abroad 60 millions, in round numbers. This may possibly modify the terrifying character of the situation.

"These further words are found in the address we are discussing. I am not going to be long about this. I want you to see an actual case of the kind of criticism of which I was speaking. "The significant fact is that the favorable trade balance which this country has always enjoyed ("always" is a big word) under a favorable tariff, immediately declined coincidental with the introduction of the new schedules, and continued to fall until by last April the balance was against us for the first time in many years. For five consecutive months this unfavorable balance increased.' The words of a serious business man to a serious business body in this city! I acquit the gentleman of purposely intending to mislead.

"Let us look at these statements: 'Always enjoyed'; 'Immediately declined'; 'Coincidental with the introduction of the new schedules'; 'Continued to fall until by last April'; 'Against us for the first time in many years'; 'For five consecutive months this unfavorable balance increased.' Not one of these statements is correct. The country had not always enjoyed a favorable trade balance under a protective tariff. It did not immediately decline coincidental with the introduction of the new schedules. It did not continue to fall until last April. It is not the fact that the balance was then against us for the first time in many years, nor is it true that for five consecutive months the unfavorable balance increased. The facts are all of official record, and I have that official record before me.

"The passage of the Payne-Aldrich tariff law in 1909 was immediately followed by a deficit in the trade balance in the month of August, 1909, of over 7 million dollars. Five months of favorable balances followed, the largest of them not as large as many months before and since. In February, 1910, there was an unfavorable balance of over 51⁄2 millions; in March, 1910, an unfavorable balance of 19 millions; a small unfavorable balance in April, 1910. Again in July and August, 1910, there were unfavorable balances, the first of over 21⁄2 millions, the second of over 31⁄2 millions. In the year following the enactment of the Payne-Aldrich tariff law six months out of the twelve showed unfavorable balances. Not for thirteen years had the favorable balance on merchandise transactions in our foreign trade been as small as it was for the fiscal year ending June 30, 1910, under both the Dingley and Payne laws. It has never been as small since. The favorable balance for the fiscal year ending June 30, 1914, during nine months of which the Underwood law prevailed, was nearly 300 million dollars greater than under the corresponding year under the Payne law.

"Nay, if we select the 10 months from the passage of the Underwood law until the breaking out of the war and compare them with the like period following the enactment of the Payne law, the result is that the period under the Underwood law shows a favorable trade balance of over 150 millions greater than was the case under the Payne law.

Remembering, however, the words 'always enjoyed,' one finds that under the Dingley tariff there were deficits of over 3 and 7 millions, respectively, in July and June, 1909, and that II months of deficit under the Wilson Act were preceded by 18 separate months in which there. were deficits under the McKinley Act. Indeed, during the entire 48 months of the administration of President Harrison 25 months showed unfavorable trade balances.

"So far from the balance immediately declining after the Underwood Act went into effect, the truth is that there had not been so large a favorable balance during the entire pendency of the Payne law and its predecessor, the Dingley law, as during the month of October following the Underwood Act. The records back to 1888 do not show any favorable balance so large as in this single month. The following month of November, 1913, showed a reduced balance indeed, but still one of 97 millions in our favor, larger than any favorable balance for a year back except the preceding month of October.

"Nor did balances continue to fall for that of January, 1914, was larger than that for December, 1913, and both were larger than most of the months under the Payne law.

"So far from it being true that 'for five consecutive months this unfavorable balance increased,' the very reverse is true. The deficit for April was reduced by three-fourths in May, and this again by threefourths in June. It advanced in July but was still less than half of that for April. With August came the war. Our exports for two weeks were stopped, but even under these conditions of stoppage the unfavorable balance in the war month of August was almost identical with that of March, 1910, under the Payne law, and millions less than had occurred in different months under President Harrison.

"I should not leave this subject without suggesting that we could have told Mr. Duncan precisely why the month of April, 1914, showed the deficit of which he speaks.

"It arose in substance from $11,000,000 increased imports of food which we had to buy as our supply was short, and from a shrinkage in exports of food of $14,000,000, which we did not have to sell. I do not think, gentlemen, that it is necessary for me to press that particular class of criticism farther, but I have brought here something that I made for the first time to illustrate to the eye clearly what has happened. (Showing chart.)

"This black line (indicating) shows increased imports, and this, (indicating) is the period under the Dingley tariff, and this (indicating) is what happened to imports under that tariff. This (indicating) is what happened to imports under the Payne tariff-that upward movement. So far from its being true, as stated by Mr. Duncan, the record shows the two great increases of imports in this country were under the Dingley law and the Payne law.

"This bottom line (indicating) shows the movement of the adverse balances. There have been but few times when the balance was against

us in foreign trade. One of those times was under President Cleveland, before the McKinley law; the other of those times was under President Harrison and under the McKinley law. One was under a Democratic and one under a Republican administration. This drop (indicating) in the trade balance in our favor occurred under the Payne law. This rise (indicating) in the trade balance in our favor occurred also under the Payne law. The truth is that there is no relationship whatever between the increase of imports over a long period, and between the favorable or unfavorable trade balance and any tariff legislation whatever. (Applause.)

"I have merely stated to you much more briefly than I had it written, what is the official record, uncontested by any man, open to all men to see, and I confess, gentlemen, it passes my knowledge why without inquiry, so far as I know-I have not been informed if it took place, I hope it did-statements are made, and I presume accepted by business men, to other business men, which seem to have no serious relation to the facts. (Laughter.)

"I want very briefly to see if I can make for you a picture of the past, the present, and some elements of the future in American commerce during the last few years, and I will ask you to go back with me in thought about three or four years. I shall ask you to get out of Boston, and out of Massachusetts, and out of New England, and out of the United States, and to remember that trade depression is almost never local, and that for a universal effect you must have a universal cause. That is sound reason, gentlemen. For a universal effect you cannot apply a local cause.

"If things are happening the wide world round, don't abuse his Honor, the Mayor. (Laughter.) If things are happening in Asia and at the same time they are happening here, don't abuse his Excellency, the Governor. If things are happening alike in countries with and without tariffs, and with all kinds of tariffs, don't abuse one particular tariff, because it is not common sense. But how many of us take the trouble to look beyond the parish in which we live? In the first place, I don't have to say that this world is tied together so tightly that we can't escape the effects upon us here of what happens yonder. For example, if you have tried any of you to have a cane chair reseated of late you found that the price of cane had greatly advanced. Ordinarily cane for a cane-seated chair is a simple sort of a thing, and rattan is not a matter of any great interest, but those who know will tell you that you must go to Sumatra, or to other portions of the Dutch East Indies, for that material, and that it is brought through Singapore by way of Hamburg to this country, and that the supply has been cut off very largely by the war and, save for some concerns with great foresight prepared themselves in advance, a number of concerns have suffered very seriously, for the material rose in value something like ten times. Consequently what happens in Sumatra affects the price of the cane-seated chairs in your kitchen. There is cane in the Philippines and we have sent a man there to look it over. We

have not as yet found manufacturers enthusiastic enough to look it up for themselves.

"I don't know whether you realize that the question of whether our wheat crop is harvested or not depends to a very considerable degree upon the condition of public affairs in Yucatan, for in Yucatan grows the sisal plant, and from sisal is made the binding twine. There was a time when people were very much concerned over sisal, for it seemed quite possible to us about five or six weeks ago that there might be an insufficient supply of binding twine in this country, because we could not get the sisal out of Yucatan. If that happened, the self-binding reapers in the West could not have been used on the grain crop. It was a serious question, and we were so busily engaged in 'destroying business' that we got to work and got the sisal out of Yucatan-four or five shiploads a day. It was a somewhat strenuous time but it was not talked about very much in the newspapers.

"You can't escape the things that happen in another continent, because you are so favored as to live in Boston. About three or four years ago something began to happen on the other side of the world which affected you and me in our factories. It was not a local matter. We felt it here. A baseball may be thrown from a hundred yards yonder and it is quite a local matter when it hits you in the nose, although it started yonder. That is a homely illustration but an accurate one. Bankers here know perfectly well that the world, and the United States included, drew their supplies, or have heretofore, of credit and of cash, very largely from the financial centres of Europe. You know of course that we have borrowed from Europe from five to six thousand million dollars in the shape of securities, which we have sold there, and every other country around the world, outside of Europe, does the same thing. The world is financed from Paris, London, Berlin, Amsterdam, Vienna, and a few other places. They loan money to the world. They have done so. It has changed of late. They are the source of credit. Great Britain has loaned outside of her borders, says Sir George Paish, twenty thousand million dollars. The Germans have indeed built the Bagdad Railway, but they built it with French money in part. The Russians are financed in part by France; not long ago there was trouble at a place called Agadir, in Morocco, and the trouble was quelled by the French bankers intimating they might call their loans. China, Australia, Ceylon, Argentina, the United States, Canada, in large part at least, live on the credit and cash. gotten from the savings of Europe. One of the leading bankers of Toronto said that Canada took $30,000,000 a month from Great Britain to keep her moving, and other countries in like proportion. Now, please don't take my word for it, because I may be here with a sting under my coat-tails to deceive you. Some people think I carry horns and a sting. I am striving my best to conceal them at the present moment.

"What began to happen about three or four years ago? If you will take the trouble to take any European financial journal, whatever country you may prefer, you will find that about three or four years ago, with

a prevision of something, they knew not what, the great financial centres of Europe began to draw in their money. The outward easy flow of credit stopped. The inward flow of gold commenced. It was not noticed at first. Undoubtedly as I look at you if I called upon you for ten dollars each it would not be noticed by you; but if I continued to call on you for ten dollars, you would find it out. In time the world found out that Europe was, as the bankers say, strengthening its reserves against a rainy day; not because they knew what day it would rain but because they thought it might rain, and capital is timid.

"So, if you look, you will see that all over the outlying parts of the world, ourselves included, there began the thing we call business depression, and it began coincidentally with the time and continued through the time, during which the European reserves of gold grew. Don't take my word as to the number of the hundreds of millions of gold thus drawn in by commerce and stowed in the vaults of Vienna, St. Petersburg, and Berlin, but look in the financial journals and see, and you don't need to read the editorials. You know what it would mean if I were to call upon you to pay all you owe.

"That process went on for three or four years and wherever it went on, depression followed. If I took your arm and tied the arteries tight, you would have a depression in your hand; and if you tie the arteries of finance outside of Europe, so that no more can flow out and what does flow flows in, there will be depression everywhere the capital went. and in the places from which it came back. That happened, and it happened pretty much everywhere. It was affected by local causes. It was not as great, for example, in Australia as elsewhere, but it happened without any earthly regard to the kind of revenue they had, or the means whereby they raised it. It happened in Brazil very badly, and Brazil has the highest protective tariff on God's good earth. It has not prevented their borrowing at 16 to 17 per cent., and Brazil is a country of infinite natural, undeveloped resources. But since the flow of money to develop them stopped, that will happen which will happen to your garden when you stop developing it with a hoe.

"Every banker in the world of international knowledge knows that I have told you the simple truth. It is a matter of record. That depression we felt last and probably least because we were the nearest to independence. The five to six thousand million dollars that we had borrowed from Europe represents a relatively smaller proportion of our national wealth than the amounts the other countries have borrowed. You do not have to explain it by criticizing any particular legislature. There is no reason to get mad with the Legislature of Brazil. They had the trouble, and had it badly, but not because the Legislature misbehaved. They had it by reason of universal causes, locally applied.

"When that process was pretty well advanced, the month of August last came around, and then it began to rain, and the money was stowed in the banks in great masses, $600,000,000, if I remember correctly, in more than one institution-saved for the rainy day which had come at