to bring its military operations to a standstill for want of money. But whether victorious or vanquished, Russia would, in all probability, issue from a great war so burdened and weakened as to render it impossible for her to fulfil her financial engagements. The wonder is that, in the face of the recent deterioration in her financial condition the prices of her securities have in late years been so well maintained. But if the unwise counsels of those who are urging the country on in the path of foreign aggression should prevail, a very different state of things will no doubt soon be witnessed. THE TRADE OF THE UNITED STATES AND THE BULLION MOVEMENTS. Ar the present time, when the possibility of gold shipments from the United States to this side is entering as an important factor into all calculations respecting the future of the money market, the recent course of American trade deserves attention. For a long series of years prior to 1873, the imports into the United States greatly exceeded the exports, the main reason being that the country was borrowing largely abroad and bringing home the proceeds of the loans in the shape of the material required for the construction of its railways and in other foreign commodities. The crash of 1873, however, put a stop to this borrowing, and also by impoverishing the people, compelled them to restrict the purchases of foreign goods. And the result was a great diminution in the value of the imports, which dropped from £128,427,000 in the fiscal year ended the 30th June, 1873, to £87,410,000 in 1879. At the same time the exports rose pretty steadily from £104,496,000 in 1873, to £138,973,000, and consequently, while in 1873 the imports exceeded the exports by £23,931,000, in 1878 there was an excess value of exports over imports of no less than £51,563,000. It was this change in the balance of indebtedness that enabled the Treasury to accumulate gold in anticipation of the resumption of specie payments, and since resumption it has enabled the country to accumulate a stock of gold sufficient to establish the currency solidly on a specie basis. Since January, 1879, when resumption took place, the imports and exports of merchandise and gold have been : The Trade of the United States and the Bullion Movements. 175 It will be seen that since 1879 there has been a continuous decline in the amount of the trade balance due to the States, and corresponding with that a decline in the excess of gold imports over exports. It is noteworthy, too, that with an excess of upwards of 50 millions in the value of the merchandise exports in 1879, the import of gold was only about £800,000 greater than in 1880, when the trade balance was about 12 millions less than in the previous year. This seems to show that the rapid re-payment of the Government debt and the absorption by the United States of their own securities previously held abroad, have largely reduced the amount of interest payable to foreign holders. And the difference between the excess of the merchandise exports and the gold imports of the past two years points to the conclusion that a sum of from 20 to 24 millions represents the amount which the Unites States have to pay yearly to Europe on account of interest on debt, dividends on securities, freight and insurance of merchandise, and credits to American travellers, &c. The movement of bullion between nations is, of course, not always determined by the state of the trade balances. A very high rate of discount here, for instance, would draw gold hither from America, even although, instead of being indebted to us, she was largely our creditor. But in the end the flow of bullion is largely determined by the currents of trade, and, consequently, the diminishing excess of the United States holds out the prospect of an early diminution, if not the cessation, of the drain of gold thither, which in recent years has so materially affected the European money markets. And in this connection it is important to notice that during the latter half of 1881 the trade balance in favour of the States was very greatly reduced. Comparing the two halves of the year, we have the following results: The excess in the latter half of the year, assuming that the calculation that from 20 to 24 millions is the amount of the yearly payments to be made by the States for interest, freight, &c., is approximately correct, would do little more than enable the Americans to pay their way; and during January of this year the balance continued to decline, owing to a continued increase in the imports and a decrease in the exports. For this decline there are two causes. In the first place the advance in the prices of commodities in the United States has stimulated imports and checked exports; and, secondly, there has, since last autumn, been a wholly artificial diminution of exports owing to the locking up by cliques of speculators of immense quantities of produce. Of these causes the first will continue in operation unless and until there is an equivalent rise of prices on this side, but the other must necessarily be only temporary in its operation, and may indeed be said now to have ceased to operate. The speculators who were keeping produce out of the market in the hope of forcing up prices have failed in their object; and, according to latest accounts, the "corner" has broken up and ended disastrously for those engaged in it. We must, therefore, now look for a considerable increase in the American shipments hither of breadstuffs, provisions, &c., and a consequent addition to our present trade indebtedness to the States. That indebtedness, however, as we have seen, has of late gradually diminished, and it is approaching the point when it will no more than suffice to pay the debt due to us in connection with our investments in American securities, and in payment of various services rendered of which the trade returns take no account. The probability thus is, as we have said, that the long-continued drain of gold hence to America will now cease, if indeed the current is not reversed before long, and some of the supplies drawn from this side in recent years returned to us. RATE OF DISCOUNT IN NEW YORK. * WE derive from The New York Commercial Chronicle the following table of the average rates for prime commercial paper at New York each month, from the commencement of 1873 to the close of 1881. Some facts, as The New York Chronicle observes, have to be borne in mind in connection with the above, in order that the statement may be rightly interpreted. In the first place, the figures for the summer of 1881 are not wholly natural. Trade was so sluggish in Great Britain, that interest in the open market at London ruled much of the time at 11 @ 1 per cent., while the tragedy at Washington so shocked the country, that it gave a partial check to enterprise in the United States. Then, again, the extreme figures for the winter of 1879-80 are special, for they reflect a temporary excitement connected with a rampant speculation-a kind of speculative cyclone-which swept over the country, under the exhilarating influence of the confidence and enterprise which followed the establishment of specie payments. We may also add the further explanation that some of the changes in the quotations during the last three years are the result of the operations of the Government in connection with refunding,-loanable funds having thus at times been made spasmodically abundant and scarce. But passing that feature-which has been a source of unnatural disturbance during the whole three years-and making allowance only for the peculiar and exceptional rates of this summer, when commercial transactions were so restricted here and in Europe, will easily bring the year's average for 1881 above that for 1880, as it really should be. Or taking the closing four months, the active season of the last two years, we *It will be remembered that tenders received at the Bank of England for British Treasury bills for three and six months were placed at so low a figure as to yield for the money less than after the rate of 14 per cent. per year. reach perhaps a fairer comparison of the present condition, which is as follows: The New York Chronicle proceeds to remark that there appear to be indications of a slow but perceptible movement upwards during the last three years of the rates charged for interest in the United States. Should this movement continue, it may have an important influence on the English money market. At times when, as has recently occurred, it has been needful to draw gold from other countries in order to replenish the reserve of the Bank of England, it has been necessary to raise its rate to such a point as would secure this. If the rates ruling at New York become in a general way higher, this operation will equally become more difficult, and the rates current here higher as well. The influence of the New York money market on that of London is now so important, that every movement in it deserves our attention. AVERAGE RATES RULING IN NEW YORK FOR PRIME COMMERCIAL |