The sun. [volume] (New York [N.Y.]) 1833-1916, 1897-06-14
ryrparMENr or TRADE BALANCES.

,,o ,onc contin ued depression Of which 90 much
has been said. or whether II proceeds merely from
tho despair OF capitalists Of being able TO do any
better with their idle money than to invest 1t In
things which promise some income. however
,m,ll. Il is hard 70 say. Probably both causes
arc operative. People have begun to get tired
NJ awaiting for legislative help. and arc taking
matters into their own hands. and they are also
,Irsd OF waiting for better opportunities OF in
~cstment than those which tho market already
rrescuts. With banks paying nothing on do
nosits, trust companies only l and lAa per cent.
nor nnnum, and frst-class railroad bonds be-
,vcen 3 and GIG, the temptation to take o little
risk for tho sake OF 4 per cent. and upward 10
too strong for human nature to resist IT.
As usual, much influence is attributed to tho
mpposcd buying Of our stocks and bonds for
European account, and q Rroundless report that
Mr.. J. p. Morgan had sold in London 81. 5000
Of new Illinois Central Railroad stock found,
for q time. many believers. That considerable
,pcculntiye trading In this market by European
operators goes on every day 10 we'll known. but
whether tho purchases exceed the sales. and
whether the excess Of purchases, II any, 10 added
TO permanent foreign holdings, are not easy
to discover. Nevertheless, 1t Is conceded that
the amount Of Americana az they arc called
In London, belonging TO British and German In.
yestors is very large, and, considering the
scarcity abroad Of safe investments which yield
even so much as 8 per cent. per annum. the
natural tendency Is to mako 1t larger. With
the per cent. debcntures of the leading British
railway companies selling at from liz to 100, 1t
is reasonable to expect that 3La per cent. gold
bonds, like those OF the Lake Shore and tho New
York Central. should readily DO taken at the
small premiums asked for them.
Between London and the financial centres Of
the Continent an extensive trade 10 done in Gov
eminent and other securities. which are a. mar
ketable in one place as they are in another.
Some Of them, the French rentes and Russian
bonds, are bought and sold by investors, while
others, such as the Spanish. Italian. Greek.
Turkish, and South American public debts, arc
purely speculative. Continental railroad shares
and debentures. gas stocks, waterworks stocks,
and similar securities are likewise quoted as
regularly in London as they are at home, and
for the last few years South African gold mining
shares have found as many purchasers in Paris
as they have in London. The facility OF tele-
graphic and railroad communications and the
long prevalence Of peace In Europe have COM
bined TO mako Of European ananciers o single
community. the members OF which deal with ono
another as freely as II they were Of one nation.
In the settlement OF trade balances between
the different countries Of Europe, the movement
OF these universally marketable securities plays
an important part Primarily. an excess of
Imports over exports BY q country IL paid to
its creditors In gold, but, to o large extent, it Ia
also paid by the transfer from one market to an
other Of stocks and bonds. A demand for gold
for shipment ct any point raises the rate Of inter.
est on money at that point, and consequently de-
presses the prices Of stocks there. Creditors
who have money payable to them at such a point,
can. therefore,, make a profit by turning 1t into
stocks, which they bring homo and sell at an ad'
vance. Tho same thing happens frequently,
though less extensively. between this country
and Great Britain, and. as We know, 1t has q do
cided effect upon the course Of foreign exchange
The excess Of this country's Exports over it,
imports has been, since July l. 1896. about
$500. 600, 900 in merchandise and S2s. ooO, 900 ir
silver. Had payment Of this balance in oul
favor been made In gold we should have i'm
ported that metal to tho valuo OF 032s. 900. 900
whereas. in fact, our net imports Of It during tn,
period mentioned have been less than CSC, 900.
900. The difference II partly accounted for BY
the interest and dividends on investment:
remitted to foreign holders, and by freights and
passenger fares earned by foreign shipping. hui
Its also made up to a large extent BY the return
Of securities to this market for sale. Great
Britain. on the other hand. imported in the yeal
1895 merchandise to tho value Of 800. 900.
900 more than her exports, and yet her net OK
WIZ v bOio v ~ yCAl "CICo hly VoO,OVO,oOO
the difference Of S670.O o 600 representing tn,
income Of her people from the earnings Of thei
ships and from their In in foreign coun
tries, as well as their sales Of those investment
In foreign markets.
To the foreign holding Of investments in thi
country is due the fact that We need every yea
to make much larger exports Of gold in addition
to Merchandise and silver than we otherwis
should. Thus, in 1893, when the nominal trad
balance in our favor was about SOS 900, 900, W,
were obliged to export Ss7.5 SOC. 900 in gold. Ii
1894 the trade balance to our credit wa
e265, 900. 900. but we still exported gold to tn
amount Of 81. 500, 900. In 1895 the excess Of gu
exports was S102, 900, 900. but we had to expor
s3l, 900. 900 in gold besides. In 1896 our credi
trade balance was S120. oO0, 900, and yet on
gold exports were $3.50 o 900. Precisely hoy
much merchandise and silver is required ever,
year to pay what we owe abroad for interest an,
dividends and for the services OF foreign shir
ping can, therefore, be only guessed at, but tn
Indications are tina 1t Is steadily becoming less
and that eventually this country will, like Grea
Britain, be so full of rich people that we shall, a
enation. DO creditors instead OF being. as we ar
now, debtors.
That time, however, Ia still too far of for u
10 begin. now. to count upon II. At the moment
indeed, in the absence Of our usual activity @
NepAetAA Jus Va ~ wv
meet all demands for 1t and more, too, bu
THIS state OF things will not always continue
The immense undeveloped resources of the couI
w oher too inviting a field for money maxim
" be forever neglected. With or without tn
new tariff and with or without a reform Of tn
currency, our people are not going TO sit dow
ana do nothing but bewall their reverses. Soone
orlater a few choice spirits will lead In breakin
.pthe prevailing stagnation and tho rest wi
follow. 1t has happened go a dozen times befor
mour history. and 1t will happen again. Whe
h~happens we shall want TO invite the a~ssistanc
vioreiRn capital, as we have on previous sim
hf occasions. and we ought to prepare to get
anu 10 Keep 1t on the most advantageous term
no argument is needed to show that the e.
.ehual requisite to securing foreign capital fc
use IN this country Is to inspire confidence 1
MoWhers that It will DO safe In our hands. NJ
why must they be assured that the money whic
"easX them 10 lend us will DO wisely employe,
wIal least, 80 wisely that its borrowers will /
VI 70 pay the interest upon IL which they aRrt