New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-04-26
LETTERS FROM TIE PEOPLE
GOLD SPFCULATIONS.


CORNERS N GOLD or NO BENEFIT TO EXPORTERS
A POPULAR ERROR CoRRECTED-EFPECTs OF SUD
DEN CHANGES IN TIE GOLD PREMIUM.
the EditorOf The Tribune.
SIR: The fact that the recent operations OF
the clique" in gold proved injurious to the business in
teress of importers q dealers imported goods and OF
manufacturers who use foreign crude material may he
Thought to Indicate that farmers and other producers
manufacturers OF exportabe articles and those per-
sons whose business it il TO send productions abroad
are proportionately benefited Our mportations are
based on gold prices and therefore advance in the
premium advances the currency cost and selling prices
and consequently checks consumption. on the other
hand our expectations based upon currency prices
and therefore advance in the premium gold reduces
the gold prices and consequently helps consumption An
imported article costs 81 gold and the gold premium
be II per cent the article 81 In currency but
the gold premium be 10 Ter cent the cost in currency
would be II 10. barrel Of nour costs SO in currency
and the gold premium be per cent the gold cost TO
the exporter would be s. 20 but If the gold premium be
10 per cent the -four would then cost in gold only 50 H.
While the effect Of established advance in the premium
on gold must he to raise the currency prices Of exp0abe
as well as OF imported goods let not be too hasy in
giving thanks to the clique" before consider
details Of the export trade
Suppose Mr.. A. to have frendsin Europe 10 whom he
sends breadsuffs and suppose Mr B. have friends in
Chicago and Milwaukee from whom he receives the
l. a. ID.
sentative men, and be considered to have a small
amount OF money in proportion to the requirements Of
their business, II conducted strictly a cash basis. Mr.
BIS friends are always crying for money and In order 10
wait until he receives money from Europe. pay
AT and he is therefore obliged bring in another
persOnthc bankerWhose business 10 lend the money
MI \. draws upon his friend in Europe commercial bill
OF exchange TO the cost OF the goods and sells this
bill the banker for cash. and sOMr enabled pay
Mr. b.. and Sir g. b. enabled To pay his friends in Chicago
and Milwaukee. When tine bill becomes due, Mr. AS
/ ID Ia
spondent ilr A friend III Europe the time,
so davs having received the goods and obtained money
Mr. A.. bill IS quite n much matter OF concern for Mr.
A. the price he agrees 10 MI b. for the goods Tor
every dollar lost by Ar A. In getting the goods Europe
must be added in his calculations Of cost Is quite ev-
deu too that If circumstance. be such as To prevent
the sale at 1r bill they must also prevent the sale Of
goods from Mr.. B. 10 Mr. A. since neither OF these gen
temen has more money than ne needs 10 conduct his
business IN The ordinary way. The price which banker
one % cent below the price al which he Is willing To sell
his own bill The bankers bill OF exchange Is drawn
against the bankers correspondent, ana Is bought by Inc
/ mpOrter for the purpose OF sending il abroad, so
| that the foreign shipper may in collecting the
! and the commercial bill Of exchange il drawn
against the exporters correspondent and Is bought ny
the banker for the purpose OF sending abroad 80 It
his correspondent may, IN collecting II, receive the sum
OF advanced here The difference in price between
commercial and bankers bills is the profit OF the Oanhng
business, but this difference varies considerably Let rs
what the gold premium has 20 do WITH IL. Mhen gpd
is high importers avoid buying bills OF exchange. so far
a. p"s>lpt 'tcidNe @oh must ne DOu.Ht - Ply Io ln
bills and hence ihe bankers soon hnd themselves snort
oi gold amt therefore unable 10 nay colncch ols IL
Is thar advance 10 he gold premium should nave
the same effect AGAINST the prices Of both nds Of 2
change sd thus tlr-c would each compensate for TIE
change Of UrcinGm In practice sharp advance IN the
premium. by creating uncertainty 10 the future. has
been found 10 widen the difference in rates of exchange,
putting down the prices OF commercial bills more than
| those 81 bankers bills Indeed. when gold has been
made very scarce by locking m" the bankers have
been unwilling II take al bills az an; and NJ Is a
matter OF Iact that the Z5th Of March when the gold
premium about Is per cent ana when one per cent
paid for the of gold Tor single day. conimercit
bills could nos be sold AZ ALL Inc seeming pfot given "a
export trade the gold speculation lost in tno
reduction OF that the exporters had 10 make IN order
~ sell their bills Or exchange The operations ot the
clique beneficial 10 class in the community
ia nothing can DE more certain than the fact that l
sudden ana nom ntIrY variations the rate OF premium
gold In. detrimental 20 every legitimate interest
ByDpatyn april a 1870. KADtX.