218 



FINANCIAL REVIEW OF 1900. 



at the instance of the United States would be ad- 

 hered to, and that after this policy had been car- 

 ried into execution guarantees for future protec- 

 tion of foreign residents in China and of native 

 Christians and agreements providing for trade ex- 

 pansion would be obtained, the later contributing 

 to the development of the vast resources of the 

 Chinese Empire. The necessity which seemed to 

 exist for the maintenance of military and naval 

 establishments by the powers for the purpose of 

 enforcing the terms of the new treaties with 

 China would, however, doubtless require the ex- 

 penditure of moneys, for the present at least, con- 

 siderably in excess of the revenues which would 

 be obtainable from the empire, demanding appro- 

 priations by individual nations of more or less 

 magnitude, some of which might involve the issue 

 of new loans. 



One of the most notable financial features of the 

 year was the negotiation in this country through 

 syndicates of New York bankers of foreign gov- 

 ernment loans. The first important event of this 

 character was the placing by Russia early in the 

 year of railroad securities to the amount of $25,- 

 000,000, which were guaranteed by the Russian 

 Government, and it was understood that the pro- 

 ceeds of this loan would be employed in the pur- 

 chase of material for Russian railroads. The 

 British war loan for $175,000,000, issued in March, 

 was offered in part in this country, and $12,000,000 

 thereof was awarded to subscribers in the United 

 States. In August a British Exchequer loan for 

 $50,000,000 was issued, of which $28,000,000 was 

 taken by a New York syndicate of bankers. In 

 the following month the German Government 

 placed with another New York syndicate $20,- 

 000,000 of treasury notes, and later a portion of 

 a Swedish loan for $10,000.000 and securities issued 

 by the free city of Hamburg and by other Ger- 

 man municipalities were disposed of in this coun- 

 try. These negotiations amounted in the aggre- 

 gate to nearly $100,000,000. The success which 

 attended the efforts of European governments to 

 borrow in the United States seemed to open a new 

 field for the employment of American capital, and 

 it was regarded at the end of the year as quite 

 conceivable that whenever monetary conditions in 

 New York were favorable for such operations 

 there would continue to be opportunities offered 

 by foreign governments for investments by Amer- 

 icans in their loans which would be mutually ad- 

 vantageous. The establishment of a market in 

 this city for dealings in international securities 

 was advocated by representative bankers as likely 

 to afford facilities for transactions in these issues, 

 which operations might eventually become almost 

 as important as are those in the European capitals. 



A financial event of the year of vast importance, 

 and which contributed greatly to the prosperous 

 conditions of the country, was the enactment by 

 Congress, in March, of the measure having for its ob- 

 ject the maintenance of the gold standard through 

 the establishment of an ample reserve fund of gold, 

 accompanied by provisions for tlic prompt and ef- 

 fective restoration of this fund whenever it should 

 become impaired. Previous laws, while providing 

 for a reserve, were not mandatory regarding the 

 amount thereof; neither did they specifically pro- 

 vide for the rest or. 'it ion of the fund whenever it 

 should he reduced below the sum which had been 

 generally accepted as the minimum limit of safety. 

 The new law inspired confidence in the ability of 

 a Secretary of the Treasury who was loyal to the 

 gold standard under almost all conceivable condi- 

 tions to maintain the parity between the gold and 

 the silver obligations of the Government. Though 

 some of the provisions of the law were acknowl- 



edged to be imperfect, and capable of being evaded 

 by administrations who might be opposed to the 

 principle embodied in the law, no doubt was enter- 

 tained concerning its present efficacy. One marked 

 effect of the law was observable in the concentra- 

 tion in the Treasury of a vast amount of gold, 

 much of which had been previously held by banks 

 and institutions, but which, as was the case after 

 the resumption of the issue of gold certificates in 

 1899, was exchanged therefor at the Treasury, thus 

 making this department the repository of a very 

 large proportion of the visible supply of the metal 

 in the country. These exchanges of gold for gold 

 certificates, the absorption by the Treasury of bul- 

 lion from the domestic mines and from the Yukon 

 fields, importations of gold from Australia and im- 

 ports in October from Europe, together with the 

 receipts of gold at the customhouses in payment 

 for duties, caused an addition to the Treasury 

 holdings of gold during the calendar year of 

 $81,317,224, of which gain $57,348,336 took place 

 after the passage of the gold standard law. At the 

 end of December the gross amount of gold in the 

 Treasury was $479,349,251, a sum unprecedented 

 in the history of the country. 



The currency provisions of the gold standard 

 law were likewise of great importance. An issue 

 of 2-per-cent. thirty-year gold bonds was author- 

 ized for the purpose of refunding $839,055,250 se- 

 curities, bearing interest at from 3 to 5 per cent, 

 and redeemable in coin between 1904 and 1908 in- 

 clusive. Provision was made for the exchange at 

 varying premiums of these old bonds for the new 

 2 per cents., and, with a view to encourage ex- 

 changes by banks who held the old issues as se- 

 curity for circulation, the tax on those circulating 

 notes which should be issued against the 2-per- 

 cent, bonds was reduced to $ of 1 per cent, per 

 annum. The law further provided for the organ- 

 ization of banks with a capital of $25,000, and 

 also for the issue by all national institutions of 

 circulation to the par value of the bonds deposited 

 as security. Under the operation of the refunding 

 provisions of the law the exchanges of old bonds 

 for the new 2 per cents, progressed more or less 

 rapidly until the end of the year, when refund- 

 ing operations were suspended by order of the Secre- 

 retary of the Treasury. After the final adjustment 

 of pending applications for funding $445,828,750 of 

 old bonds had been exchanged for new and $43,569,- 

 801 had been paid for premiums on the former. The 

 banks established under the provisions of the law 

 were 389 in number, with a combined capital of 

 $20,127.000. and the smaller banks were distributed 

 throughout the agricultural regions where they 

 were most needed. Comparatively few banks took 

 advantage of the privilege to issue circulation to 

 the par of their bonds. The increase in bank 

 circulation during the year, however, amounted 

 to $93,865.887. This gain in circulation, together 

 with the distribution by the Treasury of the above- 

 noted amount for premiums on refunded bonds and 

 the maintenance by the Treasury during the year 

 of nearly $100,000',000 of public funds on deposit 

 with those national banks, numbering 240, who 

 gave bonds as security for such funds, contributed 

 to general monetary equilibrium throughout the 

 greater part of the year. 



Commercially the country was marvelously 

 prosperous during the year. Each month recorded 

 an important excess of exports over imports of 

 merchandise, the smallest of such excess beiiu,' 

 $36.782.101, in July, and the greatest $92.50!V2S(>. 

 in October, which sum was never before surpassed. 

 The excess of merchandise exports over imports for 

 the calendar year was likewise the largest on rec- 

 ord, amounting to $048,998,738, and the total com- 



