The sun. [volume] (New York [N.Y.]) 1833-1916, 1896-11-30
OUR sUpp1r or PAPER MoxEr

specially contracted by the occurrence OF the
Thanksgiving holiday, which interrupted its
usual course and sent many operators out OF
town TO stay there until to-day. Evidently the
general public, Notwithstanding tho ease with
which money can BIO borrowed Mt low rates, is
not yet disposed to como into the market, but
leaves 1t pretty much to professional traders,
who, of course. limit their buying and selling to
tho few active stocks in which quick turns are
possible. In ono respect this Is n favorable
symptom. When other business is good tho
people engaged In II let the stock market alone;
and. conversely, when they keep away from
Wall street, 1t may be inferred that they are
more proftably occupied at home.
Nevertheless, tho low rates of interest prevail
ing. and tho accumulation Of lawful money in
the banks indicate that the revival of business
activity which, as soon rs the result Of the cleo
tion became known. was expected TO take place
Immediately. is still largely n thing of tho
future. Against the cheering news of the re-
opening Of hundreds OF factories and the re-
employment Of workmen by Tho thousand, are
to be set Off the closing Of important carpet
mills, the collapse of the wire nail combination,
and a painfully lengthening list of commercial
failures. The destruction wrought in the past
three years has been, 1t would seem, much
greater than II appeared to be, and more time
will be required for repairing II than was sup
posed. A patient convalescing from n danger
Gus and protracted illness, though his recovery
10 assured, may yet have to wait a long while be-
fore he regains full health and strength.
The demand abroad for our breadstuffs, at
greatly advanced prices, Is n factor of which the
influence is as opportune as 1t is beneficial. Our
probable exports of wheat alone. estimating
them at 200, 900. 900 bushels. and tho increased
amount which producers are likely to get for 1t
at 25 cents. on the average, per bushel, will yield
the country an additional income of $780,
900. 900 for the crop year, to which the higher
prlces of our other agricultural products may
add S25, 900. 900 more. At the end of Octo-
Der our exports Of merchandise during ten
months had exceeded our imports by over $685.
100000. and those of silver by nearly S42,-
600. 600. showing n gross balance of trade in
our favor of seas. 0Oo,o 600. That this balance
will be increased to $500, 600. 900 by tho end OF
the year is more than probable. Allowing for
all deductions on account of freight, duties, and
other charges. the net amount to be carried to
our credit on the years business cannot fail.
therefore, to be very large.
What the effect will be of this large favorable
trade balance in increasing our money supply
1t is not so easy to determine. By many people
It is regarded as certain, not only that we shall
keep the gold which we imported last Septem-
Der and October. but that we shall import moro
in addition. Their reasoning is that as our ex-
ports must be paid for in some way by the pur-
chasers of them on the other side of the ocean
they must, to the extent that they are not raid
for In merchandise be paid for in gold. This
conclusion would be sound II there were no
other way of paying for purchases but by
counter purchases or with gold, and II the pro-
ceeds of sales must inevitably be RENTED at
once to the sellers. We have. however, fire.
quently seen during the last eighteen years a
large balance of trade in our favor accompanied
by gold exports, and one against us by gold im-
ports, SO that the effect OF either cannot GER
tainly be predicted.
Gold, like any other commodity, is sent by
its owners where 1t can be most proftably
used by them. II merchandise can be bought
with it on favorable terms. 1t will be parted
with for that purpose outright. II it can be
lent safely at higher rates of interest in one
country than in another it will 60 to the
country which will pay the most for II. Thus,
during last September and October. when
interest was high here and low in London,
gold came here. although the balance OF trade
in our favor had not then begun to roll up. II
the breadstufs which Europe is now buying
from us can be more auvantageously paid for
in gold than in merchandise or in stocks and
bonds, and IL those who receive 1t can lend 1t at
better rates here than they can abroad. gold
will come here and stay here, but otherwise 1t
will not. The prevailing high price of sterling
exchange, Notwithstanding the abundant sup
ply Of it. proves that the holders Of the
bills have no desire to bring gold to this mar
ket, but prefer to leave it where 1t is. Moro
significant to the same effect is the discounting
In this market of English mercantile paper.
which is going on to a large extent, because
the rates are more favorable here than they
are in London.
A force which, on the other hand. tends to
drive gold out Of the country and keep it out, is
the continued initiation of our paper currency
by the reissue of redeemed Government notes to
supply the deficiency in the Government reve-
aues and by the increase of national bank circu-
lation. The last of the payments into the Treas
ury for the 500, 600, 900 bond sale Of last Feb
ruary was made in June, and at the end of that
month the Treasury held in legal tender notes.
Treasury notes. and silver certificates about
Sl35, 900. 900. II now holds of tie same kind of
money only about 500. 600, 900. the d Inference of
e45, 100000 having been, to the extent of SAL
600. 900, paid out to the public for Government
expenses IL excess of Government receipts. Be-
sides this, the national banks have issued, since
they began taking the new bonds, additional cir
sulation 10 the amount OF S22, 900. 900. bringing
The aggregate increase OF the country's availA-
Bile stock of paper money up to S67. 500. 600.
the probability, too, is that this amount of
newly issued paper money will, in the course Of
the next six months, be still further augmented
by Treasury disbursements. The deficiency In
the revenue for the last five months will not be
Appreciably reduced during the coming month.
and in January. 1897, the Treasury has to pay,
besides regular Government expenses, about
$40. 000, 900 for bonds Of the Pacific Railroad
issues then maturing. 1t Is unlikely that any
legislation can be had from the present Con-
Eress providing additional revenue. and even
II an extra session OF the new Congress were
called by the President-elect. it could not well
begin its deliberations before April /, nor enact
any measure TO take effect before July 1. For
the six months ending that day tho deficit will,
therefore, probably be $50. 900, 900. all OF which
will come out OF the money now on hand.
That the tendency Of such an increase of
paper currency is to displace gold and drive it
put of the country has been repeatedly demon
strated. Tho steady outpour OF Treasury notes.
issued for silver purchases under the act of
1890, at the rate OF S5O,0 900, 900 and more every
year, had, In 1893, when they amounted to
Sl55. 900. 900, 30 stimulated gold exports that a