The Wanganui Chronicle MONDAY, DECEMBER 2, 1935. AMERICAN NEUTRALITY

Wanganui Chronicle, Volume 79, Issue 282, 2 December 1935, Page 6

The Wanganui Chronicle MONDAY, DECEMBER 2, 1935. AMERICAN NEUTRALITY

jgEHIND America's efforts to keep free of entanglement in the Italo-Ethiopian affair, there is an economic background which to-day makes an interesting study by reason of the comparison with that obtaining in 1914. When America passed her recent Neutrality Act there was a realisation in the minds of the legislators that the United States had been dragged into the World War by the antecedent creation of ecoilomie ties. Although such fears to-day are not altogether groundless, there have been considerable gains in the direction of economic freedom. ■ When the World War broke the economic dependence of the United States on Europe was so great that the New York Stock Exchange was almost a branch of the London Stock Exchange. Britain had enormous investments in America, and the effect was soon seen when the crisis overtook Europe. Between June 28. when the Archduke Ferdinand was assassinated at Sarejevo, and July 30, the New Y'ork markets boiled over with selling orders. The selling was due to the British investors, who were withdrawing their money. So tumultous was the selling that the Exchange in New York had to close on July 30. Although it is true that in present-day America there is considerable foreign ownership of American stocks, the ratio is small compared with the ratio in 1914. Actually to-day the New York market is dominated by Americans or, in other words, the United States is no longer a debtor but a creditor nation. Another way of illustrating the change between 1914 and 1935 is to look at the gold movements. In 1914 they w ere outward, reflecting the repatriation of foreign capital. In the trading week ended July 30. 1914, 40,000,000 dollars’ worth of gold had been sent abroad. For the entire year up till that date the total amounted to 120.000,000 dollars. This was a fairly serious loss for America, as the United States had an aggregate stock of less than a billion dollars, and therefore, between January and July, had lost 12 per cent. An opposite movement has been recorded for this year. Imports of gold since the crisis started in Europe have amounted to almost one-half (in value) of the total gold stocks in the United States at the beginning of the World War. Total stocks are ten times the 1914 figure, rapidly approaching the colossal figure of 10,000,000,000 dollars. This inward movement of gold is only in part a reflection of the creditor status of the United States, because it must be remembered that in the present unsettled state of Europe foreigners are using the United States as a bank for safe keeping. The final difference between then and now- is the complete transformation in the agricultural situation. In 1914 America played an important part as Europe’s granary. Wheat, corn and cotton were exchanged for capital and goods needed to develop the country. But in 1914 the turning point had been reached and the war completed the transformation. Manufacturing became the dominant occupation of the American people in place of farming, and to-day, instead of a wheat surplus of 300.000.000 bushels, the United States is actually importing wheat. America is certainly in a much better position, economically speaking, io resist being dragged into a European war than it was in 1914. Even so, the pull of war trade is being felt, and measures have been taken to resist it—measures, in fact, which have gone so far that in view of certain modifications by other Powers, threaten to leave America “out on the limb.” For the time being, however, unless a serious extension of the conflict were io occur, America’s fears of being forced to abandon her policy of neutrality, appear to be groundless.