Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1909-04-16
BILE. This is one reason why gold bars


Besides, the moment an American
gold coin reaches England or any 9TH
er foreign country its value as a coin
ceases and its only value Is its in
trinsic value as gold. Coin for ship
ment Is packed In canvass bags, but
the bars are packed in sawdust and
conveyed in casks.
The Bank of England holds large
quantities of American eagles. These
eagles are all in bags. When the bags
reach the bank they are weighed. It
sometimes happens that in order to
! make the weight Of a bag uniform, a
piece Is clipped Off coin. 1t is like
breaking off a piece Of candy to make
the pound. In times Of panic our gold
eagles often come flying back from
England to help swell deprecated bank
reserves.
The process Of settling balance Of
trade by the shipment Of gold Is very
simple. The New York merchant or
banker who wants to settle an account
abroad ships the bullion to his London
agent, who sells it in the open market
| (the Bank of England is ordinarily the
buyer), and deposits the proceeds In
London bank. The merchant or bank
er in England can do the same thing
and dispose of gold in New York.
Money Made to Order
Gold may be exchanged for legal ten
der and vice versa. In this connection
| It is perhaps interesting to add that
since the United States provides for a
free and unlimited coinage Of gold, any
Ecitizen may deposit standard gold bull
Elion at the mints and have it coined
linto money without charge. If the
bullion Is not standard a charge Is
made for the copper alloy. In the case
of silver so deposited, the government
makes a profit, called seignoirage,
equal to the difference between the
metal value Of the silver and its coin
value.
Gold is not always shipped directly
to the country where 1t is owed. The
United States, for instance, may owe
Germany but ship the gold to France,
because Germany owes balance there.
The shipment, therefore, to France
pays two debts. Again, the United
States may owe England but send gold
to France, because England Is lending
there.
Having seen how and why the gold
is shipped let us now ascertain what
becomes Of 1t after 1t reaches the 9TH
er side. Most of the gold bars that go
to England find their way to the vaults
of the Bank of England. forming the
reserve of that institution. The infiu-
ence of this splendid yellow treasure
reaches out everywhere. Against 1t
the bank issues notes and 1t becomes
the very backbone Of the money
market.
When the Bank Of England gold re-
serve declines the rates for money go
up. Right here Is where the average
investor gets his connection with the
gold supply. When money rates 60
up the prices of securities go down.
Bonds are included in this decline. A
man who wants to sell his bond at such
time may have to sell it for less than
he paid for 1t.
Taking up another phase Of gold you
find on reading the figures Of the Unit
ed States treasury balance that there
is always a reference to gold coin and
bullion. The amount on hand Is usu-
ally about $150,OOO,OOO. This is our
gold reserve.
The Old Lady of Threadneedle Street
The secretary of the treasury Is re-
quired to keep a gold reserve on hand
constantly for the purpose Of redeem
ing the so-called "greenbacks." This
is paper money. This reserve cannot
properly be greater than 150,000,000 or
less than 500, ,000 1t has been the
subject Of endless discussion and con-
troversy.
In explaining the various movements
Of gold reference has been made from
time to time to the Bank Of England.
It may be helpful to conclude this ar
ticle with a brief statement OF the
power exerted by this great institu-
ton and it's rate. Founded in 1894,
1.-The Bank" as 1t Is familiarly known,
is the very pillar and arch of the
worlds money market. 1t is the most
important, with the possible exception
Of the Bank of France, Of all financial
establishments. The imposing and no
BILE propositions Of 1.-THE old Lady Of
Threadneedle Street" are familiar to ev-
cry visitor to London. This great bank
employs a thousand clerks (most Of
them, even the humblest, wear silk
hats). 1t is the repository Of the re-
serves Of all the other London banks,
pays no interest on deposits, receives
and disburses the government funds,
manages the government debt, issues
banknotes and performs a national fl
nancial service like our treasury.
It's rate Of discount, commonly
known the world over as "the Bank OF
England rate" is the minimum rate at
which 1t discounts paper. This rate
governs the rate Of interest paid by
London stock banks on their deposits,
establishes the rate which London
banks allow on the balances Of foreign
correspondents, and Is the discount
generally in the open market through
out the United Kingdom. More than
this, it sounds the keynote of the in
ternational monetary situation" 1t is
cabled everywhere and is often eager
ly and anxiously awaited. 1t becomes
the barometer of the worlds business.
When the rate is advanced it Is sort
Of warning to trade that storm clouds
are gathering. 1t often means that the
vast reserve OF the Old Lady is dimin-
| ishing and it is her way Of calling
halt. At the present time the rate Is
three per cent For many years 1t was
two and a half per cent. During the
October panic of 1907 it rose to seven
per cent. This was because the Unit
ed States was draining the British