268 



FINANCIAL REVIEW OF 1887. 



FrtiB ExchaitE*. Imports of merchandise 

 for the year ending Dec. 81, 1887, were $45,- 

 878,122 above those for the corresponding pe- 

 riod in 1886, and the exports of domestic and 

 foreign goods for the same time were $1,916,- 

 985 more. The excess of merchandise exports 

 over imports for the calendar year was $6,513,- 

 645 against $49,974,882 for the same time in 

 1886. There was an excess of imports over 

 exports of specie and bullion amounting to 

 -2,499 for the year ending Dec. 31, 1887, 

 against an excess of exports over imports of $9,- 

 806,652 for the same time in 1 886. The excess of 

 imports over exports of merchandise and specie 

 for the period mentioned was $18,358,854, 

 against an excess of exports over imports of 

 $59,781,384 for the corresponding twelve 

 months of 1886. But, not withstanding this 

 adverse apparent trade balance, foreign ex- 

 change only at infrequent intervals during the 

 year ruled at or near the gold-exporting point 



The banks of England and of France, when- 

 ever a drain of gold to America was either 

 threatened or in actual progress, sought to 

 avert or to limit such drain, either by manipu- 

 lation of the discount market or by an advance 

 in the premium upon gold bars or full-weight 

 coins. At the beginning of the year the bull- 

 ion in the Bank of England amounted to 

 19,807,281, and the proportion of reserve to 

 liabilities was 30 per cent. The largest amount 

 of bullion held by tbe bank during the year 

 was 24.770.532 on March 80, and with this 

 sum the bank governors decided a fortnight later 

 to reduce the minimum rate of discount to 2J 

 per cent., and by the close of April a further re- 

 duction was made to 2 percent., the proportion 

 of reserve to liabilities then being 50J per 

 cent It was not until August S that the bank 

 rate was raised, and then it was placed at 8, 

 remaining at that point until the close of the 

 month, when it was further advanced to 4 per 

 cent., at which it stood at the end of the year. 

 But at no time was tbe open market rate dose 

 to the bank minimum, with perhaps the excep- 

 tion of a few days early in the fall, and on 

 two occasions the bank governors Bought to 

 stain the street rate by borrowing for the 

 bank upon consols. The Bank of France 

 opened the year with the equivalent of 49,- 

 100,166 gold". This was reduced to 47,494,- 

 079 by April 14, and after this the amount 

 fluctuated between this sum and 48,400,182. 

 The gold in the Bank of Germany can not be 

 accurately stated, but the closest estimate 

 places it at about 18,000,000 January 1. 

 advancing to 21.800,000 by June 28, then 

 falling to 19,300,000 October 7, and rising to 

 about 20,159,000 by the end of the year. 

 London and Paris doubtless supplied a large 

 part of Germany's requirements during 1887, 

 and it is known that, white this movement to 

 German j was in progress, the centers above 

 named were meeting demands lor America 

 and the Argentine Republic. 



That condition of our 



market, which enabled importations of gold to 

 be made, was manifestly due neither to trade 

 conditions nor to any plethora of gold in Eng- 

 land or France, but mainly to the fact that 

 the rates for money ruled in this country so 

 much higher than they did in London as to in- 

 duce bankers to employ their foreign balances 

 in our market. These borrowings of foreign 

 capital for temporary use were extended from 

 time to time, aa the loan bills matured, and it 

 is estimated that they amounted to at least 

 5,000,000 sterling. In addition to this there 

 were negotiations of loans upon bonds of new 

 or reorganized roads, or borrowings of capital 

 upon lines in process of reorganization, amount- 

 ing to as ranch more ; and there were also 

 purchases at intervals of stocks or bonds or 

 both for speculative purposes, which were 

 more or less promptly drawn against All 

 these transactions furnished a supply of ex- 

 change which, while it was plentiful, stimu- 

 lated imports of gold. Early in January there 

 was a good demand for sterling to remit for 

 stocks sold for European account, and there 

 was also an inquiry for long bills for in vestment 

 and for speculation. This strong tone carried 

 exchange above the gold-importing point, and 

 the limit at which imports couM be made was 

 increased by the Bank of England putting a 

 premium upon bars, and the Bank of France 

 holding foil-weight Napoleons at an advance of 

 one franc per 1,000. Toward the dose of 

 January the interruption to exports, caused by 

 the strike of longshoremen in New York and 

 vicinity, made commercial bills so scarce as to 

 force rates of bankers' sterling to within a 

 fraction of the gold-exporting point and by the 

 middle of February gold was shipped to Eng- 

 land in moderate amounts. By the end of 

 February the supply of bills increased, in con- 

 sequence of the free movement of breadstuffs, 

 the partial embargo on the commerce of the 

 port having been raised by the collapse of the 

 longshoremen's strike. Early in the following 

 month liberal sales of short sterling, mainly 

 maturing long bills, bought in January, started 

 selling of commercial sterling, and the market 

 was somewhat affected by activity in money. 

 By the middle of March sales of loan bilk bad 

 a depressing effect upon the rates of sterling, 

 and then commenced the borrowings of foreign 

 capital, which thereafter bad such an important 

 influence upon the market At the beginning 

 of April the discount rate for sixty-day to three- 

 months' bills in London was 1 per cent, and 

 at Paris the open market rate was 2, and at 

 Berlin 2f per cenc.. while tbe call-loan rate 

 in New York averaged about 6. This condi- 

 tion of the money markets induced buying of 

 long bills and further borrowings of foreign 

 capital were made later in the month. In May 

 the tone was steadier, although money con- 

 tinned cheap in London and on the Continent, 

 and comparatively dear here, but early in June 

 sterling declined under the influence of offer- 

 ings of bills against outgoing securities and ue- 



