The herald., 1895-08-16
LoNDoN's IDLE CASH


rate of interest allowed, money continues
to pile up in the Bank of England to an
extent which both puzzles ana alarms the
conservative directors of England's great
est financial institution. The bank s
private deposits now amount to f41, 500.
900, against f33. $50. 900 six months ago
and H3s. 900, UJ0 one year ago.
According to this report the increase in
idle funds has increased about $40. 900. 900
during the past few months. This of it.
self is not so remarkable. but when we
consider tnat this is to be added to a pre-
vious accum mulati0n amounting to over
$4OO, 0O0, 900, it is not to be wondered at
that the bank directors are puzzled to
know what to do with the funds in order
that they may be so employed as to earn
even the small percentage which the
Bank CT England allows. These funds
have accumulated from two causes-the
natural additions to the nations savings
and of capital diverted from other invest
menss.
For time there was an American scare"
in London. and number of investments
In this country have beon closed out and
tho money is now idle in bank. Just
how these funds will be reinvested is an
interesting subject to us. 1t is claimed
that OF late the Engiishmen have been
heavy buyers in Wall street, but that on
the other hand their sales of other prop
critics about balance the sheet.
The future 10 full of import to US. The
reinvestment OF any large proportion of
English funds means a great deal to us.
The condition of the Bank of England
proves most conclnsively that instead o t
putting annual savings into foreign invest
ments England has been boarding them.
and this large surplus fund accounts for
the fact that the loan rate Of money in
the London market is down to three
fourths OF one per cent per annum.
1t requires no visionary flights to place
before the people of Southern California
the advantages of foreign investments as
is relates to us. A small percentage of
the idle funds of England brought to
Southern California would work wonders
and the investors will not have to take
any one per cent per annum as returns
on their investments. In the matter of
Investments in this country 1t is we'll to
know how the Englishmen view matters
themselves. Ono of the foremost London
papers IS the Times. What the Times
has to say carries weight with English
men. Recently the subject of American
investments was under discussion in the
editorial columns OF the London Tim es.
Among ether things the following was
said, and which, in view of matters.
ought to be worthy the consideration of
our people:
Good authorities are of the opinion
TINT capitalists of this country we're in
the habit. I'D to about 1892. of investing
about $50, 900. 900 per annum in the Uni
ted States, chiefly IN railroad stocks.
This estimate errs. if it does eri. on the
side of moderation; but in calculation
OF this kind the only estimate worth
making is of a minimum. If we allow an
other twenty millions net for Investments
(allowing for conversions, refundings
and similar operations) in other coun.
tries, we get sum OF $50. 600. 900 per an
mum, which, up to five years ago. was
employed abroad. This sum was certain
ly exceeded in some years. 1t would
seem. therefore. that at least $f250 00O.-
600 of money which used to be placed
abroad is now retained at home. During
the last five years. therefore. investments
at home have had to be found for Il good
deal more money than during the years
preceding them. But for the un
CaSlncSS WIN WDlCn the American none
tary system, the defects of which are only
too we'll known to our readers. is re-
garded, there can be no coubt that good
deal more m oney would have already been
yeinvested in the United States. now that
business is perceptiDly improving there.
But the defects of the system remain still
what thec were. end many cautious peo-
pie will refrain from putting their money
Into American securities freely until they
are remedied. There are, however, parts
of the world which seem to be regarded
with no misgivngs as fields for the en-
ployment of our accumulated savings
China, for example, and the Transvaal,
to say nothing of Chile, Brazil and other
places. Tho attitude Of capitalists toward
China is very remarkable. There has
been a positive rush to lend money to
China, not only here. but in the leading
cities of the continent.
Taking up this subject. the New York
Times goes over the ground and says:
Although greenbackers. iafationists,
free coinage advocates and the whole
tribe of cheap money men are accus-
toned to combat the proposition. it is
true that the purchase OF our securities by
foreign capitalists is q good thing for
us. We borrow money and pay for its
use because W can make money by using
il, can make moro money than the
charges we psy. The operation is profit
able to US. We shall be compelled to a
considerable extent to forego these profits