8 



Rl ADINGS IN RURAL ECONOMICS 



3. In the third place, in a country where agricultural prod- 

 ucts form an important factor in the foreign commerce, the size 

 of the crops will exert a considerable influence upon the balance 

 of trade and the international movement of gold. The extent of 

 the bank reserves in the great financial centers and the contrac- 

 tion or expansion of general credit may in consequence depend 

 most importantly upon the output of the season's harvests. This 

 consideration is of peculiar concern in the United States, where 

 until quite recently two thirds or more of the total exports have 

 consisted of such produce. 1 When the American crops are 

 abundant, our exports very naturally tend to increase, and gold 

 imports are apt to occur. That in turn means large cash hold- 

 ings in the banks, with, under normal conditions, the accom- 

 paniments of expanding credit and buoyant trade. When, on 

 the other hand, the crops fail, the movement of exports and of 

 gold swings in the contrary direction, and in that event we are 

 apt to be confronted with dwindling bank reserves, a contingent 

 contraction of the general credit, declining business, and less 

 activity in trade. 



4. Again, the size of such crops as are not consumed in the 

 locality of their production is of great significance for the trans- 

 portation interests. One has only to observe the fluctuations in 

 railway earnings month by month during the course of any normal 

 year to realize how important a factor the harvests are in railway 

 affairs. It is in the months of the harvests, from August to 

 December, that railway traffic and railway earnings normally reach 

 their highest levels, the earnings not infrequently being 30 to 



1 Kxports of agricultural products, per cent of total exports : 



