The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1901-12-27
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,
merchandise and specie of the United
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 a heavy net excess always
| takes place because the system of govern
| ment OF India compels heavy tribute
| i. e., compsls large drain of the produce
| of India to England without any material
return of merchandise or specie. But
| America is not under such a draining sys-
| tenn of alien foreign government; anc
| I therefore desire to know the causes ano
| their eXtents, of such heavy net excess
| of exports of Americas wealth or produce,
and how this large balance of trade is
| expected to be settled"
The following is an extract from
the reply of the chief of the bureau
of statistics:
| During the period Immediately follow
ing our civil war great internal develop
nlent 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
a 1ifa ot1
| ing establishments. including the opening
| of new fields of production, was an eror-
N gus increase in the expectations and
! 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
| terials 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 a consequence, exports exceeded
! imports in a constantly increasing ratio.
The fact, however, that large sums had
been borrowed abroad for the internal de-
| yelopments above alluded to required pay
ments of large sums for the annual in
| terest charges, and thus absorbed 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 ale of bonds
| or by direct loans, also require consider.
! able sums for the payment of the divi-
/ bends 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 he coz
sidered is that of the money expended
by Americans travelling abroad.
Until recently these four great factors
| ID the payment of interest on American
| securities held abroad; (2) the payment Of
| earnings of foreign capital invested in
| business enterprises in the United States;
90 the payment of foreign freishts car
ried in foreign vessels. especially freights
on goods imported into the United States.
| and (D the expenditures of Americans
| travelling abroad, have been considered
| the chief cause of the fact that the eX-
ports of merchandise SO much exec q
the combined imports Of merchandise, spe.
Gle and bullion. Within the last two OF
three years, however. three further &C
| tors have apparently been addt do tbs
| cancellation of American Indebtedness
broad, including a return to the United
| States of the railroad ard other securi-
! ties thus he'd; co 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, ard in most cases
| quickly taken to the amount OF probab by
| $l00, 000 600 in the year, and CO the credits
/ which now stand abroad in favor OF our
exporters, and which are permitted to 50
! stand because better interest rates could
| thus be realized than by insisting upon
| their immediate payment.