The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1910-04-09
COLO STARTS ABROAD.
MOVEMENT FORESHADOWED
WHEN LONDON RAISED THE
RATE.
Can Spare IL, Bankers Think-Better
To Let 1t Go Than to Lose the Eng
lish and Continental Investment
Demand


for direct shipment to London ini-
tiated the gold movement clearly
foreshadowed more than a fortnight
ego. when the Bank of England sum-
marily advanced it's discount rate
from 3 to per cent.
According to the opinion of the
leading international bankers, Az
ports are quite likely to amount 20
$2o,OOO,o00 or so before the move
ment has run it's course. Because
OF this fact and its possible bearing
upon our own money market posi-
ton, and the influence exerted by the
mere prospect of the gold loss upon
securities markets for two weeks. an
examination of the causes underly-
Ing the movement and an attempt to
determine it's effect are decide ily
worth while.
or course. deep down beneath 9TH
er factors In the export movement is
the throughly unsatisfactory condi-
tion Of our foreign trade. UP to the
lst OF March. the last date for which
full returns are available, our exports
exceeded our imports by practically
$1S9.000.000 for the eight months Of
the fiscal year, which ends on June
80. an amount less than the corre-
spending balance on the 1st Of March,
1909, by $4,000. 900.
1t Is the contention. apparently
we'll founded, of students of our fin
ance and trade that owing to the
heavy charges which we are under
each year to foreign carriers of our
goods. to foreign insurers of mer-
chandise in transit, and for the vari-
Gus other expenditures, invisible but
enormous in the aggregate, such as
the disbursements Of our tourists
each season in Europe, even the most
favorable balance ever reported at
the close of a trade year-and bal
ance have averaged iii many years
over 100000, 0,000--still left us In the
debt OF Europe.
1t Is obvious, therefore, that taking
the most conservative view of this
matter. which is that our trade bal
ances in previous years have just
covered visible and in, bile debt
items, the shrinkage indicated in the
figures above leaves many millions Of
dollars to be provided for through
other than trade channels. We were
making such provision up to a fort
night ago through sales Of securities
to foreign investors and investment
institutions. Money was easy in Lon
don' confidence in the American out
look ran high. and the combination
resulted in the investment of millions
In the new issues which our corpor-
ations were daily bringing out.
The pleasant prospect of offsetting
our adverse trade movement was
suddenly closed by the elevation of
the English bank rate a full per
cent, and the intimation that If this
discount failed to serve It's purpose
of strengthening the banks reserve
position a further advance would be
made. Two weeks have passed and
while no further advance in the rate
has been made, the banks position
has grown steadily weaker. Having
the creation of exchange through
offerings of English bills here to pay
for securities bought, the bank at
last forced the situation to the point
where gold exports from this side
were inevitable.
The duration Of the export move
ment seems to depend upon two
things-first, the restoration of nor
NAL conditions in our foreign trade,
and the other, the Strengthening out
OF the London money market tangle.
Influences a. work in foreign trade
are slow moving, and though an ad-
justment is ultimately assured. the
present export movement will un-
doubtedly be brought to a termina-
ton, not by this adjustment. which
may be long deferred, but by an i'm
proved English financial situation.
Under ordinary circumstances the
Bank of England could have re-
sponded without embarrassment to
the demands for gold pressed upon
her of late by Europe, South Amer
lea, Egypt and India, but the cir
cumStances surrounding its present
position are by no means ordinary.
The English government usually
has ON deposit with the bank at this
time of the year some $45,OOO,00O.
representing the income tax revenue