The Washington herald., 1917-07-07

attributed the appreciation in prices
of commodities of all kinds to this
enormous store of gold, saying that.
measured in commodities, gold, by
reason of its plentifulness. was cheap
er than at any time in recent years.
In other words II took more gold to
buy commodity than 1t formerly did
How rapid was the increase in our
stock of gold in the flscal year is illus
trated by comparison with the figures
which reported the stock on hand a
year ago. Then we had almost s., 3d., =
100000 in gold. The story OF this gold
accumulation is part of the history OF
the war. for aside from approximately
800, coo. 900 in gold which came from
our mines, almost all the gold was
imported for two purposes. One of
these purposes was the payment or
partial payment for commodities
bought by the allies and neutral ma
, tions in the American markets. An
other of the purposes was the main
tanning Of the rate of a foreign ex-
change.
When Lord Cunliffe. governor of the
Bank of England. was in the United
states few weeks ago, he spoke with
LOT a banker OF
the reason why England was sending,
chiefly through Canada, gold into the
United States. This was done for the
purpose OF maintaining foreign ex-
change at reasonable figure, thereby
steadying the American money mar
ket and making 1t not only the largest
and. in fact the sole open money mar
ket In the world. but also preventing
gurh of {,ta
would reflect dear money.
One item in the national inventory
for the fiscal year just ended is an in
crease in our gold supply of nearly
No Hoarding Here.
1t might have happened that after
the United States became one of the
belligerent allies the people, taking
alarm, would hoard as much gold as
they were able to secure Hoarding
of gold characterized the Balkan war
two years before the war with Ger
many began. The French people also
boarded gold. but when there was
urgent need for funds and France ap-
pealed to her people, the peasants and
the middle class brought forth their
boards of gold and poured it into the
lap of the government. This also was
done by the French people after the
Franco-Prussian war when France
needed money with which to meet the
stupendous indemnity Bismarck in
sisted upon.
Congress has provided a way by
which any one who has gold or who
is able to obtain it and who otherwise
might be tempted to hoard 1t, can
convert it into a Federal reserve note.
These notes are substantially as good
as gold certificates, and any one who
has 800 in Federal reserve notes in
his pocketbook may feel assured that
these are not only more convenient to
carry than gold, but they actually
represent gold.
Another item in the national inven-
tory for the past fiscal year Is fur
nished by the reports of the national
banks. Within a few weeks of the
close Of the fiscal year, the national
banks reported loans aggregating
sS. .751, 200, 900, round numbers. These fig-
ures are a little over sl.OOO. .00O. 900
greater than the figures which report
ed bank loans for the corresponding
period of the previous year. OF course
these loans tell story of increased
business and of vast increase in the
use of credit. Nevertheless, in the
same twelve months the total reserves
of the national banks that included the
reserve cash in their vaults and on
deposit at the Federal Reserve Bank
was 81 .525, 900, 900. or 1920. 100000 more
than were the reserves in the corre-
spending period of last year. In the
fiscal year which has just begun all
reserves will be kept with the Federal
reserve banks. No longer will it be
possible under the law for banks To-
Gated elsewhere than New York to
send a part of their reserves to their
New York bank correspondents and
receive interest usually at the rate of
2 per cent upon these deposits. But on
the other hand the law provides that
smaller amount of money be held as
reserve than was permitted before
the recent amendment to the Federal
reserve law.
The inventory which tells about our
condition in the past fiscal year con-
tains one disquieting item. For while
the average price of fifteen railroads
year ago was a little under $40 a
share. yet at the beginning of the
present fiscal year. the average price
Of these stocks was only a, trife over
slo8. On the other hand, there was an
increase in the average price of lead
ing industrial stock from 30 66-loo 10
50 100. The railroad situation and
con8tion In the fiscal year which has
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