FINANCIAL REVIEW OP 1902. 



245 



rates for money in New York, especially for fixed 

 periods, were comparatively firm and higher than 

 those ruling abroad. In consequence of these 

 conditions those of our bankers who were largely 

 interested in railroad and other enterprises which 

 required considerable sums of money for finan- 

 cing became even greater borrowers of foreign 

 capital than they were in the previous year. 

 These loans were negotiated through the medium 

 of sixty- to ninety-day bankers' bills on London 

 which were borrowed on stock or bond collat- 

 eral. As these bills approached the period when 

 they would become sight drafts they were cov- 

 ered with demand bills, thus repaying the loan, 

 or the loan was extended through further bor- 

 rowings for a sixty- or ninety-day period. These 

 operations resulted in continuous offerings of 

 long sterling, called loan bills, whicn were drawn 

 either against the foreign credits of the bankers 

 through whom they were negotiated or against 

 capital abroad which was seeking employment. 

 The credits and the capital so drawn against 

 were reimbursed by the sight drafts which were 



Rrocured for the purpose of the settlement of the 

 )an or for its extension. These sight drafts were 

 drawn against credits resulting from the dis- 

 counting or the maturing of commercial bills of 

 exchange made against exports hence of com- 

 modities, thus causing a steady absorption of 

 such commercial bills the prices of which were 

 maintained at figures quite close to those of 

 bankers' long sterling. The almost uninter- 

 rupted demand for sight bills to remit in settle- 

 ment of maturing loans caused these drafts to 

 rule at firm rates, and whenever the inquiry for 

 them was in excess of the supply and they were 

 not procurable at prices less than the gold ex- 

 port point this metal became the cheapest form 

 of remittance and it was shipped abroad. There 

 were occasions during the year, as was the case 

 in November, 1901, when through remittances 

 from London to Paris for settlements, the rate of 

 exchange at Paris on the British capital fell to 

 such low figures as to draw gold from London. 

 Then bankers here having remittances to make 

 resorted to arbitration operations, drawing ex- 

 change on London and shipping gold to Paris 

 with which to procure French exchange for the 

 reimbursement of the credit against which the 

 draft on London was made. This will account 

 for the movement of gold hence when the rate 

 for exchange at New York on London was frac- 

 tionally below the gold-exporting point. The im- 

 port^s of gold from Europe in September resulted 

 from the urgency in the demand for money at 

 this center, the high rates for loans on call and 

 on time practically lowering the gold-importing 

 point to such a figure as to make such imports 

 profitable. After the monetary tension was re- 

 lieved exchange advanced more or less sharply 

 in response to a demand for remittance, and also 

 because of dearer discounts abroad, a higher 

 price in London for gold, and low rates for ex- 

 change at Paris on the British capital, and 

 toward the end of October gold exports as an 

 arbitration operation seemed probable. 



So great were the above-mentioned borrow- 

 ings by our bankers from those in Europe, not 

 only in London, but at Continental centers 

 through London, that it was estimated early in 

 the current year that the merchandise balance in 

 favor of this countiy had been so largely offset 

 by the indebtedness of American borrowers to 

 those abroad that there remained an amount of 

 debt so large that it would require for its can- 

 cellation nearly, if not quite, all of the credits 

 resulting from the exports during the current 



season of our commodities. Not only was our 

 indebtedness to Europe thus increased through 

 borrowings of foreign capital^ but it was aug- 

 mented by subscriptions to European loans, nota- 

 bly the British consol loan of 32,000,000 emitted 

 in April, quite large amounts of which were taken 

 by prominent New York bankers; remittances 

 for instalments on this loan, as they fell due, 

 added to the demand for exchange. Other impor- 

 tant requirements for remittance of an unusual 

 character were those for the shipping deal, for 

 American industrial enterprises in London and 

 elsewhere in England, and for importations of 

 steel, and during October of coal from Great 

 Britain; the expenditures of tourists in Europe 

 incident to King Edward's coronation ceremonies 

 were also large. 



Imports of merchandise in March were $84,227,- 

 082, or greater by $8,340,248 than in the same 

 month in 1901, and though there was a decline 

 to $73,115,054 in June, there was an increase to 

 $79,147,874 in July. August imports were $78,923,- 

 281, September $87,736,346, October $87,419,138, 

 and November $85,478,765. Merchandise exports 

 fell from $136,941,539 in December, 1901, to $88,- 

 790,627 in July. In August they were $94,942,310, 

 in September $121,232,384, in October $144,327,- 

 428, and in November $125,043,181. 



The market for foreign exchange was strong 

 in December, 1901, and though rates declined 

 when money on call was firm, they advanced in 

 response to easier monetary conditions. During 

 the early part of the 'month gold was exported 

 to Europe in comparatively large amounts, 

 $2,417,273 going forward on the 3d and $1,115,869 

 on the llth. Then, however, higher rates for 

 money caused a decline in exchange below the 

 gold-exporting point, but with the relaxation in 

 monetary tension exchange advanced. Rates for 

 bankers' long sterling fell from $4.84.? to $4.832, 

 and bankers' sight bills were $4.86| on the 31st 

 against $4.88 on the 1st; while the gold exports 

 were in progress sight exchange was above $4.87. 

 The market kept so close to the gold-exporting 

 point in January, 1902, that moderate amounts 

 of the metal were shipped at intervals, though 

 these exports were the result of arbitration oper- 

 ations, which were facilitated by low rates for 

 exchange at Paris on London. Sight bills fluc- 

 tuated during the month between $4.86| and 

 $4.87i, and long bills between $4.83| and $4.84. 

 In February the market was strong and $4,265,- 

 283 gold was exported on the 6th and $3,513,823 

 on the 27th. These shipments were, however, 

 made on arbitration operations, while sight ex- 

 change was no higher than $4.87|; long bills 

 ranged from $4.84} to $4.85^. The market closed 

 firm, with sight bills at $4.87J, and it was strong 

 early in March, when sight exchange was $4.88, 

 and then moderate amounts of gold were ex- 

 ported; long bills were $4.85J. After the 8th 

 rates declined fractionally, and gold shipments 

 were checked, but by the close of the month there 

 was a recovery in sight bills to the opening 

 figures of $4.87|. In April the tone of the market 

 was strong throughout the month, and on 

 the 7th $2,518,689 gold was shipped to Paris. 

 Then came a decline in rates for sight bills below 

 the gold-export point, caused by dearer money, 

 but later in the month there was a recovery due 

 to a demand to remit for Louisville and Nash- 

 ville stock, and also in settlement for American 

 subscriptions to the new British loan, and the 

 market closed firm at $4.88 for sight, the best 

 figures of the month; no further gold exports 

 were made, however. Sixty-day bills sold at 

 $4.85. In May high money rates caused a de- 



