People's Pilot, Volume 2, Number 48, Rensselaer, Jasper County, 19 May 1893 — THE OUTFLOW OF GOLD. [ARTICLE]

THE OUTFLOW OF GOLD.

English Investment* la the United State* Demand a Steady Stream of Gold Pay. ments. Mr. L. P. Dewey writes: “By what authority do foreign nations have a right to draw on the L'nited States for gold, or exchange, or commodities? This question we do not fairly understand. Will you be so kind as to answer through the Advocate what demands foreign nations have on this government? This is an important question, as a good many don't understand it.” The demands are various. There are many kinds of American securities held abroad. Among these may be mentioned a part of the outstanding government bonds, the bonds and stocks of railroad corporations, state and municipal bonds, and the bonds and stocks of American manufactories. A short time ago we copied from the Browers' Journal a statement of nearly >100,000,000 of the stock of American breweries held "iq England. In addition to these, foreign landlords have secured title to millions of acres of American lands, and there is scarcely an opportunity of investment on this -side of the water of which foreign capitalists have not availed themselves. This investment of foreign capital has been, and still is, encouraged by the patriots who have controlled our public affairs, until Great Britain has nearly accomplished the conquest of America by means of her money,which she could not accomplish by her arms. All of these bonds of every description are payable, principal and interest, in gold. The dividends on the stock of corporations held abroad are paid in gold. Rents collected of the tenants of British landlords are paid in gold. The balance of trade for the past year has been against us, and this balance is settled in gold. There is evidently a conspiracy of British and American capitalists and brokers at this time to force collections upon every available security in order to seemingly justify another issue of bonds for the purchase of gold with which to meet these demands. The condition, when fairly understood, exhibits the legitimate results of the brilliant financial policy of statesmen of the John Sherman variety during the past thirty years of our national existence. Common sense would seem to indicate the propriety of using the gold now in the country for the payment of these gold obligations, and the adoption from this on of an American system of finance in place of the British system which has so long prevailed. Let Americans own America and conduct their own affairs upon plain, com-mon-sense principles in their own interest, and we need never fear a financial crisis, or experience a stringency in the money market.—Topeka (Kan.) Advocate. From an unexpected source comes a confirmation of the Advocates’ theory. The American Banker, in a recent issue, offers the same explanation of the late steady outflow of gold from the United States. Says the Banker: The barest hint at the cutises which effect the Interchange ot commodities and specie between nations is sufficient to reveal the great comcomplexity of the hidden, almost unanalysable, movements of which it is composed The fact ot this difficulty, which arises chiefly because of the absence of exact information concerning the relations between foreign and domestic creditors, invites many foolish assumptions. So long as this data is not available wo shall see the prophets arise on every hand to intimidate us in our enterprise. Of late this genius of phophosy has exercised itself very largely upon the direful purposes ot “Gresham's law. ” This law Is in brief, that an interior currency drives the superior medium of exchange from the avenues of trade. If a cheap tool serves just as well as one that is dear, the latter will not bo used; and there is nothing occult about it. Our exports of gold are held to be a present example ot the operation of this law. For, do not our exports exceed our Imports, and yet, do we not send out gold? Therefore our currency has become Inferior and good money Is leaving us. Such reasoning overlooks one Important consideration, and is stupidly fallacious besides. It is well known that aside from the debts created by the International movement ot trade, wo are Indebted to European countries, especially to England, upon stocks and bonds, for interest and dividends. The volume ot these payments Is admittedly large, though Its proportions are not known precisely. To ignore these payments In considering the course of international exchange is a great error.

Some idea as to the volume of these payments may be gathered from the following hint dropped by lion. W. E. Gladstone, in the course of a speech in the house of commons, during the recent debate upon the inevitable silver question. He said: “I am almost afraid to estimate the total amount of the property which the United Kingdom holds beyond the limits of the United Kingdom, but of this I am well convinced that is not to be counted by tens of hundreds of millions. One thousand millions probably would be an extremely low and inadequate estimate. Two thousand millions, or something even more than that, is very likely to be nearer the mark.” Here is an acknowledgment of more than ten billions of dollars of foreign investments. Continuing, he said: “This splendid spirit of philanthropy, which we cannot too highly praise—because I have no doubt all this is foreseen —would result in our making a present of £50,000,000 or £100,000,000 to the world. It would be thankfully accepted, but I think that the gratitude for your benevolence would be mixed with very grave ihisgivings as to your wisdom.” Now multiply $250,000,000 and $500,000,000 by three and you have the minimum and maximum estimate of the decreased quantity of products, or commodities, it .would take to pay the interest due to England. from other nations, were silver to be remonetized. But as'this, decrease in the aggregate quantity of commodities or products it would take to. pay such interest, would not decrease the denomination vaiue, or money sum of such.,interest, .Mr. Gladstone’s statement is equivalent to an admission that England is absorbing from other nations an interest and dividend tribute amounting to anywhere from ?750;000,000 to $1,500,000,000 annually. And in confirmation of what Mr. Gladstone said, an eminent English authority. in speaking of the wonderful productive resources of the United States says: “The interest from money loaned and profits of investments of English capital in the states amounted

to 5727,000,000 last year, or more than sixty dollars for every vote in that country of universal suffrage, much more than is received in the same way from all the British colonies combined. ”