520 THE WORK OF THE STOCK EXCHANGE
closing of the New York Stock Exchange.®* As the President
of the Exchange during that trying time afterwards stated :*®
. . . the fundamental reason for closing the Exchange was that
America, when the war broke out, was in debt to Europe, and that
Europe was sure to enforce the immediate payment of that debt in
order to put herself in funds to prosecute this greatest of all wars. To
use an illustration popular in Wall Street at the time, there was to
be an unexpected run on Uncle Sam’s Bank and the Stock Exchange
was the paying teller’s window through which the money was to be
drawn out. so the window was closed to gain time.
Once the initial shock was spent, however, the Stock Ex-
change was reopened gradually and skilfully. Trading in all
securities was again permitted by the following December 15,
and at once the Exchange became vitally serviceable to the
nation under the new and unprecedented conditions imposed
by the war.
Reversal of Our International Trade Balance.—Obyvi-
ously, Europe could not maintain her previous volume of
exports to us, for her factories, her ships, and her capital were
restricted to war production. On the other hand, the Allies
soon began to purchase here enormous quantities of all sorts
of raw materials and manufactured goods needed to conduct
the war. The result was, of course, that our total exports
soon threatened vastly to exceed our total imports. It was
vitally important for the Allies to prevent such a condition in
our trade, lest dollar exchange soar in terms of francs and
pounds, and their purchases of war material here prove im-
possibly expensive. In consequence, Europe soon began to
ship us large quantities of gold to offset our impending surplus
of exports. But there was not sufficient gold at her disposal
to balance the account in this way, and accordingly the vast
European pre-war holdings of our securities began to be sold
through the New York Stock Exchange to American specu-
18 See Appendix XVIITe.
19 Noble, The New York Stock Exchange in the Crisis of 1914, p. 65.
