We heard at once that letters of credit of
travelers in Europe were uncashable. Gold was hoarded everywhere. It is
estimated that about $30,000,000 in gold was hoarded in New York in the
first week in August. Runs on banks were frequent. Bank reserves were
depleted.
The moratorium was resorted to to avoid a general cataclysm of
bankruptcies which might have occurred--not from actual insolvency but
from mere insufficiency of cash.
To me one of the most striking phenomena was the promptness and
effectiveness of the co-operative actions by which, so far, any business
cataclysm has been avoided. The closure of Stock Exchanges perhaps saved
us from general financial panic. Most striking of all is the manner in
which the Governments of the world have come to the rescue of business.
Those of us who were brought up in the old laissez-faire school have to
rub our eyes. Had the world been guided by laissez-faire ideas, in this
emergency we should in all probability have witnessed by this time the
greatest collapse of credit the world has ever seen. Almost all the
large and effective measures to meet the many emergencies arising were
taken by Governments.
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