OCEAN SHIPPING The percentage of the volume of our oversea foreign trade carried in American ships increased 1 per cent during the calendar year 1924, from 40 to 41. Privately owned American vessels in 1924 gained two points over 1923, carrying 29 per cent, while Shipping Board vessels transported 12 per cent as compared with 13 in 1923. The American seagoing merchant fleet, 500 gross tons and over, totaled 12,250,000 gross tons at the beginning of 1925, a decline of 538,000 gross tons during the year 1924, which represents largely the tonnage of vessels scrapped. For this and other reasons idle American tonnage declined slightly during the year ended June 30, 1925, while the idle tonnage of other countries increased. In general, American trade was adequately served during the year. Some progress was made in transferring Government-owned ships to private companies. BANKING AND FINANCE AT HOME AND IN FOREIGN TRADE The bankers' figures at the end of the year indicate a high degree of stability in a period of fairly substantial prosperity. All banking operations consistently kept pace with the increases in production, employment, and prices during the year. Rediscounts at the Federal reserve banks increased from $350,000,000 to $455,000,000, partly because of this increased business activity and partly because of the recent net outflow of gold. Rates on prime commercial paper were steady at 334 and 4 per cent during June, 1925, showing a slight increase for the year, while the Federal reserve discount rates at New York remained at 32 per cent, the same as one year before, although the yield on short-term Treasury obligations increased from 2% to 2% per cent and prime bankers' acceptances from 2% to 34 per cent. These changes all reflected the increasing demands by the business world upon the supply of loanable capital. The total volume of money in circulation on July 1, 1925, was $4,734,236,000, which was only $21,000,000 less than one year before, but there was a notable shift to circulation of gold and gold certificates, the latter having increased by $233,000,000, with corresponding decreases in notes. This process of putting gold and gold certificates into circulation, together with the considerable volume of net gold exports during the year, has made for monetary stability and minimized the dangers from inflation threatened by superabundant gold holdings. Perhaps the most encouraging feature of the period was the progress made throughout the world in the stabilization of monetary systems. The setting up of the machinery of the Dawes plan in Germany, in August, 1924, was a helpful beginning in this direc 66548-25--4 tion. The reorganized Reichsbank commenced the issuance of new currency based upon gold to replace the old inconvertible currency. On April 29, 1925, Great Britain and the Netherlands simultaneously resumed specie payments, and this example was immediately followed by New Zealand, Canada, the Union of South Africa, and the Dutch East Indies. These favorable developments had already been preceded in April, 1924, by Sweden's return to the gold standard and the establishment of sound currency conditions in such countries as Switzerland, Austria, and Czechoslovakia. The countries of Latin America which are not already on a gold standard have made marked progress toward sound monetary conditions and stable exchange. The progress in the reestablishment of the gold standard is of incalculable importance to international trade, which has been so severely hampered by the uncertainty resulting from exchange fluctuations. The volume of the world's total international trade, count ing both imports and exports, now aggregates about $50,000,000,000. The great bulk-more than two-thirds—of this total represents the foreign trade of the United States, Great Britain, the British Dominions, and the other countries whose currencies are stabilized in relation to gold. The foreign trade of those countries that have long been on a silver basis might well be included with these goldstandard nations, in which case it appears that the financing of an overwhelming proportion of the world's trade will henceforth be done on a metallic monetary basis comparable to that of before the war. In this work of stabilizing the world's currencies the United States has been of great assistance to the other nations through the granting of stabilization credits by our banks and the flotation of loans in our security market. The gross volume of foreign securities publicly offered in this country during the fiscal year ended June 30, 1925, amounted to $1,382,000,000, of which $292,000,000 were refunding issues and $1,090,000,000 were new capital. This represents an increase of $640,000,000 in new capital over the preceding fiscal year. Europe received more than half of the total new capital, with borrowings amounting to $655,000,000, of which $594,000,000 were for the account of Governments and enterprises enjoying a governmental guarantee while only about $62,000,000 were borrowed by private enterprises. Canada came second in volume of new capital, with borrowings amounting to $197,000,000, and Latin America came third, with $182,000,000, while Asia received only $24,000,000. In addition to these flotations, the Federal Reserve Bank of New York and a New York banking syndicate extended credits amounting to $300,000,000 to the Bank of England and the British treasury. respectively, to insure the successful stabilization of the pound sterling. The three Italian banks of issue obtained a $50,000,000 revolving credit for exchange stabilization and the Danish Government received a $40,000,000 loan for a similar purpose. Numerous less important bankers' credits were also extended. This increase in foreign loan flotations in New York can partially be accounted for by an easy money market. During the latter part of the fiscal year the embargo on foreign loans in London, which was adopted to insure the stability of the pound sterling in connection with the return to the gold standard, served to divert some loans to New York which otherwise might have been floated in London. The total foreign loans floated in London, excluding refunding issues, during the fiscal year ended June 30, 1925, and including colonial and dominion borrowings, amounted to only about £96,823,800 ($471,193,023 at par of exchange), or less than half of the volume of such loans sold in the United States. The reversal of the gold movement was another extremely important development during the year. It was the first year since 1919 during which gold exports from the United States exceeded gold imports to the United States. Total imports during the year amounted to $134,000,000 and total exports amounted to $249,000,000, leaving a surplus of exports of $115,000,000, whereas there had been a surplus of imports of $407,000,000 during the fiscal year ended June 30, 1924. The change began in December, 1924, when there was a surplus of gold exports of approximately $29,000,000. All the subsequent months of the fiscal year showed a surplus of exports. Factors contributing to this development were (1) the withdrawal in gold by the new Reichsbank of Germany of a large part of the proceeds of the $110,000,000 Dawes plan loan to the German Government floated here; (2) the premium on the Australian pound, which gave a further impetus to the outward movement of gold, inasmuch as it became more profitable to ship gold to that country than to purchase bills of exchange (this is partly because of the three-cornered nature of New York exchange transactions on Australia, most of which are consummated through London); (3) large gold shipments to India, the result of agricultural prosperity, the cheapness of this metal in terms of other commodities. In other words, gold ornaments were obtainable in India at bargain prices. Finally, mention should be made of the debt-funding settlements between our Government and the Governments of Finland, Poland, Hungary, Lithuania, Czechoslovakia, and Belgium as encouraging factors all pointing to the progress made by the world in recovering from the Great War. FOREIGN TRADE Exports and imports both showed substantial increases in the fiscal year. The excess of merchandise exports amounted to $1,041.000,000, which was larger than in either of the two preceding years. There was also an excess of gold exports totaling $115,000,000, in contrast with excesses of imports in most other recent years. The balance of exports of merchandise and gold has been largely covered by American loans to foreign countries. The following table shows changes in the value of trade and trade balances compared with pre-war and recent years: TABLE IV.-FOREIGN TRADE OF THE UNITED STATES Exports of domestic merchandise increased $554,000,000 during 1924-25, and two-thirds of this increase occurred among the unmanufactured products. Exports of crude foodstuffs reached & value over twice as large as in 1923-24, since the coincidence of large crops of bread grains in this country with small crops in Europe resulted in larger grain shipments from the United States at higher prices. Exports of manufactures, which are less affected by changes in supply and demand than crude foodstuffs and materials, increased 8 per cent, continuing an upward trend which has been in evidence for many years. The gain in imports, which totaled $270,000,000, was confined largely to crude materials. Imports of this class were 19 per cent larger than in the previous year as a result of the increased activity of our manufacturing industries. Our foreign trade with all continents except Asia increased in value during 1924-25. Exports to South America were 28 per cent larger than in 1923-24 as a result of increased exports of manufac tures, while exports to Europe increased 21 per cent due to larger shipments of grain and cotton. A decline occurred in our exports to Asia, in consequence of internal disturbances in China, and les ened demand from Japan for materials to replace earthquake damage. Imports from all continents except North America increased in value, and the decline for this continent may be ascribed entirely to the lower price of sugar. Changes in the volume of foreign trade during the past four years as compared with 1913 are shown in the following table for some of the leading commercial nations: TABLE V.-VALUE OF FOREIGN TRADE ADJUSTED TO 1913 PRICE LEVELS Germany 1 1 Not available for 1922, 1923, and 1924, on account of currency fluctuation. As compared with 1913, the value of our trade with Asia increased 244 per cent, and that with Oceania and South America 230 and 136 per cent, respectively. At least some part of the expansion of our foreign trade in recent years may fairly be attributed to the increased activity of the Department of Commerce. The steady growth of our service in the promotion of overseas trade is indicated by the fact that the number of demands for services from exporters, merchants, bankers, and others interested in foreign trade increased 75 per cent during the past year and were about ten times as many as in 1921. As an illustration of the results obtained through these services it may be noted that 175 firms to which the department rendered material assistance during 1925 obtained business which reached a total value of $73,000,000. The number of firms currently receiving foreign-trade service from the department is now about 18,500. |