From all information obtainable, this country's supply of gold at this time exceeds by many hundreds of millions of dollars the gold stock of any other nation.

The above statement shows that the increase in our money supply since January 1, 1915, is wholly accounted for by the increase in gold, and the increase in the gold supply is explained by more than $500,000,000 of foreign gold sent to this country in exchange for American products since the outbreak of the European war.

AMERICAN BUSINESS AS AFFECTED BY PEACE AND PREPAREDNESS.

THE COMPOSITE OPINION OF 1,629 AMERICAN BUSINESS MEN.

By THEODORE H. PRICE.

[Reprinted from the Outlook of May 24, 1916.)

Instead of writing an original article for this issue of the Outlook, I have asked the editors to allow me to publish something that seems to me far more important and informing than anything that I could

say.

It is the composite opinion of 1,629 American business men in regard to American business as affected by the political and economic conditions by which we are now, or may shortly be, confronted at home and abroad.

It is derived from an elaborate investigation made for their own and their clients' guidance by Harris, Winthrop & Co., a well-known firm of investment bankers having offices in both New York and Chicago.

The complete report and the letters which accompany it comprise a pamphlet of some 60 pages, advance proofs of which I have been permitted to read and which will probably be published about the same time as this issue of the Outlook.

As such documents do not generally circulate outside the comparatively limited circle of those to whom they are sent for financial reasons, and as this one seems to have exceptional public interest just now, I feel that I am doing a real service to the readers of the Outlook in putting it at their disposal. As it is difficult, if not impossible, to improve upon the bankers' summary of their own report and the conclusions to which it points, I quote it in full. I hope those who read it will agree with me as to its practical value to business men in the present somewhat perplexing situation. This is the report:

In January, 1915, we made an investigation into business conditions in the United States, the result of which we published in a pamphlet dealing with "The Present and Future of American Busi

ness."

This pamphlet came to have a wide circulation, and many of our friends have been good enough to say that it was at the time an important influence in reestablishing the confidence of the people of this country in themselves and the commercial future of the Nation. Our previous inquiry was addressed to about 2,000 men of affairs throughout the United States, and was sent out January 21, 1915. At that time many were in doubt whether this country could prosper while Europe was involved in a war which had then been in progress only five months.

The replies which we received and the letters that we were permitted to publish indicated the general individuality of confidence

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in the future of each respondent's business that has since been fused in the widespread commercial prosperity that we are now enjoying. Such service as we may have rendered was in making faith infectious and encouraging a justifiable optimism which most people felt but hesitated to express.

We are now again confronted by a situation that engenders doubt. There are many who fear that we shall have a business recession in the United States with the advent of peace in Europe.

This fear is due to the belief that our present prosperity is artificial and abnormal in that it is the result of the war-induced demand for our products and the protection to our industry which the present military preoccupation of Europe provides.

With the object of ascertaining whether this apprehension was justified by the intrinsic facts, we submitted some 17 questions to about 4,500 men of affairs throughout the United States, including all those who had answered our previous inquiry. Our investigation included every State, the number of business men addressed in each State being proportioned to its population.

(The questions referred to will be found on the accompanying table on pages 11 and 12.)

Those replying were asked to cross out the answers least accurately describing the conditions inquired about, and to amplify their views by writing us at greater length if convenient.

In the selection of those whose opinions we have thus sought to obtain we have included but few bankers and have omitted altogether the business men of Greater New York.

We are particular to explain our action in this respect lest it be regarded as invidious. Our purpose has been to obtain a reading of the business mind of the United States at first hand rather than through the eyes of bankers who must view events in the light of their financial trusteeship, or men of large affairs who live in New York and are precluded by the very isolation of their metropolitan residence from anything more than a vicarious knowledge of conditions outside this great city.

It is only proper to say that we approached this investigation with the feeling that the dependence of the country upon the foreign demand for our goods had been exaggerated, and in submitting the questionnaire to our correspondents we so informed them, closing our letter of transmittal with the following statement:

The aggregate of our foreign trade, including both imports and exports, is Our domestic commerce is competently estiabout five and one-half billions. mated at about one hundred billions. The purchasing power of our population is greater than that of any other people in the world. Economically, we are self-contained. If the balance between domestic production and consumption is fairly well preserved, and we do not unnecessarily alarm ourselves over conditions that affect us but remotely, our progress ought to be undisturbed.

We have received in all some 1,629 replies, which we have summarized in tabular form, according to geographical districts. (This summary will be found on pages 11 and 12.)

The summary speaks for itself and requires but little explanatory comment. Of those answering the first question, about one-half feel that their business will be directly affected by peace in Europe, while the other half look for undiminished activity.

It is only proper to explain that those who feel apprehensive as to the effect of peace in Europe upon American business activity are engaged, for the most part, in the metal or munition industries or in the manufacture of articles that were imported before the war. Thus, a Connecticut manufacturer of clocks says that he fears that he will not be able to compete with German-made clocks when the war is over; and those who are interested in the manufacture and production of sugar in Louisiana, Utah, and Colorado express a reasonable apprehension of lower prices once the European supply of beet sugar is again available. Many who anticipate a slackening in the war-stimulated demand for specialties are undisturbed thereby and admit that they are gradually and successfully preparing themselves for such a contingency.

We can not, therefore, regard the evenly balanced opinion as to the effect of peace upon American business as indicative of a lack of confidence in the country's ability to readjust itself promptly to the conditions which shall develop with the ending of the war.

The answers to question 2, in regard to the effect of higher prices upon the consumption of goods, are most reassuring. Nearly everyone agrees that the purchasing power of the country has been greatly increased, that people are able to buy more and better goods, and there is but little, if any, complaint as to the effect of high prices upon consumption. In fact, one New England manufacturer goes so far as to say that instead of buying a poorer quality of goods at the same prices the demand is running constantly in the direction of better goods even at higher prices.

The answers to question 3, with regard to the unemployment of labor, are most reassuring. The unemployment reported is, for the most part, localized either on the Pacific coast or in the Southern States, where, as many of our correspondents state, the higher wages paid have really had the effect of diminishing the industry of the Negro.

The answers to question 4 indicate a somewhat widespread desire for higher wages, but most of our correspondents express themselves philosophically with regard to the situation, and realize that it is entirely natural that the wage earner should desire to share in the widespread prosperity of which he hears so much.

The response to question 5 is a corollary of that made to question 4, and is, if anything, more reassuring. The labor unrest is apparently confined to a few classes, including the railroad men and the workers in some highly specialized staple industries.

The unanimity of opinion with regard to the operation of the Federal reserve law is remarkable, and about the only dissatisfaction expressed comes from the Rocky Mountain States and the Pacific Northwest, in which sections loans running for longer periods than the Federal reserve law permits are required to satisfy the financial needs of most of the population. Doubtless the Federal reserve law will pass into history as the most beneficent piece of economic legislation that has ever been enacted in this country.

The response to question 7 negatives much of the newspaper talk with regard to the inflation of currency and credit in the United States. If there is any inflation, but few business men are conscious of it, and it is, we think, reasonable to assume that until there is an

inflation of which people are conscious there will be no attempt at contraction.

The answers to question 8, in regard to the constructive activity of the country, reveal the basis upon which the present prosperity rests. Constructive activity means the creation of productive wealth, and it is encouragingly significant that about 80 per cent of our replies indicate that the people are building new houses, enlarging their. plants, and making permanent improvements that bespeak their confidence in the future.

The answers to question 9 report an almost unanimous willingness that the tariff question shall be taken out of politics by the creation of a tariff commission. In view of the fact that a very large proportion of our replies come from manufacturers and States which on account of their industrial activities are generally reckoned as "protectionist," this unanimity of opinion may be said to mark something of a revolution in American political feeling with regard to the tariff. We commend it to the special attention of the platform committees of both the Democratic and Republican Parties, and are delighted to feel that we are nearing the time when the political energies of each successive Congress may be employed more profitably than in the revision of tariff schedules. One correspondent qualifies his acceptance of the tariff-commission plan with the proviso that it shall be made operative "before the end of time." With this we are in hearty agreement.

The answers to question 10, in regard to the market for real estate, drive another rivet in the structure of prosperity that is visualized by this investigation. If the rural-credit bill which the Senate has already passed shall become a law, the effect will probably be to increase greatly the availablity of farm lands as a basis for loans, thus stabilizing their value; and a prosperity that is buttressed by higher wages, increased consumption, and stable values for land would seem to be, for a time at least, immune from any serious reaction.

We regard the answers to question 11, in regard to the abatement of the antagonism toward the railroads, as providing what is, in a financial sense, the most important information in our report. That over 90 per cent of our correspondents should report that the disposition to harass the railroads is vanishing, is extremely encouraging. The railroads of the United States employ more labor and disburse a larger sum in wages than any other single industry. Their purchases constitute a very large proportion of our total commerce; and if their development in the future shall be unrestricted by the unwise legislation and regulation of which they have hitherto been the victims, it will be well for the future prosperity of the country.

The negative answers to question 12 with regard to a possible advance of 5 per cent in railway freight rates, are, for the most part, qualified by statements of which the following from a southern correspondent is typical:

"We have already accepted one advance of 5 per cent in railway rates without complaint, and would not be willing to submit to a further advance unless it is equitably distributed throughout the entire country."

The answers to question 13, in regard to the saving and extravagance, are also qualified. Most of our correspondents admit that the savings banks, insurance companies, and other repositories of thrift