Meanwhile wealth in town and country increased, owing to the general activity of all factors. In a few years the number of savings-banks accounts was doubled, and railroads had only the one complaint—that they could not get enough cars to carry all the wheat, corn, wood, iron, cattle, coal, cotton, and manufactures offered for transportation. In two years the number of money-orders sent through the post-offices increased by 7 millions, and the number of letters and packages by 361 millions. Now, too, came a time of magnificent philanthropy; private endowments for education and art increased in one year more than $50,000,000.
Along with all this came an increase in foreign trade; here, too, bad times had prepared the way. When the home market was prostrate, industry had sought with great energy to get a footing in foreign markets; and by low prices, assiduous study of foreign demands, and good workmanship, it had slowly conquered one field after another, so that when good times came there was a splendid foundation built for a foreign commerce. America sold bicycles and agricultural machinery, boots, cotton cloth, paper, and watches, and eventually rails, bridges, and locomotives in quantities which would never have been thought of before the panic. And the country became at the same time more than ever independent of European industry. In 1890 America bought $357,000,000 of foreign manufactures and sold of her own only $151,000,000. In 1899 its purchases were $100,000,000 less and its exports nearly $200,000,000 more.
And at the same time, owing to the tremendous crops, the total export of native products reached the sum of $1,233,000,000, and therewith the United States had for the first time reached the highest place among the exporting countries of the world—a position which had formerly belonged to Great Britain. The trade balance of the United States, even in the first year of prosperity, 1898, brought $615,000,000 into the country. The year in which the American Navy, by a rapid succession of victories, demonstrated that the nation was politically a world power, brought the assurance that it was no less a world power commercially. Already the Russian trans-Siberian Railway was using American rails, American companies were building bridges in India, American cotton goods driving out British competition in China, and the movement was still going on. One large harvest followed another.
The wheat harvest in 1901 reached the unprecedented figure of 736 million bushels, and in 1902 of 987 millions. In the same year there were 670 million bushels of barley, and as many as 2,523 million bushels of corn. A corn harvest is almost always profitable, because it keeps and can easily be stored until the right time comes to sell it; and then, too, the farmers are always ready to use it for feed, which further helps its price. Corn has done more than any other harvest to bring wealth into the West. The cotton crop stayed at its ten-million mark, and nearly 70 million barrels of petroleum flowed every year. The demands made on the railroads increased month by month, until finally last year there were weeks in which no freight could be received, because the freight yards were full of unloaded cars. And at the head of everything moved the iron and steel industries. The larger the harvests the more lively was the industry of the country, and the more busy the factories and railroads became the more the iron industry prospered. The manufacture of iron and steel increased steadily, and in 1898 amounted to 11.9 million meter-tons of pig-iron, and 9 million of steel; in 1900, to 14 of pig-iron and 10 of steel; in 1902, to 18 and 15: while the production of the entire earth was only 44 and 36 respectively.
But in spite of this tremendous growth, the prices also rose. Railroads which in the spring had made contracts for new rails were able a few months later to sell their old rails at prices which were 25 per cent. higher than the former price of new rails, because meanwhile the price of steel had risen enormously. If it is true that the iron industry can be taken as an index of national prosperity, there is no doubt at all that prosperity was here. No city in the country experienced such a growth in its banking as Pittsburg, where the banking transactions in 1899 amounted to $1,500,000,000.
This tempestuous expansion in every direction, which lasted from 1897 to 1903, is no longer going on. A counter-movement has set in again. So many factors are at work that it is hard to say where the reaction commenced, although undoubtedly the great coal strikes were the first important indication. The feverish building activity of the country is very largely over, and this decrease has considerably affected the steel industry. Perhaps the refusal of bankers further to countenance the financial operations of the railroads has been an even more important matter. During the years of prosperity the railroads had obtained credit so easily that the scale of expenditure on most railroads had become too lavish, and in particular large sums had been spent in converting railroad shares into bonds. Now the financial world began to react and refused to furnish any more funds, whereon the railroads, which were among the best patrons of the steel industry, had to retrench. And this depressed the state of business, and the otherwise somewhat diminished industry cut down the freight traffic. Other industries had to suffer when the building and iron industries declined. The purchasing power of the working-man has decreased somewhat, and general industry is a trifle dull. This has affected stock quotations, and nervousness in financial circles has been increased by the mishaps and miscalculations of well-known operators. This has worked back in various directions, and so it is natural that pessimists at home and the dear friends of the country abroad have predicted a panic.
But it will not come. The situation has been too largely corrected, and the country has learned a lasting lesson from previous years. When a collapse came in the early nineties, after a time of prosperity and over-expenditure in every sort of undertaking, the national situation was in every way different. There was a great deal of real weakness, and there were many unnecessary and unconservative business ventures on foot. All this is different to-day. The credit which the railroads at that time had overdrawn on had been used to lay thousands of miles of tracks where as yet there was no population. During the recent years of prosperity, on the contrary, the railroads have been extended relatively little, and the expenditures have been mainly for improved equipment and service. The railroads have been made more efficient and substantial, their indebtedness is less, and the considerable contraction of business cannot do them serious harm. Indeed, many persons believe that the great strain which the boom of the last few years has put on the railroads has been a decided disadvantage to them. The excessive traffic has disturbed regular business, increased the danger from accidents, and considerably raised the charges for maintenance. In general, the railroads would prefer a normal to an abnormal traffic demand.
The same is true of industry. Such tremendous pressure as the last few years have brought cannot be borne without loss. The factories were obliged to hire working-men much below the average grade of intelligence, and the slight decline of industrial demand has made it possible to dismiss the inferior men and to keep only the more efficient. Industry itself is to-day like the railroads, thoroughly sound and prosperous, and the small fluctuations in profits are not nearly so great as the declines in market quotations.
Financial operations and labour are largely independent of each other. The output can be undisturbed when the value of shares is being wiped out in the market. American stocks do not represent the actual value of the industrial plants which have been combined to form a trust, but represent in part certain advantages which it is calculated will accrue from the consolidation of business—economies of administration and obviation of competition. The real economic life will not be damaged if such shares, which for the most part have remained in the strongboxes of the very rich, decline from their fictitious values. Such fluctuations have always happened, and may happen in the very height of prosperity, without doing any harm to industry itself. Thus, for instance, in 1898 an enormous over-speculation commenced in copper shares. Their price was artificially raised and raised, and in the summer of 1899 this house built of share certificates collapsed, and great was the fall thereof; but the price of copper itself was uninfluenced. A pound of copper in the year 1897 brought only the average price of 11 cents; in 1899 its average price was 17 cents, although the copper securities were going down steadily. Not only is industry itself on a sound basis, and the improvements which it introduced in the last panic are not only still in force, but also certain needs have now been met at home which formerly were met only by foreign countries; and at the same time commerce has been so energetically carried into other countries, that there is now a readier outlet than ever in case the domestic purchasing power should again be suspended.
But there are still more important factors. The first of these is the recent and complete independence of this country from European capital. Since year after year the exports of the United States to Europe have exceeded the imports by hundreds of millions of dollars, the debt which Europe so contracted has been paid for the most part by returning the industrial and other bonds which Europe owned against America. It was this which had greatly contributed to the crisis in the early nineties; Europe withdrew her capital. In 1892 the United States paid back $500,000,000 of European capital, and to-day very little is left to pay. In 1893 the United States exported $108,000,000 in gold, but imported only $22,000,000. In the year 1898 the imports of gold to the United States were $105,000,000 more than the exports. Last year the balance was still in favour of the United States; and it would be impossible to-day, in case of any stringency in the money market of the country, for the withdrawal of European capital to precipitate a panic.