The sun. [volume] (New York [N.Y.]) 1833-1916, 1907-07-21
EXPORTING GOLD.
Point at which II Becomes Pront abl Cost
OF shipment.

OF Shipment.
Every point that the price Of exchange
advances above 4soT-which is the par OF
exchange-makes it easier TO export gold,
says the Van Norden Magazine.
Under ordinary conditions when exchange
sells around 4s7%-whioh is a full cent
above the par Of e~xchange-it becomes
profitable to export gold. II sold at 4s7x
on the day when the present movement
was i~naugurated. but even at those terms
IL might have been difficult to start the
movement had 1t not been for the fact
that the Bank Of France offered to concede
the interest In transit while the metal was
on the water.
Thai ia to say it made advances to the
importing bankers at Paris IN the day
that the negotiations for the New York
shipments were concluded, so that as soon
as the $500 900 was paid into the United
States Sub-Treasury for the gold bars taken
out Of the Assay ONCE the bankers received
credits or money at Pa rs covering the
amount Of the engagement at New York.
When a gold shipment to Paris is nego-
tiated three items OF expense enter chiefly
into the cost OF making the export. Estimat-
ing them roughly on the basis Of shipping
81 900 900 from New York to Paris. they are
as follows:
EIr ,s charges including carriage. 500
interest on ST 200 900 for nine days reckoned at
3s per cent, which Is the French Banks
Total. S:.i.s
This shows that the bankers could not
ave exported gold advantageously had
they seen ss than So. l25 profit in the trans
initial shipment Of May Is was made. and
for thai reason no gold could have been
sent. Realizing this, the Bank Of France.
in its eagerness to anticipate the gold move
ment. authorized its agents to offer in
terest in transit for the gold engaged in
New York.
This concession eliminated the item Of
81 ,l25, which was the exact interest charge
on each 81 900. 900 shipped. and reduced
the cost Of shipping eaoh 100000 from
gold exports possible at nearly one-third
less cost than would have been possible
had the Bank Of France not assumed the
usual interest charge.
All this goes to show why the great Euro
pean banks oher interest in transit when
they are anxious to secure gold. Tho
Bank of France frequently does II, and the
same concession has been made at London
whenever the English market WINS in need
Of Strengthening its gold reserve. Such
an inducement never creates a gold move
ment, for that is governed by the infexibie
laws Of exchange. but IL often anticipates
one. just as II did in this country during
the week OF April II, 1909, when Secretary
Shaw consented TO make special deposits
OF Government funds with national banks
agreeing to import gold from Europe.
No branch Of banking Is more difficult
To master h the intricacies Of foreign
exchange, and even the experts who have
studied the subject all their lives will tell
you that they often misjudge the market
completely, and have to shift their opinions
In short order so as to avert heavy losses.
The extraordinary gold shipments in
yolved in remitting the purchase price Of
the Panama Canal property during the
period ending June II. 1904. when the Panama
Canal remittance was In transit. OF this
amount s43, 089. 900 went in May alone,
which WAS the high record for a months
gold movement. The previous high record
was lust ten years before. in May. 1904,
but the amount exported in that period
was only 327, 400, sOl.
No such records will be achieved on
this movement. for there is nothing alb
normal about the present gold outflow
to France. Excepting 1908. we have sent
gold to London. Paris or Berlin before
June, in every year since 1899.