination of conditions obtaining
abroad does not reveal much that is
encouraging. Latin America has just
gone through number of revolutions,
but the situation is still far from salts
factory. Wholesale defaults on con-
tractual obligations have occurred. In
d1a is restless. Chaos reigns in China.
AuStralia'S finances are precariouS.
Economic conditions in Japan leave q
good deal to be desired. Russia con-
tlnues the great enigma: she is both
feared and ignored. England and the
scandinavian countries have abandoned
the gold standard. In Germany, Hit
lerlSm and FaSciSm are regarded as q
oenace to the peace of the world their
protaaonistS' cause is helped greatly by
the unsettled reparationS problem. A
new war Is p-cpheSied.
Ludendorf, erStTGpe leader Of Ger
man soldiers, has even SXed the date
Of the outbreak of hostillties-May l.,
1882. Why not April /? The venerable
prophet-general would seem to be pre-
ciSely one month late.
The gold scare has been with us since
time tmmemorial. 1t affords a rela-
lively simple way of explaining certain
economic phenomena. 1t may be said
to have its counterpart in Russian
dumping or European selling or
bear raids"
The "Institut Fuer Konjunturfors-
chung" branch of the German gov
ernment Bureau Of Statistics, for ex-
ample, is definitely of the opinion that
while examination Of the various gold
theories establishes certain similarity
in the movement of gold reserves and
price levels, there still is no incontest-
able proof that gold supplies are the
cause of price fluctuations.
The main dificulty-if 1t may be
termed such-seems to reside in the
maldistribution rather than the threat
ened dininution Of gold.
The total amount Of yellow metal
approximates $40, 0,7o0, 900, 900, of which
tn, United States and France hold sub