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would have the effect eventually of bringing about a rise in the prices of all commodities for which it is exchanged. While we are increasing our stock of gold, we are, however, increasing our national wealth in practically like proportion. The growth of the wealth of this country during the last thirteen years has averaged annually $8,500,000,000. In this connection other facts of a cognate character may be stated.

The total income of the people of the United States is about $35,000,000,000 a year. Of this, $10,000,000,000 is derived from agricultural products, $2,500,000,000 from minerals and $10,000,000,000 from manufactured articles.

The total merchant tonnage of the United States is exceeded only by the merchant shipping under the British flag, which is nearly 21,275,000 tons. American shipping is greater than the merchant tonnage under the Norwegian, French, Italian and Dutch flags combined.

The average annual income of each resident of the United States is nearly $350. The average annual income of each resident of Great Britain is $260. The residents of our country save each year about seven billions of dollars.

Foreign economic reserve strength has been very materially weakened by enormous sales of holdings of American securities.

The English debt originated in its present form in 1689 and aggregated $107,575,000 in the year 1697. Prior to the American Revolution, Great Britain's national debt was $642,915,000. It rapidly increased from then to 1857, when it amounted to $4,180,000,000. It showed a reduction of approximately one billion dollars by 1899. March 31, 1914, it aggregated $3,535,000,000, and one year later showed an increase of $2,290,000,000 due to war appropriations. The debt had then reached the stupendous total of $5,830,000,000--a figure so large as to be almost beyond human comprehension. It is estimated that the national English deficit amounts to $15,000,000 a day. Revenue is about

$3,500,000 a day, so that the daily deficiency approximates $11,500,000.

The total wealth of our country and the total of real estate values, as shown by the last three estimates of the Census Bureau have been as follows:

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Total wealth....$88,517,000,000 $107,104,000,000 $187,739,000,000 Value of real es

tate

.......

52,537,000,000

62,541,000,000

110,600,000,000

Including real estate, our wealth increased at the rate of $4,646,000,000 per year from 1900 to 1904, and at the rate of $10,000,000,000 per year from 1904 to 1912. Excluding all real estate values, the increase was at the rate of $2,186,000,000 from 1900 to 1904, and $4,600,000,000 from 1904 to 1912. Thus the gains during the last period, outside of all increment to land values, and all fixed improvements upon the land, were practically the same as the gains including real estate values from 1900 to 1904.

The investment in manufacturing machinery, tools and implements increased in the eight years, 1904-1912, from $3,297,000,000 to $6,091,000,000, or nearly doubled. The investment in privately owned electric light and power stations increased from $562,851,000 to $2,099,000,000, and in farm implements and machinery from $844,000,000 to $1,368,000,000.

An official statement by the German Treasury recently published estimates the total wealth of that country before the war at 290,000,000,000 to 320,000,000,000 marks, or about $75,000,000,000 to $80,000,000,000. Sir George Paish in 1914 estimated the wealth of the United Kingdom at $85,000,000,000. The Census Bureau estimates that the wealth of the United States increased from 1904 to 1912 in the sum of $80,000,000,000. The estimates for Germany and the United Kingdom include investments by their people in other countries, while the census figures for the United States deal only with tangible property in this country.

The extreme expenditure of the contest will be realized when it is stated that total military expenditures of all the belligerent nations in the first year were more than $17,500,000,000, while in the second year it was $28,000,000,000.

The aggregate of these amounts represents a sum that is three times greater than the entire capitalization of the railways of the United States, and four times greater than the total deposits of our National banks. Two years of the present war will cost six times more than the full amount expended in our civil war, and will reach an aggregate that is forty times more than the total sum of the National indebtedness of the United States and one hundred and twenty times more than the expense of the Panama Canal.

Great Britain's war expenditures are $25,000,000 a day, as compared with little more than half that amount at the opening of 1915. The daily war cost of France is $18,000,000 and of Russia $15,500,000. The chief Entente Allies expend every time the hour hand of the clock moves, more than $2,400,000. The Germanic Allies, it is computed, lay out every sixty minutes at least a million of dollars as the price of their enmity.

The United States leads all other countries in the volume of its exports.

Figures show the rapidity with which this country is increasing its equipment for furnishing necessities. If the capital investment has doubled in eight years, it must have more than doubled in productive capacity for new equipment. The thirteenth census showed that from 1899 to 1909 the amount of capital invested in all manufactures in this country increased 105.3 per cent., the number of wage earners employed increased 40.4 per cent. and the amount of wages paid increased 70.6 per cent. The production of coal practically doubled from 1900 to 1910, and the tonnage of the railways increased in nearly the same proportion, while the population of the country increased 21.4 per cent.

Coöperation is a duty on the part of American merchants to generalize the use of dollar credits as not only profitable to themselves but of lasting benefit to the economic fabric of our commerce.

THE FEDERAL RESERVE SYSTEM A YEAR OLD

November 16, 1915, the Federal Reserve Banking System was a year old. As a unit the regional reserve banks earned two per cent. in the year on their capital. There was a large release of reserves incident to the initiation of the new system and within a few months a tide of gold began coming from Europe to pay for war supplies so that member banks were not obliged to seek discounts as might otherwise have been the case.

The Federal Reserve Board states that bad banking practices have been eliminated, that fiduciary applications had been scrutinized as never before, and generally that banking all over the United States was looking up. Banks everywhere in the national system now expect to be compelled to conform to strict requirements of the law and conservatism is the rule in discounts.

It is evident that the money of the people retained in the reserve banks is there for the promotion of commerce, and back of these banks is a guarantee of the member banks which own them. It is also evident that the function of fiscal agent for all government drafts or checks, aggregating more than one million dollars per day, can be performed by the banks with a very material saving to the government. The system may be called a "shock absorber" or a "safety valve."

It may also be added that the new Federal Reserve Law increased the lending power of American bankers by no less a sum than $3,000,000,000, which lending power has been further increased by the influx of about $400,000,000 of gold. Including the effect of the new banking law and the new gold, bankers' power to make loans to their cus

tomers has increased since the date above mentioned, July 31, 1914, to the extent of something like $5,000,000,000, of which power they have so far made use of about one-fourth.

How RESERVE BANKS CLEAR-OPERATION OF GOLD SETTLEMENT FUND EXPLAINED

November 18, 1915, the ease with which clearings are made for the twelve regional banks through the Federal Reserve Board is described in a statement made by the secretary of the board, H. Parker Willis. In the first six months of the Gold Settlement Fund managed by the board the volume of bank balances adjusted amounted to $719,688,000, and the cost of administration was a little more than $1,000. The work is done by officers connected with the Federal Reserve Board, who assume this duty in addition to their other responsibilities. The statement of the board is as follows:

More than $100,000,000 is now held by the Federal Reserve Board in its gold settlement fund, made up of balances to the credit of the twelve federal reserve banks and the federal reserve agents. In the weekly clearing made by the board today [November 18] the balance in the fund was shown to be $102,620,000, made up of deposits held to the credit of the Federal Reserve banks for the purpose of clearing balances between them existing at the close of business each Wednesday. Each bank telegraphs to the Federal Reserve Board a statement of the amounts due to other banks, and the clearing takes place on each Thursday morning.

Clearing operations were begun on May 19, 1915, and the fund is, therefore, now six months old. The first actual clearing was on May 26, each federal reserve bank at that time being required to deposit $1,000,000 in the fund and an amount in addition equal to its indebtedness to other federal reserve banks.

Paragraph 5 of section 16 of the statute enacts that the federal reserve notes may be exchanged for gold coin or gold certificates. The practice of the federal reserve bank is, therefore, within the spirit as well as the letter of the

statute.

Attention is called to a regulation covering the matter which was issued by the board May, 1915. Deposits by the

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