New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-02-01
MinimizeS Losses Attend
ant on Balance of Trade
Upheaval.
HUGE GOLD RESERVE
ROCK OF CONFIDENCE
italy Complains of British
Higher to Genoa
than MarSeilles.
BY YVES GUYOT.
tx Mln,ter oi Public Works, Editor "L'Aeoace
Eoonomiaue Fl Flnanoltre."

m Cable to The Tribunel
Paris, Jan. 31.-An important sec
ton Of the report of NJ. Pallain,
governor Of the Bank Of France,
deals with the question Of exchange.
French imports reach 5000, 100000
francs and exports 3,O0O,OO0,0O0
francs. If we had 40,OOO,000,000
francs invested abroad at per cent
interest it would not compensate the
difference. But as state loans have
absorbed our surplus capital we are
unable TO invest abroad The profits
from freight have been insignificant
and we have had no invisible ex-
ports. An official decree forbade pri-
vate persons to export gold; that is,
to pay for purchases abroad in gold.
The Bank Of France has conducted
the following operations regarding
exchange: First, it has assisted in
the opening Of international credits
10 minimize the effects of loss on ex-
change. Second, 1t has facilitated
loans abroad for the account of the
French or Allied governments for
the payment of supplies ordered
abroad. Third, it has interviewed in
the exchange market TO regularize
transactions and give French bust
ness men and manufacturers the re-
CURED facilities. The latter point
demanded considerable care and cir
cumspection. Fourth, it has limited
as far as possible the dispatch Of gold
abroad and added to the banks gold
reserves.
Generally speaking, the bank has
tried 70 stabilize exchange rather
than TO bring it artifcially to par
when external conditions would rem
der its maintenance there impossible.
The exchange problem can be ex-
pressed simply if one takes an indi-
vidual case instead of the nations.
The person who buys must pay with
gold, or paper representing gold, or
be in debt.
What fixes the rate of exchange?
It is the law Of supply and demand.
Then comes in the psychological
factor. The fear that debtors cannot
pay in gold causes a demand for it
even when it really is unneeded
That is the case In the United States.
The high rate of exchange repre-
sents their eagerness for gold pushed
to an extreme.
The Bank of Frances gold reserve
is $1,000, 100000, which gives con-
fidence to the creditor but doesn't
give him gold. He has received a
promise to pay instead Of the metal
itself. He therefore demands a pre-
MUM TO recompense him until he
does get it. This premium Is pre-
cisely the difference in exchange
which France must pay to America
and Britain.
In Italy the chief complaint is di-
rected against high freights. They
say Britain makes them pay S15
ton from Cardiff to Genoa. The ltal-
ians ask why is freight $3.50 higher
to Genoa than to Marseilles. 1t IS
because Genoa is less furnished with
conveniences for debarkation.
The French government is also in
terested in the freight question. The
first idea was to hire ships. Then
came talk Of purchase for 100000
600. which naturally did not reduce
freights. Much time was thus wasted.
Now it is announced that the govern
ment is about to sign very large
freight contract with an American