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exporters interest on the gold during its transit to Berlin, which the exporter usually has to pay. But behind all this was the fact of 2 per cent money in New York against 4 and 5 per cent money at Berlin.

In November, gold exports from New York reached the sum, unprecedented for that month, of $20,000,000. For reasons obvious to any one who considers that the volume of our agricultural exports reaches then its highest point, November is commonly a month of large gold imports. Only in 1901 and 1895, during the past sixteen years, have gold exports run beyond the inward movement, and in those years peculiar circumstances governed the situation in 1901, Europe's recall of the capital loaned by it to support the rampant Wall Street speculation of the spring; in 1895 a belated outflow which made up for wholly artificial restrictions placed in the way of international settlements by the Belmont-Morgan syndicate in the spring.

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This heavy outflow happened at a time when the rapid movement of currency to interior banks had slackened. Nevertheless it could hardly continue in such magnitude without impairing bank reserves. The cash fund of the banks, in fact, fell off five to six million dollars weekly while this export was in progress, and the surplus reserve fund would undoubtedly have been exhausted but for another noteworthy expedient which was at once employed. The trust companies, whose rise in power on the money market has been a striking incident of the past eight years, have three ways of using their deposits. They may invest them in securities; they may redeposit them with the banks; or they may lend direct to borrowers. Since the banks pay two per cent interest for the use of such deposits, it will usually follow that, with the money rate much above that figure, trust companies will lend on their own account, while with the money rate at or under two per cent, they will hand over their deposits to the banks.

We have seen that the money rate during nearly all last year, up to November, ranged between one and two and one-half per cent. It was not at all surprising, therefore, that the New York trust companies, in their semi-annual report of July 1, should have shown, as compared with July, 1903, a decrease of $108,000,000 in their loans, and an increase of $106,000,000 in their deposits with other banks. In November when, for reasons already stated, surplus reserves of the New York banks had fallen very low-the Stock Exchange rate for demand loans rose to three and then to four per cent. In December it went to five. The response of the trust companies was instantaneous. They

recalled their deposits from the banks and loaned them directly on the market; and, as a consequence, the burden of loans which was weighing down the Associated Bank reserves was in five weeks reduced $50,000,000. It remains to be seen how far this new expedient will go in supporting a more or less top-heavy structure of speculation. It is not to be forgotten, under any circumstances, that the liabilities created by the new loans of these institutions do not really alter the question of the reserve behind the market. It is the cash fund of the New York banks which supports the demand obligations both of themselves and of the trust companies which stand behind them.

Two or three other facts must be remembered. One is that return of trade activity, on the scale of three or four years ago, is certain to recall from the Eastern banks the huge sums of idle cash which were sent to them, this past year, from interior markets. If the speculative markets obtained the use of this cash because trade was so slack that the money was not needed, they will naturally have to give it up if it is again required in hand-to-hand circulation. If we were freely importing gold, such recall might be a matter of indifference. But we have seen that the real movement of gold is just now away from this country.

Again, it is perfectly well known that the absence of large security issues by our great corporations, this past season, was an important factor in converging capital on existing securities, and in making possible the extravagant movements of their prices. But the corporations have been merely waiting, and borrowings of enormous volume are certain now to come upon the market. There have long been outstanding upward of $150,000,000 railway short-time notes, which begin to mature this coming spring and must be refunded; but the refunding process is only a part of the work in hand. Within a month after election time more than $250,000,000 new railway stocks and bonds were offered; probably twice as large a sum will shortly follow.

But there are perils in an excited Stock Exchange movement, quite apart from these general influences. Some foretaste of this possibility was obtained very suddenly in December. Up to that time the almost unbroken rise in stocks had caused such extraordinary advances, over the year's earlier figures, as 46 points in Union Pacific, 40 in Chicago, Milwaukee and St. Paul, 109 in Delaware, Lackawanna and Western, 39 in Amalgamated Copper, 44 in United States Steel preferred, 38 in Pennsylvania Railway, and 10 to 30 elsewhere in the list. In the second week of December, without a single unfavorable development in the market, a sudden crash occurred, in the course of which, during two

days, declines of 5 points or more were general, St. Paul dropping 12 points in the period, Amalgamated Copper 24, Steel preferred 11, Union Pacific 10. There was a quick recovery, and it is true that the circumstances of the decline were such as to suggest a rather vulgar conspiracy to entrap a speculative public. But whatever its origin, the December crash, before it ran its course, had developed signs of dangerous weakness among the reckless leaders of the long speculation which preceded it. What happened on December 7 and 8 may happen again, and may, if the recent practices of the Stock Exchange are resumed, be aggravated by circumstances.

All things considered, American finance stands to-day on the threshold of an exceptionally interesting year. If the markets have prophesied accurately, then it would be quite safe to assume that a period of exceptional prosperity is before us. The qualifying fact in such calculations is that the markets of 1903 gave unmistakable prediction of disaster, and that disaster did not come. Whether an excited Stock Exchange may not to-day have somewhat exaggerated the tokens of a coming "boom," as it exaggerated the signs of danger eighteen months ago, is a reasonable query. As to the fact of a real and genuine renewal of

prosperity, however, there can be little question.

ALEXANDER D. NOYES.

APPLIED SCIENCE.

A LARGE portion of the attention of scientific and technical men has been directed toward St. Louis during the past few months, not only because of the attractions of the exposition, but also on account of the various scientific gatherings and congresses meeting there. Congresses of electricians, civil engineers, meteorologists, geographers, and professional men in all departments of the arts and sciences have been held, and innumerable papers upon all branches of pure and applied science have been read, discussed, and placed upon the record, fixing the present state of the industrial arts clearly as a picture for subsequent comparison and study. Of the permanent value of such congresses there are various opinions, and these need not be discussed here. Some of the congresses at previous expositions did excellent work in determining and establishing international units and standards, but this feature was not an important element of the recent meetings. Rather predominating were the papers describing recent achievements in construction and operation, placing upon record some of the more important works in the application of scientific methods to practical industry.

Thus the question of the long-distance transmission of electrical energy was emphasized by the numerous papers on existing lines, such as those in California, where more than 50,000 horse-power is transmitted from 150 to 200 miles. The hydraulic power developed from the high heads of water in the Sierras has been converted into electrical energy and correspondingly high voltages, and transmitted to the towns and cities near the coast for application and utilization. The construction of these lines has required the solution of various problems not included in operations of less magnitude. High voltages are necessary for the transmission of large amounts of energy, for otherwise the thickness and consequent weight and cost of line wire would become prohibitory. High voltages demand correspondingly good insulation, and much skill and ingenuity in design and construction have been expended upon improved insulators which will stand the tests of heavy line service. Experience has shown that better results are obtained by the use of steel supporting towers and long spans than with wooden poles and

shorter spans of wire. At the present time pressures of 50,000 to 60,000 volts are successfully employed, and these permit transmissions up to 200 miles in length to be commercially successful.

In all the existing long-distance electric transmission systems the alternating current has been employed, this being converted into the continuous current at the points of application, as may be desired. Recently, however, experiments have been made in Switzerland having in view the use of the continuous current at high voltages upon the line wire for distances of 100 kilometres and upward. There are several advantages in the use of the direct current, especially in connection with the secondary effects due to capacity and inductance, besides which the experiments made in Geneva show that the insulators will stand nearly twice as much pressure with the continuous current as with the alternating. The principal difficulty appears to have been with the generation of the high-voltage in the dynamo; but by the introduction of condensers between the sections of the armature success has been reached, while by connecting three dynamos in series a pressure of 70,000 volts may be obtained. At the present time the highest voltage in practical use with the continuous current is 22,000 volts, transmitting 5,000 horsepower between St. Maurice and Lausanne, a distance of 60 kilometres; but it is probable that further experiments will be made in this direction.

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In like manner to the consideration of the question of the transmission of energy, the subject of merchandise and personal transport occupied the attention of more than one section of the congresses. Just as in all considerations of work the two elements of force and motion must always be taken into account, so in the industrial activity of the world the provision for keeping the forces in motion is always evident. the course of an address upon present problems in technology, Prof. Haupt showed how the ratio of live to dead load has been increased in railway transport, the capacity of freight cars having been increased so that, instead of the paying load being less than the weight of the carrier, it is now about three times greater. A still greater advance has been made by the substitution of pipe lines for tank cars for the transport of petroleum, and in the same way the substitution of continuous for intermittent methods of transport for other merchandise and for passengers is a problem awaiting solution.

Mention has already been made in these pages of the advantages of the travelling sidewalk, as used temporarily at the World's Fair in Chi

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