The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1896-09-25
Because Foreign Capitalists Get
High Rate Of Interest
Which Must Be Paid Because
We Have Not
Money Enough In This Country
to Do Business.
FOREIGNERS DOING IT
And Reaping All the Profits Of
Capital.
Moving of the Crops Response
BILE For the Inflow.
FOREIGNERS DOING 1T

Journals financial writer, one of the
most highly paid skilled and best posted
authorities on money matters contrib
utes the following essay on the cause
Of the gold importations:
The discussion over the remarkable
flow OF gold into this country continues
Unabated and some very wise theories
are PROMULGATED. Wall street patted it
self on the back with great glee this
week, when it discovered that the
statement Of the treasury department
for she August movement of imports
and exports had solved the mysterious
problem. This statement showed an eX-
cess of exports over imports of Sl9, 1884,
80, against an excess OF imports in
August. 1895, of $15.131, 324, and great
Clacking Immediately arose, and the
Il told you sos reSOunded from every
banking Office.
How simple the whole thing becamel
Why, of course, gold is coming in be
cause the balance OF trade is IN our IA
Vor and foreigners are in our debt This
is the same Wall street that in 1894
shook its head OminOusly at the export
OF gold when the balance of trade was
also in our favor to the amount of
S24O000.C COO, and pointed with thunder
tones of conviction to the silver agita-
ton as the cause of the flow of gold
from our shores. Whole pa ges of edi-
torials were written. and enough fnan-
cial criticism printed to fill a library, to
prove that the mere suggestion of free
coinage OF silver was enough TO cause
every ounce of gold in this country to
take wings and fly from the land Of the
abhOrred silver agitation.
This was also the same Wall street
that in 1892 Numbered for the repeal of
the Sherman silver purchasing act be
cause the export Of gold was alarming,
with the balance of trade over $780,
100000 in our favor. The Sherman silver
act was repealed and the silver agita-
tion has grown tremendously Surely
the free silver agitation of 1894 was not
a ripple compared to the huge wave of
efT1er
nation.
Gold. however. is now pouring into
the country, and all on account of the
favorable balance of trade. fOrSOOthi
The lacOnic old gentleman in the Vicar
OF Wakefield furnished to pOsterity
the most competent answer to Wall
streets latest discovery in his custo-
mary exclamation of "Fudgei"
1t was shown in two previous articles
how the international exchanges had
been deranged by the shock of the Bar
ing suspension in $780, and how conf
deLce had again restored the interna-
uonal action of money to a normal
basis Under normal conditions it is a
well known law that the gravitatiOn of
money IS always toward the nation
where there is the greatest need of
money, as expressed in the form of the
highest interest rate. The persistent
and enormous export of gold TO this
country by other nations in so short
period. which has scarcely a parallel in
financial annals, is due to an extraor-
y
The situation became plain the mo-
ment the crops matured- We had not
money enough to conduct our business
and move the crops at the same time.
What is the inevitable result of a con-
ditlOn where there is not money enough
TO go around?" The people only buy
what they must aid sell everything
that they can Imports must then de-
crease and exports increase. Every eff
fort is directed to the decrease of ex-
penditures and the LIQUIDATION of assets.
The great assets of the country are
its crops; hence sales to the foreigners
who are OVer-fiuSh with cash at the
moment. The decrease of expenditures
is attained by cutting off Injuries,
hence contraction of impOrts-Th grow
ing balance of trade in our favor is
consequently only an incident of the
phenomenon troubling Wall street. and
not cause The swelling trade bal
ance in our favor. like the gold impOr-
tatiOn. is only one of many manifesto
uonS Of the fact that we have not suf-
hcient money to conduct the business
operations of the country. There has
already been imported ST 600 600 gold,
and this money has disappeared like
drop OF water on a hot stove. Wall
street wonders at it This amount of
fresh money in circulation is only a
drop in the bucket.
A consideration Of the money situa-
ton reveals why S27. 600 000 of foreign
money has only given slight relief I'm
der the Bland law g 600 600 new money
was created each month: under the
estimating the average value Of silver
bullion purchased under that act For
three years no new money has been
created by government act. During
that time S262. 600 600 bonds have been
sold by the government. and gold has
been steadily leaving the country Mon
ey has been absorbed into the treasury
az the same time that it was leaving
the country. The Great ton of $50 600 600
Of government money annually has
ceased The net amount of money alb
sorbed by the treasury since the first
bond issue, in February. 1894 is about
$3.50, 100000. The net loss of gold has
been Sl20 .OO0, coo. AS compared with the
conditions ruling in 1893. counting the
rate of new money issue under the
S45o, 100000 on the wrong side Of the
ledger, Meantime the population has
been growing, and the cOnsumptive ca
pacity OF the nation expanding in pro
portion to growth Of population.
ne limitations OF the national bank
note system are such that the banks
have not been able to fill the gap. The
hole thar must be filed gives some faint
idea of the extent of the gold imports
that viii be forced. no matter what Of
nc1aI measures foreign government
banks vainly undertake to stop the doyv
OF gold to this country.
The moment the crops began to move
IN earnest the banks found themselves
IN a position where money could not |
be supplied for business and crop NOV
Ing purposes at the same time. It could
not be done because the money was not |
there Checks and other credit instru-
ments win not move crops. 1t requires
cash TO harvest crops and cash to buy
them Mercantile credits were cut off |
short, but still there was not money
was threatened. Interest rates began |
TO soar. Suddenly the FOREIGNER Stenna1 l