of exports of merchandise over merchandise imports. It is reasonable to suppose that with this marked reduction in our favorable balance of trade, the inward movement of gold might have practically ceased or might have been converted into one of outflow, had not the volume of foreign securities issued in this country in the fiscal year declined to the lowest level since 1919. The new foreign capital issues (that is, excluding refunding loans) in the fiscal year ending June 30, 1923, aggregated about 395 millions, as compared with 932 millions in 1921 and 428 millions in 1920. Of the new capital issues in the fiscal year, about 142 millions were for Latin America, about 109 millions for Canada, about 58 millions for Europe, 45 millions for the Far East, and 41 millions for United States possessions. The general level of the exchanges on New York, as shown by the Federal Reserve Board Index, declined from 69 in the first quarter of the fiscal year to 68 in the second quarter, to 67 in the third quarter, and to 66 in the final quarter. The decline in the general average is primarily a consequence of the unsettled political and economic conditions in Europe. It is to be noted, however, that sterling exchange rose steadily from $4.45, the average for June, 1922, to about $4.70, the average for March, 1923, after which time there was a gradual decline, the average for June, 1923, being about $4.61. On the other hand, the French franc declined from an average of $0.0876 for June, 1922, to $0.0630 in June, 1923. The average value of the German mark fell in its headlong decline from about thirty-two one-hundredths of a cent in June, 1922, to about one one-thousandth of a cent one year later. One of the important events of the year was the funding of the British war debt to the United States Government, the first of the allied debts to be funded under the act of February 9, 1922, creating the World War Foreign Debt Commission. The settlement fixes the capital amount at $4,600,000,000 as of December 15, 1922, which is equivalent to the amount of the original advances with interest, less a cash payment of slightly over $4,000,000. Payments on the principal commence with $23,000,000 the first year and increase to a maximum of $175,000,000 in the last two years of the 62-year period, with interest on the unpaid balance at 3 per cent per annum to 1932 and at 3 per cent thereafter. Foreign Trade. Both the export and the import trade of the United States. during the fiscal year were in an essentially healthy condition, with the improvement begun in the latter part of the preceding fiscal year continuing in export trade, and with a continuation of the upward trend in the value of imports which had been evident throughout the whole of 1921-22. The year marked a closer balance between merchandise exports and imports, a balance more in keeping with our international position, than any year since 1896. Compared with the foreign trade of other countries, that of the United States is in a very favorable position. The total gold value of the exports of 10 of the other principal commercial countries of the world in 1922-23 was but 20.6 per cent greater than in the calendar year 1913, while the exports of the United States were 59.3 per cent greater. The import trade of the United States for 1922-23 was 109.9 per cent greater than in 1913, compared with an increase of but 15 per cent for the total of the same 10 countries. The favorable position of our foreign trade is further shown by the fact that trade with the United States is a more important factor in the foreign trade of nearly every important commercial country than it was prior to the war. The value of our exports exceeds that of any other country, while our imports are second only to those of the United Kingdom. The following table shows the value of our merchandise exports and imports, the balance of trade, the net gold and silver movement, and the total visible balance (merchandise and precious metals) for 1922-23 compared with preceding and pre-war It must always be borne in mind that the great drop from 1921 to 1922 was more largely a drop in prices than in the quantities of goods, as set out in my last annual report. The increase in the value of 1922-23 trade over the preceding year was 45 per cent for imports and 5 per cent for exports. Compared with pre-war years, the value of imports was 124 per cent and that of exports 83 per cent greater than the 1910-1914 average. The excess of exports over imports in 1922-23 was, however, but $176,000,000 compared with over a billion dollars for 1921-22, and an average of nearly one-half billion dollars for the five years just before the war. Taking both merchandise and precious metals together, there was a slight excess of imports in 1922-23-$68,000,000 compared with an excess of exports in 1921-22 of $714,000,000. The "invisible exchange " has a most important bearing upon the whole question of trade balances and is discussed more fully in Part III of this report. One of the outstanding features of our 1922-23 foreign trade was the continued growth, during the first nine months of the year, in both the value and volume of imports-a growth that brought the value of imports in March, 1923, to a point $57,000,000 in excess of exports, the first excess of imports in any month since July, 1914. Imports in April and May though lower than in March were still above exports, but since May the decline in imports has been more marked and the first months of the new fiscal year show an excess of exports again. While each of the great commodity groups contributed to this growth in imports, approximately 75 per cent of the gain in 1922-23 over 1921-22 was due to the increasing requirements of our manufacturing industries for tropical and other raw materials and partly manufactured goods growing out of our increasing industrial activity. These increased imports were largely noncompetitive in character such as raw silk, crude rubber, fibers, furs, skins, and other tropical and semitropical products. Though Asia, South America, and Africa, the continents largely supplying this material, showed the greatest percentage increases, imports from both Europe and North America were markedly larger than in 1921-22. Exports of crude materials, partly manufactured goods, and manufactures ready for consumption in 1922-23 showed substantial gains over the previous year but decreases in foodstuff exports especially marked in the case of crude foodstuffs-approximately offset the gains in the first two groups, and the net gain in exports over 1921-22 was much more moderate than the gain in import trade. Although exports of crude foodstuffs in 1922-23 showed a marked falling off compared with the preceding year, the value of this group was higher relative to prewar values than that of any other group, reflecting through the lower relative prices of farm products an even greater gain in quantity. Increased demands for imported foodstuffs on the part of Europe growing out of the curtailment of production in Eastern Europe was responsible for this growth in food exports 68596-23-2 2166,000, 00,000 as compared with pre-war. Concomitant with the recovery of agricultural production in Europe, a decrease in our agricultural exports is, as was to be expected, occurring. That total exports to Europe in 1922-23 were about the same in value as in the previous year would indicate that exports of manufactured goods and raw material to Europe are increasing as foodstuffs exports decrease. Exports to Asia were slightly below those of 1921-22, while shipments to the Americas and Oceania showed considerable increases. A study of the influence of prices on values of the principal classes of commodities for which quantitative data are available (presented in Tables 4 and 5) indicates that higher prices in 1922-23 than in 1921-22 were partly responsible for increases in the year's trade values. With 1922-23 trade valued at 1921-22 prices, imports would still show a considerable gain while exports would probably show a slight falling off compared with the preceding year. The huge export balances of the past few years were a war abnormality, and were to be expected to disappear. Through these balances, however, we have shifted from a debtor to a creditor Nation, and the theory is now more or less generally accepted that our hitherto normal excess of exports over imports must ultimately shift to an excess of imports, as we have large balances to receive in payment of interest. The gradual reduction of the monthly export excess in 1922, culminating in the spring of 1923 in four consecutive months in which imports were larger than exports, does not necessarily mean that this time has arrived. In comparing recent trends of exports and imports it should be borne in mind that the extremely low imports of the 1921 period of depression probably left stocks of many items abnormally low, and the strong upward import trend since reflects both a building up of larger stocks and increased current requirements. On the other hand, rising prices in the United States and gradual recovery of production in Europe have been impairing the competitive power of the American exporter, while the healthy domestic demand for goods has made the American business man to some extent less keen for foreign markets. Furthermore, exports are normally at a lower level during the first half of a calendar year than in the fall months when the outward movement of grain and cotton is the heaviest, and the January to June, 1923, decline from the high figures of the previous October and November is not by any means an indication of a weakening export position. June, the last month of the fiscal year, witnessed an approximate balance between exports and imports and the |