A YEAR or more ago the opinion was widely held in the United States that the economic recovery of this country was retarded by conditions in other parts of the world. The domestic situation was assumed to be thoroughly liquidated, and although business still received occasional shocks or setbacks, these were believed to come mostly from abroad. Our banking crisis during the first quarter of 1933 gave a hard jolt to this assumption. Now that we have emerged from the stress of this period and seem at last to be on the road to recovery, there are indications of a reversion to our former idea that our progress is being hampered by conditions elsewhere.
In a sense this view is correct. In spite of a manifestly growing desire in the United States for economic self-sufficiency, we have not yet learned how to avoid sharing in some degree both the fortunes and the misfortunes of other countries. But the rule works both ways. If we suffer from their ills, they may also suffer from ours. As the charts on the following pages clearly show, the ups and downs of business activity have paid little attention to national boundary lines, but seem to have followed practically the same schedule on both sides of the Atlantic. Not only in the countries represented in the charts but also in most of the other countries of commercial importance, prices have been rising, speculative activity has been increasing, industrial activity has been expanding, and employment has been gaining. These may be indications of the beginning of world recovery.
In Chart I, showing the trend of wholesale prices in the United States, France and Great Britain during 1932 and 1933, the similarity of the curves is especially striking in view of the dissimilar monetary policies of these countries. In each country there was a sharp recession of prices, in terms of domestic currencies, during the first half of 1932, followed by a short-lived recovery in the third quarter, and then by a
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