But we have wandered somewhat from the subject of foreign liquidation. Those little versed in financial matters believed that this liquidation would come suddenly, in a day or a week, and that for this reason the exchanges could not be opened. The fact that the opening of our stock exchanges has not brought out a deluge of securities, such as overwhelmed them in the last days of July, is taken by some people as a proof that no liquidation will occur. Both assumptions are contrary to good sense and to the normal operations of finance. The tremendous outpouring of securities which became so embarrassing a few hours before the outbreak of the European struggle, was the result of an entirely different situation than that which prevails at the present time. A good deal of it was the work of speculators who had been carrying margin accounts and who, becoming frightened at the war clouds overhanging Europe, decided to seek safety. A large share of it was prompted by the desire of foreign financial institutions and commercial interests to make preparation for the storm which had so suddenly brewed. It was apparent if war should come that a period of isolation, uncertainty and ruin would follow. Far-sighted financiers thought that a credit balance in the United States would be of assistance both in settling transactions already entered into, and in connection with future problems, after present-day obligations had been handled. The Bank of England was caught unprepared. Its gold reserve was dangerously low, compared with the burden which it must suddenly assume. Gold instead of coming to it, was being withdrawn, and it was evident that drastic steps for the replenishment of the gold stock were necessary. Thus we had general moratoria and the calling of short-time loans which American bankers have habitually made during the summer against credits to be built up through the sale of cotton and grain during the fall, and which normally amounted to $400,000,000 and upwards at the end of July. The clearing up of this current borrowing has really been the object of the conferences between the representatives of the British treasury and American bankers.
The editors of The Commercial and Financial Chronicle and of a few other publications have performed a notable service in pointing out the unfairness of England's position with reference to this current indebtedness. Shielding herself behind a moratorium—a self-declared stay-law—postponing indebtedness without regard to the necessities or the desires of her creditors, and at the same time demanding of us the repayment of our obligations on the day when due, and in gold, she has, to a large degree, emphasized and intensified the disorganization which the war would cause, and has, by this purely arbitrary and one-sided arrangement, drawn from us practically all of the gold with which the position of the Bank of England has been bolstered up. I wish to reassert, in the strongest possible terms, the very wise position which these authorities have taken, that we must not play a maudlin and uncertain
