392 ^THE POPULAR SCIENCE MONTHLY 



edged law of nations and the principles of that law in their legitimate 

 development and expansion must prove controlling, whether they con- 

 template a temporary abridgment of neutral commerce or whether they 

 justify its prosecution in channels sanctioned by the highest authority. 

 The effect of such rules as between those engaged in war, however, 

 should properly be left to the decision of their forces or opportunities 

 such as they may be. For both neutral and belligerent, nevertheless, 

 international law as crystallized in our own country and in Great 

 Britain by executive action, by the carefully considered decisions of the 

 highest courts, and by legislation in harmony with acknowledged prin- 

 ciples of international law, point out the only safe pathways and those 

 in which both governments and individuals should find their truest 

 advantage. 



FUTURE BANKING PROBLEMS OF THE UNITED STATES 

 WITH EEFERENCE TO THE EUROPEAN WAR 



By Peofessoe THOMAS CONWAY, Je. 



UNIVEESITX OF PENNSYLVANIA 



PUBLIC opinion in the United States concerning the effect of the 

 great European war upon this, country has passed through several 

 distinct stages. The first period was of brief duration. Many people, 

 recalling the prosperity of this country during the Napoleonic wars, 

 jumped to the conclusion that it would bring financial and commercial 

 prosperity to us. 



This delusion, for such it may be termed, was rudely shattered by 

 the consequences which followed thick and fast during the first few 

 days of August. Our stock exchanges closed even before war was offi- 

 cially declared, the cash reserves of our banks were reduced almost 

 over night below the minimum prescribed by law, emergency currency 

 in very. large amounts must be issued, interest rates soared, banks ad- 

 vised retrenchment and caution, orders were cancelled, factories closed 

 or operated only part-time, while cotton became not only unsalable, 

 but of unknown value as collateral. 



In the face of such circumstances, of which these instances are illus- 

 trative, public opinion entered upon the second stage. Pessimism 

 abounded. Fears for the safety of friends and relatives abroad, coupled 

 with highly colored, but inaccurate, news from the seat of war, led to 

 the greatest apprehension. We came to regard Europe as wholly mad, 

 destroying ever3i;hing ; suddenly bereft of all business prudence or sound 

 sense. In this period arose the hysteria of a German invasion of our 

 shores, although a hundred times further removed than the English 

 coast, apparently unattainable to her. During this period arose the 

 dread of uncontrollable foreign liquidation of American securities and 

 of our banking system, drained of every dollar of its gold reserve. 

 Happily this period of horror and depression has nearly ended. 



