New Ulm review., 1901-05-15
A FINANCIAL PUZZLE.
Why American Money Goes to
Europe and Little Returns.
Treasury Department Answers In
dian Gentleman Residing in Lon-
don and Explains an interest
ing Commercial Situation.

"What has caused so much produce,
States to go out of the country with
out the ordinary corresponding re-
turn" is a question recently pro-
pounded to the treasury bureau of
statistics by Mr.. Dadabahai Naoroji,
an Indian gentleman residing in Lon
don.
Mr.. Naoroji in his inquiry addressed
to the bureau of statistics quotes the
recent figures showing large ex-
cess of exports of merchandise and
specie over the net imports of mer-
chandise and specie, and says:
.'In India heavy net excess always
takes place because the system Of govern
ment of India compels a heavy tribute,
l. e., compels a large drain of the produce
of India to England without any material
return of merchandise or specie. But
America is not under such draining sys-
, tenn of an alien foreign government; and
I therefore desire to know the causes and
their extents, of such heavy net excess
of exports of America wealth or produce,
and how this large balance Of trade is
expected to be settled
The following is an extract from
CHS #ISPly VI sGlC ClllSI VI GuCs Jul ca
of statistics:
During the period Immediately follow
ing our civil war great internal develop
ment of our railways and manufacturing
occurred. Much foreign capital was
brought into the United States for use in
this development and during that time
and in subsequent years railroad and
other securities were largely marketed
abroad. The commercial results of this
development of railways and manufactur-
ing establishments, including the opening
of new fields of production, was an enor-
| nous increase in the expectations and a
disposition to relatively decrease the i'm
portations because the development of
manufacturing was making it practicable
to produce at home from our own ma
ter1alS much which was formerly brought
in from abroad. Thus the great business
development of the years 1870 to 1890 had
tendency to stimulate production and
expectation, but discouraged importation,
and as consequence, exports exceeded
imports in constantly increasing ratio
The fact, however, that large sums had
been borrowed abroad for the internal de-
velopments above alluded to required pay
ments of large sums for the annual in
terest charges, and thus absorbed a part
of the proceeds of the surplus exports
The earnings of foreign capital invested
in great enterprises in this country, other
than that obtained by the sale of bonds
or by direct loans, also require consider
able sums for the payment of the divi-
dends and profits of the enterprises in
which it was invested The further fact
that internal commerce and investments
in internal developments were extremely
profitable, reduced and temporarily sus-
pended shipbuilding in the United States,
and, as consequence, the increasing traf-
fic came to be carried more and more in
foreign ships. Another factor to be con-
sidered is that of the money expended
by Americans travelling abroad.
Until recently these four great factors
Q) the payment of interest on American
securities held abroad; CD the payment Of
earnings of foreign capital invested in
business enterprises in the United States;
60 the payment of foreign freights car
ried in foreign vessels, especially freights
on goods imported into the United States,
and N the expenditures of Americans
travelling abroad, have been considered
the chief cause of the fact that the ex-
ports of merchandise so much exceeded
the combined imports of merchandise, spe-
Gle and bullion. Within the last two or
three years, however, three further fac
tors have apparently been added-G) the
cancellation of American Indebtedness
abroad. including return to the United
States of the railroad and other securi-
ties thus held; (2) the sale of foreign Sc
curities in the United States, such as the
German, British and Russian securities
which were placed upon the markets here
during the last year, and in most cases
quickly taken to the amount of probably
$1OO, ,000, 600 in the year. and (3) the credits
Which now stand abroad in favor of our
exporters, and which are permitted to so
stand because better interest rates could
thus be realized than by insisting upon
their immediate payment.