The Birmingham age-herald., 1914-05-23

the world have bought more heavily of us than we have of them and in that way there has been established a physical or apparent trade balance in our favor-is likely to be this year a good balance. The best estimate is that early in July it will be possible to report that in the present fiscal year a vsibe or apparent trade bal ance of $6o0000,0 600 in favor of the United States has been established.
 No record is kept, nor could any be kept. of the sale of American securities in the foreign markets, nor is any record kept, since 1t would be impossible to keep one, which would show what the United States is paying in the form of dividends or in- terest upon American securities held abroad, nor is it possible to get more than a rough estimate of the amount of money which is put in American letters of credit.
 Yet. in any event, it is deemed by those who are qualified to speak that 1t is too soon to assert that the affect of the new tariff law is to be observed in the ex- portatons of American gold. Some in the financial district have hinted that the first operation of the federal reserve bank ing system will tend to cause gold to leave the United States for time.
 It Is Nothing New
 The movement of gold this year from the United States to other lands is not an un- usual movement. The record of recent years shows that we have furnished Flu rope and South America with gold in the early months of the year. This often re- fleets special transactions; it has nothing to do with trade movements. With money in plenty and with an abundant supply of gold such as we now have, it is natural enough that the American markets be sought, since 1t has been for some years the best market in which to obtain gold.
 Controlling Foreign Exchange
 The statement is made In the financial districts that when the new banking sys- tenn is in thorough operation it may be so utilized as to control the movement of gold from the United States to other lands. This could be done. the experts say, through accumulation of foreign exchange and the marketing of that foreign ex- change in such manner as to control the market.
 Yet this is not always an easy transac- tion. It is not as arbitrary transaction as the establishing of the discount rate would be. How difficult the accumula- ton of foreign exchange with intent to control gold movements may be is best H. frustrated by the experience of the late J. F. Morgan. Once only in his entire ca reer did Mir. Morgan stand for many weeks with his back to the wall fighting an almost irresistible financial tendency. MT. Morgans intimate friends since his death have said that although at other times he fought hard, yet never did he fight so desperately for the maintenance of purpose as he did at the time when in loyalty to his pledge to President Grover Cleveland he determined to prevent the expor:ation of gold. MT. Morgan's ar- rangement with President Cleveland whereby the United States treasury was to be furnished some $60, 00O,000 of gold. and then this gold be so protected as to prevent the operation of the endless chain Is now one of the traditions of our finan- ciel history
 MT. Morgan agreed with the President to prevent, if possible, the withdrawal of this gold from the federal treasury for exportation for a period of about six months. The method by which he pur- posed doing this was similar to the meth cd the federal reserve banks would adopt in case they undertook to pre- vent the exportation of gold of foreign exchange.
 MT. Morgan. however, ventured upon an unprecedented undertaking. He and those associated with him were to stand for some six months between the federal treasury and foreign demands for American gold. In no other way could this protecting barricade be built than bv the accumulation of foreign exchange, so that when demand for gold was made the exchange could be furnished with which to meet the demand
 The transaction caused the United States to be raked over for the purpose Of securing exchange. Every expedient every factor in the difficult and great problem of foreign exchange was util- fzied by MT. Morgan and his associates. but there were days when it seemed s though these resources would not avail. Those were the days when Mir Morgan stood with his back to the wall fighting for the protection of American gold His struggle was a successful one, but if Is likely again to be undertaken by any other American fiancier The federal reserve banks. with their great resources and their far-reaching influences which cover the entire country, might be able more easily to accomplish what MT. Nor gan undertook to accomplish and did accomplish and yet they might meet with some of the difficulties against which Mir. Morgan struggled.