The position of the English market did not improve, the American exchange had fallen to 4.79 and brought about fresh withdrawals of gold, which, coupled with home and Egyptian requirements, caused the bank reserve to fall from 41.27 to 30 19 per cent., compelling the central institution to increase the official rate on October 6th from 4 to 5 per cent.

This rise in the bank rate could not fail to have a certain effect on the French exchange on London, which at one time rose to 25·40, a rate yielding a certain margin of profit for the export of 20-franc pieces from Paris to London. This export of gold from France could, however, only be limited; for, on the one hand, the recent withdrawals for Italy had somewhat reduced the available stock, and, on the other hand, the Bank of France, which, as is known, has the option of paying its notes in gold or in silver, refused to satisfy the demands for gold for export, so that the balance in hand of that establishment suffered but little. From 606 million francs on September 15th it was only reduced to 598 millions on October 20th. But while the Bank of France succeeded in protecting its stock of gold, its portefeuille was anything but satisfactory. Already in October 1881 there were signs on the Paris Bourse of a coming crisis, which broke out a few months later. Speculation, resorting to every available means to obtain the resources necessary to maintain its position on the Bourse, had created a considerable amount of accommodation paper, and the Bank of France, with a view to defending itself against this inrush of bills devoid of a serious basis, and not wishing to encourage such excesses, raised its official rate on October 20th from 4 to 5 per cent.

This timely measure had the desired effect. Speculation, already impressed by the high contango rates, reduced its purchases abroad, and exchange on London falling to 25-24, all fear of gold exports disappeared.

Gold was no longer at a premium and found its way back into the Bank of France, whose stock, which on October 20th stood at 598 million francs, rose on November 3rd to 611 millions, and on November 17th to 627 millions.

Meanwhile, the position in England had assumed a more favourable aspect. The Bank reserve, which in October was 30 per cent., returned on November 10th to 383 per cent. The money market had recovered its normal state; the American exchange was firm at 4.80 --that is above the gold point-and the French exchange at 25.23.

The syndicate took advantage of these circumstances to continue its purchases of gold without deviating from its original policy to make its purchases in the open market rather than from the issue banks. They acquired a certain quantity of foreign coins, which the Italian treasury, in accordance with the provisions of the treaty of Turin, was bound to accept at the rate fixed by the Bank of France, viz. :

Russian Imperials

916/1000, or fres. 3148-29

per kilo.

American Eagles

900/1000, or frcs. 3093-30 per kilo.

20 mark pieces 899/1000, or frcs. 3091-58 per kilo.

...

It was from November that the transactions in foreign coins for account of the syndicate assumed an important development.

Berlin supplied Russian gold, Vienna and Trieste, 20-franc pieces, Australia, English sovereigns, Paris 5-franc pieces, and already by the end of 1881, 174 million francs in gold and 35 millions in silver were in the hands of the Italian Treasury.

But, while from that point of view, the prospect was less gloomy, the position of the syndicate was anything but favourable as they had still to place the remaining half of the loan.

The crisis on the Paris Bourse, which had been feared for so long was now in full force. Many will remember the general break down and the state of panic which followed. Italian Rentes which during the second half of 1881, had wavered between 88.27 and 90.75, fell at the end of January to 85 60, and at the beginning of February to 83.50.

It was then that London who had for a long time been watching the difficult position of the Paris Bourse, thought the moment had arrived to come to the rescue of the French market, in taking up all that was offered in international stock.

As a result of these important purchases, Paris had become the creditor of London, and the English market soon felt the effect of this position, which, involving remittances to France, sent up the exchange on Paris to 25 12 and brought about the withdrawal of a considerable quantity of 20-franc pieces from the Bank of England. In the face of the situation produced by the French crisis, the central institution did not hesitate to adopt energetic measures, and on Monday, January 30th, raised the official rate from 5 to 6 per cent. This step taken on a Monday instead of on Thursday, as usual, took the financial world all the more by surprise, because it coincided with the news of the suspension of the Union Générale in Paris and was followed on the same day by a withdrawal of £920,000 for France. Never had the export of gold left such a gap in the vaults of the Bank in one single day.

Other centres followed the same defensive policy. Berlin raised its official rate to 6 per cent.; Amsterdam to 5 per cent.; Brussels even went as far as 9 per cent. for the discount of bills drawn on Belgium from abroad.

Fortunately the rise in the American exchange was such, as to justify a hope that the tide of the gold movement might any day turn toward London. Had the Paris crisis been simultaneous with withdrawals for American account, the consequences might have been very serious, but on the contrary the New York exchange on

London showed such a marked tendency to rise that all fears of complications on that score were removed.

It could not be expected that after such a severe crisis the French market would return to its normal state within a short time. The wounds had been too deep not to leave their mark for a long time to come. The market in Italian Rentes in Paris, remained heavy, and while the English, German and Dutch markets showed a greater interest than formerly in that security, their support, however valuable it might be, did not, in the opinion of the syndicate justify the issue of the balance of the loan. They felt they must wait until the Paris Bourse improved, and fortunately a certain ease in money enabled the French market to recover by degrees from the effects of the violent shock it had received.

The Bank of France, which, during the crisis, had done its utmost to come to the assistance of the market, persevered in that direction, and on March 2nd, reduced its rate of discount from 4 to 4 per cent., and on March 25th, from 4 to 3 per cent., its gold stock amounting then to 860 million francs. At the same time, London after having reduced the official rate on March 9th, from 5 to 4 per cent., further reduced it on March 23rd, to 3 per cent., and these reductions in the price of money could not but have a beneficial influence on the prices of public funds.

The Italian Rente improved considerably and showed great firmness. Quoted on April 1st at 89.90, it rose to 90'80, and even to 91.15 under the effect of purchases for Berlin and Amsterdam account, where the Italian Government had, at the request of the syndicate, appointed first class houses for the payment of the coupon.

The time for the issue of the balance of the loan seemed therefore within measurable distance, and while not unmindful of the fact that the support of the Paris market must be limited, the abundance of money seemed to justify the issue of the remaining half of the loan (£15,589,800, francs 364,745,000).

It took place on May 3rd and 4th, 1882, in London at Messrs. Baring Brothers and Co., and Messrs. C. J. Hambro and Son, at 88, The result was not satisfactory. As at the time of the first issue, it required great efforts to keep up the market in Italian Rentes, and when it became known that only one-fifth of the loan had been subscribed, it was soon dealt in below the issue price.

The prospects of the syndicate did not appear to be brilliant, but on the strength of its confidence in the ultimate success of the operation, it took over the unplaced portion of the loan and an official quotation on the Stock Exchange was obtained.

The syndicate undertook, as a result of further agreements, to supply the Italian Treasury, not with 444, but with 491 millions in gold (or 47 millions more) and with only 153 instead of 200 millions in silver.

The syndicate felt all the more justified in entering into this fresh arrangement because by May 31st more than 300 millions in gold had been delivered, and the expected flow of gold from New York to Europe had already begun on a large scale. Quoted at 4:864 at the beginning of May, the American Exchange rose during June, July, and August to 4.883, and even 4.894 was paid for London transfers, a rate which admitted of the export from New York to Genoa of American Eagles and even of some gold bullion. American Eagles were also procurable in London, so that there was no scarcity of gold.

At one time a shipment of gold was more profitable than a remittance in silver, for the 5-franc pieces supplied by the Bank of France at Marseilles for Genoa came out, under deduction of freight, insurance and commission, at the exchange of 25'07, whereas the remittances of the yellow metal came out at 25.16.

The remittances in silver being so disadvantageous, the syndicate thought it advisable to propose to the minister that the January, 1883 coupon, for which cover was to be sent by December 15th, 1882, and which amounted to about 33 million francs, should be paid exclusively in silver instead of two-thirds in gold and one-third in silver, as stipulated by the treaty of Turin. This proposal was certainly such as to cause some astonishment to the minister, who thought at first that it must be a mistake, but who, as may well be imagined, readily accepted the offer made to him.

It seemed, however, as if the issue of this great undertaking was fated to be surrounded with difficulties. As was shown above, everything went on smoothly from a monetary point of view, but as regards the realisation of the balance of the loan, fresh drawbacks occurred. The events in Egypt in June and July, upset the markets, but Italian Rente remained somewhat firm. Quoted on June 10, at 90.50, it only fell to 90′10 on the report of massacres at Alexandria, and we find it on July 15 (date of the bombardment of that city) at 86-40, ex coupon.

The end of the Egyptian crisis soon brought about a rise in the quotations, and the syndicate took advantage of it to dispose of its stock and to continue its remittances to the Treasury which amounted in the latter part of August to 550 million francs, and toward the middle of September to 580 millions.

Notwithstanding the sales of the syndicate, Italian Rentes, being more and more taken up by English, German, and Dutch capitalists, was very firm and an important rise was expected as soon as the syndicate had completed it sales.

This expectation seemed justified by the fact the French market appeared to be more favourably disposed toward Italian Rentes, and several offers were made by groups of French bankers to take over the balance of the loan. But the negotiations with these groups having fallen through, the syndicate accepted the proposal of an

Anglo-Franco-Italian group to which the balance of the loan was transferred (£6,444,840).

Having thus realised the balance of its holding, the syndicate gave its attention to the monetary part of the operation, which from that moment presented no further difficulty, and at the end of January, 1883, the Italian Government was in possession of the equivalent of the whole of the loan.

The work was therefore finished. It was a very laborious task, and rarely have so many monetary and financial difficulties had to be overcome. The energy, ability, and perseverance of the contractors of the loan of July, 1881, alone brought the matter to a successful issue.

When the contractors were in a position to inform the Italian Government that they had fulfilled all their engagements, they no longer had at their head, to inspire and aid them by his experience and his abilities, the eminent Directeur of the Banca Nazionale nel Regno d'Italia, le Commandeur Bombrini, Senator, who had died in March, 1882. His very able colleague and successor in the government of the bank, le Commandeur Grillo, was able, it is true, to the last moment, in following the course laid down by his predecessor, to give to that grand combination the support of the financial institution, which had contributed so much, in all the various political phases, through which Italy had passed in recent years, to the development of the credit of that young and great power.

The monetary aspect of this great operation, was without doubt particularly interesting, and the success obtained by the contractors of the loan exceeded their expectations.

The highest authorities on matters of finance, in Italy, Germany, England and France, pronounced as impossible the monetary combinations necessary to enable Italy to attain its object. The contractors of the loan of 1881, while assuming without hesitation the responsibility of this great undertaking, had to study with care every aspect of the question, to weigh every consideration, every argument, and every monetary circumstance in both worlds; they can, with legitimate pride, say that their wise appreciations were justified by events, and the Minister of Finance, Mr. Magliani, showed great judgment in following their lead and in entrusting himself to their experience.

They had every reason, on delivering the last million, to congratulate themselves on having avoided a disturbance of the various financial markets; but in order to attain this end, they had to take advantage of the least variation in the exchange, of the least change in the movement of money, and to secure all available sums. Buyer one day in New York, the next, the syndicate concentrated all its available resources to secure Russian gold in Berlin; now exporting 20-franc pieces from Copenhagen, Metz, Vienna, Paris, Turin; then turning its attention to Spanish gold, German marks and gold bullion.