New-York tribune., 1918-01-20


of ancient Straits paper money or
my London draft. After showing
it in various pockets I asked the ex-
change clerk what the bank was
paying that day for English gold
sovereigns, worth $8.57 at parity.
He straightway bid me 80, and
would have taken quick advantage
of my ignorance of values, although
the bank had just put itself into
what we would call a trust relation
with me by standing in the place of
my London banker-whose cor
respondents they were-and accept
ing my draft, which paid them we'll.
Some impulse prompted me to check
up the market, although 1 should
never have thought Of going beyond
my bank had been in New York,
London or Paris. later learned
from the cashier Of one Of the big
department stores that throughout
the banking and commercial district
in Singapore there was a broad.
close gold market-as reliable in
every way as that for Standard Oil
shares in the outside market in New
York-and that gold sovereigns had
sold that day as high as $10.50, but
were now a shade lower.
Not SO Much
Difference After All
returned to the bank and inquired
how they happened to bid me 50
when the market all over the Street
was from $40 to $1O5O. The bank
official assumed naughty, bored
air and told me firmly that great
European banks in the East
were doing all they could to check
the despicable speculation in Eng
lish gold which was being carried on
by low class East Indian and Chi
nese money changers. In New
York have shivered in the chilly
air exhaled by clerks in bargain
stores Of the kind which The Trib-
une has exposed. Now I shivered
before this Singapore banker. How
simple was his explanation, and
what high motives had actuated him
in bidding me 50 for what was
worth nominally only s8.57, and
actually WORTH from $40 to $1,000,
according to the fluctuations of the
moment!
Later I learned that this great
European bank, together with
others Of the same class, really
transact very little commercial or
discount business as we know it in
America. They are Exchange
banks" They do not call them
selves money changers. Their
profits are enormous, particularly in
uncertain times like the present.
Their shares sell at many times par.
and their dividends are large. They
make most of their money through
superior facilities for keeping in
touch with the constant fluctuations.
and by taking immediate advantage
OF those who are not so we'll in
formed. They are so powerful that
it is even said that they are able
arbitrarily to set the rates of ex.
change. It is bad for business: it
IS bad for the country, but it Is
good for the so-called bankers.
1 discussed these points with an
English business man who has been
in the East for many years, and who
has been hampered by this unsound
situation, now more aggravated than
ever. He agreed that these Eek
change banks" had no counterpart
in stable European countries, nor in
America, and that their gains were
largely the small tradesmen's and
merchants losses. He also averred
that some of the American tex
change banks" operating in the East
were to be compared with the others
all OF them out for all they could
get, regardless of the ultimate effect
on the credit Of the countries of the
East.
Money Speculation
Crippled Trade
In China and the treaty ports
conditions were still worse. Trade
was badly crippled through wild
speculation in money. The Mexi-
can dollar is the theoretical medium
of exchange, but paper money is the
actual one which circulates freely.
There is no fixed parity between
gold and silver. Nominally, they
are on silver basis, but the whole
system, if there ever was any, has
deterlorated into mere barter. The
are terrific. Men grow
gray trying to figure how thew
stand. Whenever there is crisis it is
said that many Chinese spectators
hasten to commit suicide. The
Mexican dollar r,irht ho co;J l.. l.