This is too intricate and complex a subject of which to attempt an exhaustive explanation within the necessary limitations of this work. Some of the more important influences which have a direct bearing upon the exports and imports of the yellow metal, so that some general idea may be had as to the causes for its movement, will be given. A knowledge of the principles of foreign exchange (see " Exchange ") is necessary to an understanding of the gold movement, for one is very closely related to the other.

In the first place, the actual transportation of the metal is accomplished in this way: Specie in general is almost always shipped on a through bill of lading to London - the principal world's market for gold - and consists either of small bars of gold packed in kegs, or gold coin in similar packages. The present rate of freight from New York to London is \% on silver, and 5-32% on gold. The insurance would be placed by the shipper with any of the large insurance companies, whose current rate is l-20th of 1%. At such times gold is not valued as coin but as bullion. As coin itself is subject to abrasion and, consequently, light weight, the shipper prefers bullion. This may be obtained in bars from the " Assay Office " at a small premium, and packed in sawdust to prevent abrasion. It now becomes a mere commodity and the premium, packing, cartage, expressage, loss of interest on the money involved during transit, and insurance, must all be added to the cost.

1 Express companies have made a specialty of issuing " travellers' checks " in denominations of $10 and upwards. These have become so well known that they are accepted by steamship companies, hotels, etc., as readily as actual money. These are of great service here in this country, and are in constant use among commercial travellers.

2 Between London and New York this is estimated at about 3-8 %, or a little less than 2 cents per pound sterling.

The Secretary of the Treasury, in 1906, established the precedent of increasing the Government's deposits in banks (see " United States Depository ") to the amount which they have engaged gold for import (covered not by deposits of United States Government bonds, but by what are known as " savings bank bonds " - permissible for the investment of funds of Massachusetts or New York savings banks - accepting them at 90% of their face value) as soon as the engagements have been made.

With the above facts in hand it is easy for the exporter to figure into the transaction the price obtainable abroad and thus determine whether or no he can ship at a profit.

In the next place, why is gold shipped? The common belief that it is to settle the balance between countries arising from exchange of commodities between them is only partly true. There is more than this so-called "balance of trade" entering into the matter. Take our own country, for instance: We must settle with foreigners for not only the commodities imported ¹ but for earnings on foreign capital invested here as well as liquidation of the principal; for the expenses incurred by Americans travelling in foreign lands; for foreign securities sold in American markets; remittances sent home by immigrants; and for transportation of American freight in vessels sailing under flags of other nations. The opposite side of the account is the money which immigrants bring in; payment for our exports; expenditures by foreign ships when in our harbours; charges of American vessels for carrying foreign merchandise; travelling expenses incurred in this country by tourists from abroad; investments in United States by foreigners, and interest, dividends and principal payments on such of their securities as are owned by ourselves.

Once in so often a balance of all these accounts must necessarily be struck, and gold shipped by the debtor to the creditor nation. But a settlement in this way may be postponed beyond its natural time. Gold shipments are regulated by the rates of exchange, which, in turn, are affected by the rates for money. Since we are now so closely connected in monetary matters, one nation with another, each will take advantage of higher interest rates prevailing in the other and lend its money there. The rate of exchange, which may have been at

This changes the "gold import point," for not only the loss of interest in transit need not be considered, but an immediate use of the money may be obtained; thus the interest thereon may also be deducted from the cost of importation. This leaves the cost of packing, cartage, insurance and freight, and the cost of the metal, less the item of interest, as the only things to be considered. (Practice discontinued under Secretary Cortelyou.)

This " facilitating process." as it is called, is of vast importance to the United States, as it practically eliminates geography from the question. Gold in almost any part of the world can be readily made available in this market, and it is bound to increase the importance of New York as a monetary centre; in addition to which, it would have a tendency to maintain more equable rates of interest.

The action of the Secretary above referred to, indicates the strong call which the United States made for gold during 1906. This was partly brought about by the San Francisco disaster, and the fact that the New York trust companies were called upon to keep cash reserves for the first time. The London Statist estimates that we absorbed one-half the world's output of gold for the year 1906.

1 On account of probable undervaluation of imports, published statistics are likely not to be exact.

& point where gold shipments were likely to occur, will be suddenly changed by the creditor nation lending its balances at the prevailing rate in preference to calling its funds home. This will reduce the rate of exchange. Just as soon as the rates for money decline exchange will go up.

A shipment of gold has a natural tendency to strengthen money rates, and is, therefore, always dreaded by Wall and State Streets. The reverse brings lower rates and ease of mind.

Unless there is some such influence at work as the above, it is obvious that the rate of exchange may advance until the shipment of bullion is more advantageous and gold exports follow.

Then there is the complex system of one country paying its debts to another through the medium of a third. Gold was shipped from Australia to pay for food stuffs purchased in Argentina for the English soldiers in the Boer war. The Sydney Mint now sends much gold to San Francisco in payment for American products shipped to Europe.

Great efforts are at times made to attract imports. It is not uncommon for Germany, for example, to mark up discounts as a bid for gold, or the Bank of England to pursue the same tactics to prevent its export.

The Bank of France, however, has another method, namely, that of purchasing gold on its own account and charging exporters a premium for the same. This plan necessitates less frequent changing of the discount rate.

It is usual to expect Europe to ship us gold in the autumn when payments are due for our cotton and grain, and for us to reciprocate in the spring when we are more likely to be in its debt.

Gold is almost the last article exported. We exchange all other products for it. It must be borne in mind, however, that we produce it, as well as corn, cotton, etc., and in the natural course are bound to export it from time to time. (See "Balance of Trade," "Bank of England," "Gold Import Point," and "Gold Export Point.")

International Postal Money-orders. See "Postal Money-orders."