New-York tribune., 1908-01-04
HOLIDAY BANK RATE.
High for Festiue Standardization
Predicted Diamond Depression.
London. December 81

CCCU--1(tLHtOUu l(C pr ootOH.
London. December 81
\ per cent Christmas, AS IL is the first
one for over forty years it is. at least, a nov
city and like other costly luxUries it is set
down to the account of America year ago
the bank rate was 8 per cent. and there were
dismal lamentations over it, although it was
caused mainly by the remarkable activity of all
industries In the kingdom. which had created a
ceaseless demand for money. There had also
been large Withdrawals of gold for America and
Brazil and a considerable loan had been
financed for Russia, and when money was
wanted in great masses at home and abroad the
bank rate had to be raised although the re-
serves were higher In December than they had
been in January. The per cent rate has come
at the close of a year when trade has been less
profitable business activity more normal and for
egn countries especially America and Germany.
have been less prosperous. and 1t is maintained
more artifcially than last years Christmas rate.
because money is more plentiful and less capt.
tai is needed for the legitimate requirements Of
trade and for public works. 1t remains for the
benefit of banking interests and money lenders
when stock brokers are complaining OF stag
nant markets and bad business and manufact-
urers and merchants are forced to restrict pro-
duction and export trade. There is no squeeze
in the money market, as there was a year ago.
at the high charges; yet the rate stands at
Der cent when the resources of the bank are
greater than when it was q or even T.
The exclamation offered for this artificial dear
ness of money when the demand for il has de-
cIiued at home and trade has fallen of abroad
is that the strengthening of the banks POSI-
ton is more important than the lowering Oh the
rate An immense amount of gold has been
drained from Europe to America during recent
months. and the high rate is considered neces-
earv until there are signs of refiux of bullion
.The gold must come back before the money
market can be eased.' is the fiat Of the bank
avs Who have their dividends to reconcile them
- tho i,conveuienCes of the situation Extre-
t+ ar,,orr the monetary theorists are even dis
nosed 10 argue that the rate should De ralSeu
n : or Q in order 10 hasten the recovery ol tIe
lost gold which has been swallowed oy sreeuS
America: but more cautious bankers are Coii-
WINGED that it is difficult enough 10 JUSTIFY
nar cent when the bank reserve is as Iavoraoie
and the money supply as plentiful as al pres
ort and that it will be unreasonable to increase
tho rate unless withdrawals of gold are rene"eu
nv demands from America. Germany AfseH-
.i chile Brazil and other countries Inc re-
-. Of tho gold recently absorbed by America
IN r,Iace of undigested securities IS as uhceIt
nc rho restoration of the stocks OF bullion az
curruIated in Paris, Berlin. Vienna 81 fe'eiS
-. washington and other capitals during the
last twenty years. Apparently tne puiN VI ~
o1d e1norted to New York is an advance pay
So. fIr cargoes of cotton. breadstuffs and pc
+ro1o,,n which have been or are 10 De ueliN
I'D if there is a marked decline OF European
:, America next year a big SHRINK
:; .,,,ris+ travel the return OF the DuIiiOh
-. no deferred indefinitely The banK id'e ID
III to he reduced with the influx OF January
,i>,,Ja,ds long before the gold is "dissorged
from America - 5 or
y-he per cent rate has come a' ''Ai- -
. ,.ear when the yield of gold from the Iia
at has reached the maximum Inc HS"'e'
for December are not yet at manu. pu' .'e GO
.-e,,to production for twelve months VIII prop
ob1v axceed s135. 100000 In the course OF nVe
,,ears owing mainly to the introduction oi Oni-
~ ,ahor in South Africa, the yield OF the
-. h.s bean doubled and the aggregate solu
,7,,rtion of the world has been largely IN
creased The bulk OF gold comes TO London ana
is shaken through it as through sieve anu
scattered over the European continent anu INC
y,r,e+ar, F4eufsphere VIII the supply from the
r,a,s,.aaI which is absorbed so readlly Dy an
tho ereot countries except England De HldIh-
,ained during the coming year Iha' is an III
,..,i,e, question in view of the changes er-
fec+ad in labor at the mines. III the moh'hiS
rst,rrs Of production for the last five years De
,,s.1,, examined il will be found that the enor-
~ a,,,ansion has conceded with the introduc-
,fo, and systematic training of Chinese labor.
Can the present output be maintained alter tn7
v,tbdrawal of the Chinese next spring? Ihe
bast evnert whom l have consulted-and ne IS
. trained South African statistician-asserts
that il can be done. but that there VIII not De
, a material increase. He jUstifes this opinion on
two Grounds: first that the Beers. who are now
:, co,troI Of the colony are not sentimentallsts.
l,,,. hard taskmasters and will force the kafiirs
+o work and secondly. that native labor WHICH
was required for railway building reconstruc-
tf,r schemes and other enterprises at the close
- rho war can now be massed at the mines
ond substituted for Chinese labor. The kaffirs
are however. distinctly inferior to the trained
.,bi,ese as workers and the utmost that can
| 10 reaso,ably expected is the maintenance OF
The current output without the phenomenal
ratio Of increase which has been witnessed since
| 1902.
| The Transvaal gold supply may not oe oi
| minished, although there cannot be any rea-