ABSTRACT
The down-drift of trade came to an end in 1885. On the lower curve in Diagram I. a very steep ascent is to be seen between 1885 and 1886, and from 1886 to 1890 a steady upward slope. In 1886 America was apparently taking loans again in big quantities ; in 1887 the loans were bigger still, and in 1888 their amount was enormous—almost as great as those at the explosion point of the inflation of the seventies. The improvement in United States imports is not reflected in exports, however, until as late as 1888. We find the same fact, namely, that the movements in exports follow those in imports only after a year or two, in the trade fluctuations of the seventies. The explanation is not far to seek. Both these trade vagaries were conditioned by railway enterprise and speculation, and much of the capital which indulged the mania came from England. Therefore, for a time, the increase in imports was met by the export of securities. It was only when the flow of capital was checked, or even turned back in its course, and when interest became a chief element in the “loan and interest” balances, that exports had to respond to any great extent.
