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About The commoner. (Lincoln, Neb.) 1901-1923 | View Entire Issue (Aug. 1, 1914)
The Commoner VOL.! 14, NO. 8 30 '4 ' m Ml tm r :. chow." It also proves tho economic fallacy of .too much consolidation. - Tho combination of thirty retail stores in as many separated cities got beyond tho availablo capital of the mother concern and also beyond tho "limits of em- nCy' wiLL, IT PREVENT PANICS? When tho federal reserve association is in working order do you believe that it will prevent panics? Answor. Assuming wise administration, and that, I think, Is certain, the new system ought to prove a successful preventive of financial panics. And why shouldn't we assume "wise administration" of tho system? The able Amer ican mind is not yet obsolete and patriotism is not yet dead! There is abundant material to draw from, not only for members of the federal rosorve board, but also for directors of the fed eral rosorve banks. We arc usually the slowest people on earth to correct our own abuses, but when wo once begin tho job wo generally do it thoroughly. We have been trying without avail for almost half a century to reform our banking laws, and then, all of a sudden, we woke up and put upon the statute books the most far-reaching and -beneficial piece of legislation since the national bank act. I look forward to a wonderful period of finan cial stability, with its inovitablo complement of undisturbed confidence, and to an era of un equalled prosperity for this country under the now federal reserve system. Tho provisions of tho law, which permit our banks to establish foreign branches, together with our new tariff law, will contribute beyond the expectations of even intelligently optimistic men to the expansion of American trade and commerce. A big foreign trade will, of itself, tend greatly to stabilize our domestic trade and make extremes of business depression at home far less possible. Our foreign trade has always been restrained by unwise tariff laws and lack of American banking facilities. The new laws have removed theso obstacles. WHAT CREATED BUSINESS DEPRESSION Do you believe there is amy truth in tho rumor that there has been a delibenito conspiracy on tho part of a certain group of financiers, polit ically opposed to tho administration, to create business depression? Answer. No, I would not say that. It would bo fairer to say that there has been a systematic attempt, politically organized, to make the coun try believe that there is a serious business de pression. All the "divine right" and "vested right ' interests and most of the big financiers are allied with the political opposition to the democratic party and are helping the calamity campaign all they can. By divine right" in terests I mean those who, because of their wealth, education, social standing and acquired or inherited leadership of great enterprises, be lieve that they have superior rights and are en titled to be left undisturbed. They resent any sort of change or governmental regulation or control. You may romomber that a certain an thracite coal magnate some years ago assumed that attitude when the great coal strike was on. By "vested right" Interests I mean those who have been long intrenched in "privilege" through favoring tariff laws and every sort of govern mental bounty, -and who consider any inter ference with their "privileges" an invasion of sacred Tights. Then we have tho soreheads and chronic kickers and Pharisees who are always against an administration they cannot control. These elements, not so much by concert of action as by common sympathy, have united in a drive against the 'administration. They have produced the "psychology" of the situation, which, operating upon a time of year when business for perfectly normal reasons, is usually below par, has produced a certain amount of hysteria in shallow minds and a certain .amount of fear in timid souls. But on tho whole little has been accomplished. Every day their gloomy prophecies are being dispelled by facts and the steady advance of business prosperity. Crops prodigious crops are beginning to move and business stimulation is already reported from nearly every section of the country. We are going to have a splendidly prosperous fall season. SURPLUS IN THE TREASURY As evidence of the conscienceless efforts to create uneasiness I need only call attention to the solemn predictions made on the floor of con gross a short time ago by certain republican leaders that the United States treasury was piling up a huge deficit and that the secretary of the treasury would soon issue government bonds. The treasury statement issued July 1 shows that the fiscal year closed with a surplus of $33,784, 452.07. This amount and $1,000,000 more was spent on the Panama canal, but that is for prop erty bought and paid for, and is an asset, not a deficit. And an issue of government bonds is not in sight! In fact one cannot be discovered with a telescope, much less with the over-sensitive obliquity of vision of our highly excitable political opponents. NO ALAltM ABOUT GOLD EXPORTS Is it truo that you have, at any time, felt any apprehension about tho gold exports? Answer No, not tho slightest. On tho con trary, I have regarded the gold exports as a benefit to this country, because we could spare the gold and the exports have secured the foreign financial situation. International finance is so intimately related that a cataclysm in England, France, Germany or any other important country reacts injuriously and directly upon our domes tic situation. In time of European trouble, American securities are always sold first beer use thero Is a ready market for them.' At such times there may be a sudden unloading on our market of large, volumes of bonds and stocks, which is always depressing and hurtful. If we can let Europe have gold when she heeds it and we don't, and thus conserve the general situa tion, it protects us. The present movement has not hurt us in tho least. If the papers and the political partisans didn't make a noise about it, as little would have been heard of it as has been felt of it, and that is nothing. When the federal reserve banks are in. full operation they can exercise a material influence upon gold imports and exports and furnish a large measure of protection to our gold reserve, if tho need at any time arises. GOLD HOLDINGS HAVE INCREASED Hiivo the gold holdings of tho treasury in creased or decreased during the gold export movement? Answer. They have increased. July 1, 1913, the total stock .of gold in the country was $1, 806.619,157. July 1, 1914, the total stock of gold in tho country (after deducting all ex ports during tho year) was $1,892,154,731, showing an actual increase in the total stock of gold for the year of $25,535,574. Not only was there a gain during the fiscal year in the total stock of gold in the country, but there was a gain of $17,363,237 in the amount of gold in tho treasury. GOLD IMPORTS, $65,232,067 Since January 1 tho gold shipments from tho port of New York to Paris, London nnd Berlin amounted to 978,000,000. Does this imply that tho balance of trade between this country and Iburopo is no lonsrer in our favor hy reason of foreign competition? Answer. No, it certainly is not due to foreign competition. I believe that tho gold exports since January 1, which, by the way,. have been abnormal only in the month of June, do not necessarily indicate that the actual balance of trade is against this country.. They are due principally to the. constant, sale, for several monthB, by European holders, of American se- l I ? tot16"018 of SOW for the fiscal year ended June 30, 1914, were $112,432,165 7?.2a In16 mRorU of old for the same year (Juno estimated) were $65,232,067, bo that the net exports of gold for the entire fiscal year just ended were only $47,200,098. This is a baga telle so far as affecting the strength of our posi tion is concerned, and has no. particular signifi cance For the same fiscal year, as already stated our total stock of gold, in spite of these exports, increased $25,535,574. I want to caU attention particularly to the $65,232,067 of cold Imported during the year. This is at least a very tidy amount, but very little is ever heard of gold imports, whereas gold exports' are played up furiously, Why? Because gold Imports Tre not palatable to tho calamity howler and It suits them UrPSe fc t0 8UPPreSS a11 knowledge of CROPS WILL CREATE HUGE BALANCES IN OUR FAVOR Do present indications point to a return flow taSl swigf aUd COnunoaity ort season! Answer.---Yes, there Is no doubt that wo shall be able to import gold in the fall if wo want to The marketing of our crops must necessarily create huge balances in our favor. Gold im ports do not, however, always .ollow because th balance of trade is in our favor. If dur credits can be more profitably employed in Europe they will remain there until such time as they can bo more profitably employed at home. Then thev .will be recalled and gold imports will naturaliv follow. THE GOLD BEHIND THE GREENBACKS With tho abolition of the endless chain green back system will there bo any danger in the future of a gold outflow in sufficient volume to bo a serious menace to tho treasury holdings of specie? fa Answer. There is no danger now of any such gold outflow as will menace the treasury's hold ings of specie. The "endless chain greenback" is practically a thing of the past. Your question implies the existence of a fear with the American people inherited from the experience of the last Cleveland administration, more than twenty years ago. At that time, the conditions were essentially different. Then we had only a small and depleted gold reserve hehind the greenbacks now we have $150,000,000 of gold behind the greenbacks. Moreover, the country's total stock of gold at that time was relatively small, only about $500,000,000. Now we have the greatest stock of gold of any nation on earth, namely $1,892,154,731, of which we hold In tho treasury of the United States $1,276,581,594. When gold is withdrawn for export it is usually upon pres entation of gold certificates against which there is 100 per cent, of gold on deposit in tho treas ury. The amount of greenbacks presented is relatively small. 1 consider the position of the treasury of the country impregnable so far as gold is concerned. Moreover, our stock of gold is increasing each year, not only through domestic production, which is large, hut also through tho constant increase in the wealth of tho nation. We have only $349,120,016 of greenbacks and treasury notes outstanding, against which wo have a gold reserve of $150,000,000. We shall in timo get 100 per cent, of gold behind the greenbacks, provided the surplus earnings of the federal reserve hanks shall be used as the act authorizes, "to supplement the gold reserve held against outstanding United Slates notes." This is a very wise provision of the law. PAYING DEBTS OR LENDING MONEY It has been claimed that tho present outflow of gold has been duo to tho unfavorable balance or trade, as well as to the enormous expenditures AnjeHcan tourists in Europe during this sea son of the year. Is it also truo that, because of the railroad and other Wall street scandals, Juiropo has been sonding American securities oacic 'to us in enormous volume, and that tho gold shipments, to a great degree, represent liquidation of tho indohtcdness thus created? i,;inSW?,TTh0 outflow ot gold at any time shows that we are either paying debts abroad nL I , VT Ending money abroad. If we SfP5yinff,debts' they may represent either im ported goods, expenditures of American tourists, EL S Purchase of American securities which f7t!,T P0?18?11,' b,ack to this country. As before Sinf' thi?k that the Principal cause for the fpnHeXP2rt8of gold is the sale of American monlli I Eui;Pean holders who need the mnYJ d have found that they could get gold S advantagoously by that means than by any w nrtw rUr.?e has 8imply -needed gold which in for if TnSiIy SP,are' and she has 8t it by pay iaf f !, ,L f,rm or Mother, either by the AmmSnn0. I serIties Prices which attracted aUnteSSf?nfCll,l?r8- or by lowing from us lendem WhiCh are Profltable to American MUCH DEPRESSION TRACED TO THE RAILROADS nreTenaft,1iLy0,,1; Plnlon. tho cause of tho Kc d!?o-'eSetl,8tto of- b9iness, which has Sos anA PCratins Py of stel and other tirades and thrown many people out of employ- iy tSTSated"88? depre88ion has been gross intlmSv w he reasury department touches ospSfaHv th ?e8f.,n S?1 part8 of ' country, ThtnnrtolMl busIns of the country. relfabS? anfl wnV,aVe come to om many that the obi J i1 Inf0I;med sources convince me tries aied J6' Presslon exists in those Indus upon the rnneS8e,8 which are dependent largely abouV thJi Ta f0r orders- There is no doubt SSs for unn !at the broads have withheld nanco of wavPnPr,leS a?d haVG deferred mainte slbie fivf0nayfandequIpment the utmost pos aay UUs ? iwn he ,pa8t 8lx months. I don't ing from riU1,mate-. ThGy have heen suffer ed Sinn ldi ,GaTnfnes during this period, ZpSi !ll(I ,nauco many of them to tlve03;; but the greates impelling mo e Undoubtedly has been their desire to make toaSSxLi