1862 to the middle of 1865, although our own mines were then producing less than $50,000,000 a year. But those gold exports were distributed as automatically and naturally among the various foreign markets, in proportion to their trade activities and their monetary needs, as is the gold which goes out in an ordinary commercial movement. There have also been times when a given country, especially in stress of panic, has grasped at the gold reserves of the outside world and has drawn to its own markets abnormally large sums. The United States did this in the crisis of October and November, 1907, when our market's bid of a 4-per-cent premium on gold, payable in checks on solvent American banks, drew $100,000,000 gold with great suddenness from the bank reserves of Europe. Not only, however, was this a high emergency expedient, but the machinery utilized to effect the importations (Continued on page 58) Is It Not Sound Policy Write for our booklet, "Management of Your Estate" for you to do your banking business with Such a company not only can look after It is possible that we may be able to assist |||||||| ESTABLISHED 1865 ||| ESTABLISHED 1865 Investment Service F OR 51 years PEABODY, HOUGHTELING & Co. have carefully adhered to the principles of conservative investments. This cumulative experience in successful investment banking, combined with an efficient organization of trained experts, insures you a most dependable, specialized Investment Service. It will be our pleasure to send you a list of Choice First Mortgage Securities which have been carefully investigated and purchased outright by us. Long or short terms, in $1,000, $500 or $100 amounts, yielding 5% to 6%, and safeguarded in every possible way. This company welcomes your correspondence or your call in reference to any in vestment matters. Peabody, Houghteling & Co. (ESTABLISHED 1865) 10 South La Salle St., Chicago ESTABLISHED 1865 |||||||||| ESTABLISHED 1865 ||| was wholly unlike that which has effected our gold imports of 1915 and 1916. Undoubtedly, in the 1907 episode, the gold was eventually paid for through exports of merchandise, just as the present gold imports are being paid for in war munitions. But, aside from the fact that the gold import of 1907 was a trifle compared with the present movement, the radical difference of circumstances is that, in the panic year, New York was calling desperately for foreign gold in order to save the currency from disorder and the banks from disaster, our circulating medium having been immensely depleted by withdrawals for hoarding purposes. On the present occasion, the foreign gold continued to come in long after any need for increased American bank reserves had apparently disappeared, and long after any peril to our currency had been averted. Furthermore, it poured into our markets in such quantity that before many months even Wall Street, which of all things usually desires abundant bank reserves to support enlarged demands for credit, began to talk of the gold import movement as involving grave danger to our own financial system. THE abnormal character of the incident Strange Ideas of Finance has produced some strange economic ideas, which have been set forth gravely to the general public, often by responsible financiers. Incidentally, it has shattered completely a notion long prevalent on financial markets. From time to time in past years even in official reports by secretaries of the United States Treasury-the proposition has been urged for creating an international gold reserve, to be kept at some one or more designated points, to be managed by a commission of international bankers, and to be made a basis for gold certificates current in all the markets of the world. By this machinery, it was argued, the costly and wasteful process of shipping gold back and forth between markets of the various nations might be avoided, and great economy in international finance be effected. Whether such a plan is destined ever to achieve success, in some changed era of international relations, it will have to be admitted that the incidents of 1914, the rupture of financial as well as political (Continued on page 60) Income Assured-Principal Safe T HE family income secured by Municipal Municipal Bonds are safe, dependable, con- We offer Municipals in $1,000, $500 and $100 amounts yielding 4 to 5% per cent. Note These Attractive Issues Complete details on request The house of William R. Compton Company, with its extensive facilities, resources and experience, is ready to act as your Investment Banker. Conservatism and protection of patrons' interests are foremost considerations with us. Unusual Abnormal conditions and changes in the economic life of this country have created new investment opportunities that should be carefully considered. Write for our letter No. R.-1 that gives details about one of these investments. A. B. Leach & Co. Investment Securities 62 Cedar St., New York 105 S. La Salle St., Chicago Safe 52% Complete safety of principal. Widest diversification. Reasonable assurance of market. These are among the merits of the first mortgage 512 serial bonds, underwritten and safeguarded in accordance with the Straus Plan. Write for Investment List No. C-710 S.W.STRAUS & CO. (Continued from page 58) relations between the great European states, the seizure of banks in one country by the soldiers of another, the suspension of gold payment on their currency by a majority of the great belligerents, can hardly have advanced its prospects of immediate acceptance. What, for instance, would have happened to $100,000,000 or so in gold deposited at Berlin, to which London had a claim through certificates issued against it and held in England? What would have happened to a similar amount lodged at London to the credit of Berlin? This old proposition has been forgotten in the rush of events during the present It has been replaced, however, by several far more peculiar economic suggestions. The first of these was the notion, which became prevalent last year, that our own financial and business organism was threatened with ruin through this huge accumulation of gold. The idea seemed to be, first, that increase in our money supply through these gold imports was raising the cost of living at an abnormal rate, and, second, that the rapid expansion of bank reserves was encouraging reckless speculation both in stocks. and in commodities, thereby making inevitable hardship to consumers and an ultimate overwhelming collapse. THE HE idea of such immediately impending consequences was greatly encouraged by news that the state banks of Scandinavia and Holland were discouraging gold imports to those countries, contrary to all previous experience. That action, how- Gold ever, has been much mis- Imports Disunderstood and its purport Scandinavia couraged by greatly exaggerated. The ac- and Holland tual motive for it was officially explained in last year's annual report by the president of the Bank of the Netherlands, which set forth that the abnormal war conditions had "created new inducements to foreign countries for financing gold via the Netherlands when occasion offered, the proceeds of which would benefit foreign countries"; that the Dutch Bank would thereby "have become a tool in the hands of foreign arbitrage agents, in transactions for which the bank would not directly have rendered its assistance if it had been asked to do so." There (Continued on page 62) |