Of more importance will be the various effects on various classes.  Certain people will be greatly benefited by the rise in food prices and the fall in security prices.  The farming classes will profit by the former; the investing classes by the latter.  Those who have the good fortune to belong to both classes will grow rich.  The farmer who is in a position to save money will both make more money to save and be able to invest it more advantageously after he has saved it.  If he lends to his neighbors he will find the market rate of interest high.  Even if he buys more land the purchase price will be restrained from the great rise we might expect from the prosperity of farming by the fact that the “number of years purchase,” as the phrase is in England, will be small, or, in other words, that the interest basis, which enters into every land price, will be high.

Labor Will Not Suffer Much.

On the other hand the general consumer of farm products will suffer from another advance in that part of his cost of living, while the debtor classes will suffer from the fall in bonds or rise in interest.  Many speculators on the Stock Exchange, those who have speculated for a rise, are in effect undoubtedly ruined already, and many borrowers at banks on collateral security will feel the pinch from the depreciation of their property and the hard terms of renewing their loans.

And the laboring man, who forms the majority, what of him?  It seems improbable that he will be greatly affected, that is, on the average.  He will have to pay more for his food, and food constitutes more than a third of his budget.  But some articles he buys will probably fall and he may secure higher wages because of the withdrawal of competing laborers.  Some labor may rise, especially in the industries benefited by the war, such as, for instance, farming and other food industries, canning, flour mills, sugar, &c., the automobile industry and perhaps ammunition and steel.  In other industries thrown out of gear for lack of foreign markets or for lack of foreign raw material, the wage earner may lose in wages and employment.  In other words, labor will be dislocated in spots, like the other parts of our industrial machinery.

Important dislocations will be felt in the fields of shipping and banking.  One consequence is that American enterprise has now the golden opportunity to capture a good share of each.  The outbreak of the war and the simultaneous opening of the Panama Canal will tend to divert the course of trade from Europe to South America.  Probably our merchant marine can be developed more successfully for this South American trade than it could for the European trade.  New York can largely take the place of London as the world’s exchange centre for Pan-American trade.  This opportunity is increased by the possibilities in the new Banking act for the establishment of branch banks abroad.

With these opportunities and the rise of interest in Europe, the United States will change to a great degree from a debtor to a creditor nation.