The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-04-29
ENGLAND'SLOSS OF GOLD.
Conditions Developing That Call for
Action OF Joint stock Banks.

onomiCs has been turned almost top
sy-turvy by the European war. The
most gigantic experiments in Govern
ment backed credit have been sue
cessful. Except for the blockade OF
commercial intercourse with the outer
world. Germany, with a suspension of
gold payments but no moratorium,
seems to have suffered no worse ef-
fects financially than Great Britain
preserving gold payments but Tor
months operating under morato-
rum. Bimetallic France IL able to
advance credits to some OF the minor
belligerents. though at the same time
she appears to lean to some extent on
the credit Of gold standard England.
Russian exchange Is at a large dis
count. and she turns to London for
credit facilities. although only re-
Gently Mr.. Lloyd George, the British
Chancellor Of the Exchequer. talked
Of being able to draw on the great
gold stocks Of the banks of Russia
and France II the reserves OF the
Bank OF England fell to TOO low
point. The war has aroused sort Of
patriotic psychology which sets at
naught precedents as to what happens
when certain economic conditions are
produced.
The proportion Of reserve to liabli-
ties Of the Bank Of England on July
90. 1914. was 52A per cent. In tho
week on the eve Of the war IL fell to
40 per cent. and on August s, at the
height of the crisis provoked by actual
conflict, the percentage dropped 10
1ass. II then rose steadily to 3ass on
December -. but subsequently, took
downward course until II touched 1914
on April /. 1915. For the last four
weeks the percentage has ruled but
little over 1s Although authorized to
do go. the Bank Of England has not
awaited itself Of the privilege Of issu-
ing its notes against securities instead
Of gold. sovereign for sovereign. which
is the requirement OF the bank act.
But nevertheless the British Gov
eminent was forced to resort to some
thing like fiat money. In the two
weeks ended September 2 last II is
sued Treasury currency notes, with
out a shilling Of gold behind them. to
the extent Of f25. 156,4s6. The follow
ing week, however II had the Bank Of
England set aside or "earmaik" f3,-
0000 in gold as n fund to redeem
these notes. Week after week II made
additions to this fund. until on March
3 there was f27.500 600 gold for the
redemption Of f37.o6S,07s Government
notes, n gold percentage Of 7i.20. From
that date the gold redemption fund
has been stationary. but the issue Of
notes has been continuous. so that on
I fhnra fl
outstanding, against which the re-
demption fund was f27,500, 900, or 6604
per cent.
, Does 1t not seem that Englands e I'D
standard position rests on patriotic
I sufferance? An Is per cent. ratio of
gold against all liabilities, notes and
deposits OF the Bank II England in
ordinary times would spell panic.
There Is every prospect that Govern
ment notes will continue to be issued.
and how can fresh gold he added to
! the fo7 10000 now existing redemp-
ton fund? The Bank Of England Is
subjected to a drain Of gold TO the
United States. the Argentine ard even
Egypt. The bank recently released
$1,000 900 from It's stores accumulats d
in ottawa for shipnen, IN Nav York
and n cable las, week said that 81 600
600 more had hecn sold 70 New York
Tho hazard of ocean ,ransI, has
caused n susnens,on or actual shin
ments 10 Argentina We, for weeks M e,
tho hank has been setting aside
! amounts ~ tho crndi, n, thar conn.
try VARYING from $50 600 70 $3.50 600
The annual cold nroduction in tarr,
tories belonging 70 the british En-,
nire is about s27s GOO 600 ont or a to,a,
ou-pu, of tho world Of eho,, si5o
600 600 n wear We, tho Rank Of Eng.
land carno, uso its norma, n,rnc,
for drawing Tho nre,ious n,o-al >,
London. namely. advancing dlscoun,
-otas 7, looks like case 81 "p,ir
5,vi,. null hakor" Tho hank mich,
,t,r,c, ,,o'a Nv biaarnr nm ror,,
ratios hu, tho British G.yornrent
mus, b,yo o-,lagi,' money case IA "a.
,..r,a,. g. cors,,,, humans. Lorrov.
iprs for war n,rposos ,brourb m.
.,lo ~ low rate Exrbcouor hills
I, is a, interesting question nc =.
lou, f,r Tho o,,i.s ~ rrr,,f,,d ga,
LON nor IN rchuild hcr ro,j reserves
.rbo, bovo ,hclr own rr,b,on,s :,
u,s,cr Tho ,a,es, renortod s,,tcrer,
of tho Rank ~ Russi, shaved RIA,
tho cold bn,Jirrs vore abou, sS,9
400 OoO while tho rnte iss,o nu.st,pd.
inc was a 900 400 OnO I'm IN ,bo,,,
yoar ago tho Bank ~ Russia hold q