The sun., 1916-11-27
The Money Situatien.


Call money advanced to s per cent. or
a higher rate than since the early part
OF July. when loans were made at & per
cent following the publication OF an
unfavorable bank statement. on many
accounts money should be firm from now
on. Not only has the public speculation
in stocks greatly expanded bank loans.
but the cost Of carrying wheat. corn. cot
ton. copper and other commodities has
increased In the same ratio with which
prices OF these commodities have in
creased. The inventories of merchants.
buying heavily In anticipation OF a
record holiday trade and at high prices
In active competition with one another.
have taken more money h a ever be-
fore. The crops are moving rapidly and
temporarily many interior centres are
loaned up.
Yet every slight advance in money
rates attracts money 90 this city from
some interior points and further loosens
tho British pursestrings. The banks
have hardly begun to take advantage Of
che opportunities Of taking out Federal
reserve notes. They car easily obtain
more currency At home. But they do
not need to look at the home supply.
Every little furry In money which sends
the New York rate up to or above the
London rate IL followed instantly by ar
ranRements for the importation Of more
gold from Ottawa or Halifax. That was
the case last week. The drop In the
call money rate to ~ per cent. Friday
was due principally to arrangements for
tho shipment Of gold which Is expected
to arrive here early this week.
The bank statement showed The sur
Plus reserve cut down by Sci, zoo. 900 to
the lowest amount since the carly part
Of July. But II also showed a healthy
contraction Of a32.500.00 In the loan
account. Reserves were below the IS
per cent. ratio prescribed for central re-
servo cities before the institution OF the
Federal reserve system. and there is. Of
course. much criticism or the ground OF
imitation. But the evils Of imitation are
not likely to be experienced this year, or
perhaps not until after the war. The
ters now for academic discussion: for
all practical purposes there In money
enough TO 20 around mons business
men and spectators.
The Remarkable Export Trade.
Great Britain. France and Russia are
supposed to have a gold reserve Of some
5000. ooo. 600 In Canada. this gold TO be
used In strengthening the exchange po-
sition Of those countries here whenever
needed. The country's extraordinary
foreign trade indicates clearly enough
that that money II at the mercy OF
American bankers. The net export bal
ance In October was 1914, 200, 600, $685.
600, 1000 less than in September. but with
that exception exceeding that OF any
other single month. For ten months OF
the current nscal yea the surplus Of
exports over imports was se.434,O00. 900.
Clearly enough. this country need not
lack for money 30 long as there Is any
left abroad.
To this balance OF nearly two and a
half billion dollars there must be added
the gain that the country IL making In
the unknown balance OF trade. In all
probability this country is now a cred
itor nation In the respect that It's re-
ceipts OF interest n dividends from
foreign countries outbalance It's expen-
ditures on the same account. More and
more ships are plying the seas under
the American flag. S%hipyards the coun-
try over are crowded to capacity with
the building OF more ships to ny the
American nag. In shipping. as in in
terest payments, the drain upon this
country's wealth is to be further and
greatly reduced.
business follows the nag and trade
follows the dollar, With the American
nag over shipping, the country's COM
merce must Increase, 1t Increases also
with every loan to neutral countries,
Last week n loan OF $500, 900 to the
city OF Sac Paulo. Brazil. the nrst South
American municipal offering EVER made
In this country. was well taken. Loans
to Argentina, soon to be made, n gold
sent to Argentina mean the strengthen
Ing OF business relations that will con-
stn.,A 1Aaw 10. 49,. $40
The Bond Market.
Approximately $4,000. 900 bonds
changed hands In the Stock Exchange
last week, although the bond market
had seldom been In sharper competition
with the market owe the counter and
with new offerings which were dealt In
only outside or over the counter. or
foreign loans alone these outside OFFER
ings aggregated $40. 500. 900. compris-
ing 100000 900 Russian Governments,
IS. 900. 900 Chinese Governments 500
900, 900 French municipala and the
$500, 900 a Paulos. That the bond
market In the Stock Exchange con-
tlnued active and steady showed clearly
enough an investment demand which In
keeping UP with the supply, great
though the supply Is.
This week British Treasury bills will
be offered to the banks and they will
be followed by offerings Of French Gov
eminent securities OF the same char
acter. These issues are new to this
country. hut bankers regard them favor
ably. will take them In considerable
amounts at once and very likely will in
vest surplus funds more heavily In them
later on. The amount of these bills that
may he brought here IL indeterminate.
II is Ia DO regulated by the demand for