CHEMICAL NEWS Jan. 10, 1919 } Configuration of Organic Compounds. these chemists were based largely on the comparison of the compounds with dissimilar stereo structures. That progressive unsaturation, with formation of bodies of comparable configurations, really proceeds with increase in density is shown by the data on the l-amyl esters, given in Walden's (9) research on their specific rotary power. To follow the relations between the position of unsaturation in the aliphatic, monobasic acids and the density increase, it should be borne in mind that the relatively heavy carboxyl group is here the dominating factor in the specific gravity, and that therefore the density values decrease with the increasing molecular weight of the hydrocarbon radical. On the other hand, the density should rise in unsaturation with the nearness of the unsaturated hydrocarbon group to the carboxyl, as the segmentation of the axial A-carbons is proportional to such a relation. a, 8- Unsaturation of a saturated acid augments the density decidedly more than it does in the B,y-position, and that the difference in the effect due to By-y,d- and d,e-unsaturation is comparatively slight, is evidently in agreement with theory. The observations at hand do not permit quite sure conclusions on the connection of density with structural and stereo-structural chemical changes in unsaturated acids, but it is very probable that the replacement of a nuclear hydrogen in acrylic acid by a primary alkyl group, causes a decrease in the order of cis-, trans-, and a-substitution, and also with the molecular weight of the radical. Although the density relations in stereomeric substances are proportional to the magnitude of the compression at the axial carbons, it does not follow from this connection that the density relations and those of the heats of combustion, and in the case of acids of the affinity constants, always run parallel to each other. For the chemical nature of the axial groups may be such, that the segmentation due to the change of energy at the axial A-carbon atoms may not be proportional to the decrease of bound energy in the axial groups, or to that of the negative energy relations at the acidic hydrogen atoms (10). As far as is known, however, the fumaroid form shows a greater density, excepting in the esters of maleic and fumaric acids (11) and those of allocrotonic and crotonic acids. Since a reversion in the energy relations of maleic and fumaric acids occurs in the formation of the sodium salts (12), there is evidently a possibility of a corresponding change taking place, but to a less extent, with esterification. The catalytic transmutation of the maleic into the fumaric esters (13) shows, however, that this is not the case, although their physical and chemical properties and their energy relations are much closer together than those of the acids. The carboxyl group in esterification evidently looses much of its negative energy, and the esterified carboxyl groups in fumaric acid, that are cisto the nuclear hydrogen atoms, become less capable of neutralising the positive energy of these atoms, and this results in a separation of the axial carbon atoms. On the other hand, the same change in maleic acid, by reducing the negativity of the carboxyl groups which are in cis position, increases their attraction, i.e., it causes an approach of the axial carbon atoms. Moreover, the cis-, much more than the trans-relation of the carbalkyloxyl groups allows a better intra-molecular neutralisation of the chemical forces in them, through which the axial segmentation in the maleinoid ester is increased to a greater extent. Esterification, therefore, causes a relative reversal in the segmentation relations of the axial carbon atoms, and to an extent sufficient to give slightly larger densities to the maleic esters (14). The substitution of a nuclear hydrogen atom in these esters by a methyl group, introduces the different 56 56 influences of cis-CH3 in a fumaric ester, and trans-CH3 in a maleic ester to the oxygens of one of the carbalkyloxyl groups. The positive influence of this methyl group is evidently greater in the fum. derivative, which explains 17 why the densities of the (fum.) mesaconic esters become higher, although only very slightly, than those of the (mal.) citra-compounds. The experimental data on the densities of the ethyl esters of allocrotonic and crotonic acids are less satisfactory, but it is probable that the allo derivative has a slightly higher value (15). In allo-crotonic acids the 3-CH, is in the cis-5,6-, and in crotonic acid it is in the trans-5,6-position relative to the oxygens, and esterification may displace their density relations, which are probably not far apart in the acids, in favour of the mal. derivative. the sodium salts of 6 pairs of stereomeric acids in dilute, J. Traube (16) has examined the molecular volume of aqueous solution. The salts of allocrotonic, dibromo crotonic (94°), cinnamic, furfuracrylic, fumaric, and mesaconic acids show a larger volume than those of the stereomeric acids, and classifying the acids according to Wislicenus, Traube concluded that the salts of trans-acids show a larger volume than those of the cis-stereomers. This conclusion is not tenable, since allocrotonic is a cisacid, and the dibromocrotonic acid melting at 94°, is not, as was assumed, a derivative of crotonic, but of allocrotonic acid. Traube found further that the molecular volume of allocrotonic acid is somewhat, and that of citraconic acid considerably greater than those of the stereomeric acids, and concluded, as this is also the relation existing between the affinity constants, that the connection is explained by the difference in the "ionisation" of the acids. This conclusion cannot be considered proven on account of the meagre experimental data, and no explanation was given why an increase in the "ionisation" should cause an increase in the molecular volume. Solubility (17).-In the solution of an acid in water a neutralisation of its negative energy to a greater or lesser amount by the positive energy of the solvent occurs, and the solubilities of stereomeric acids should stand, therefore, in a direct relation to their affinity constants, that is, the mal. form should show the greater solubility. Further, there should be an approximate proportionality between the differences in the affinity constants of such structurally related acids and those of their solubilities. The first conclusion could not have been drawn, a priori, and, the latter relation is not valid, in the case of some B-halogen ethylenic acids, in which a reversion of the energy relations in the mother acids took place with the substitution of hydrogen by halogen. For instance, with the conversion of (fum.) crotonic acid into the (mal.) 3-chlorocrotonic acid, the less solubility of the fum. mother acid might possibly have outbalanced the effect of the change in the energy relation (18). Actually, however, in all known cases the maleinoid shows a greater solubility in water than the fumaroid form (19). The rule does not necessarily apply to other solvents, even when, like water, they are relatively basic towards acids, e.g., mesaconic acid is more soluble in ether than citraconic acid. Whether a relation exists between the affinity constants and the solubility factors in such solvents cannot be determined at present, owing to inadequate exGenerally speaking, however, the perimental data. maleinoid stereomer in all classes of ethylenic derivatives shows in solvents a greater solubility than the fumaroid body. This Melting Point.-Carnelly (20) connected the higher value in isomeric compounds with the more symmetrical structure, to which the rule of the writer (21) for stereomers conformed, that is, the fumaroid spacially more symmetrical form shows the higher melting point. rule still holds for the stereomeric mono a and B-deriva. tives of acrylic acid. With stereomeric, disubstituted B-products, it is impossible to decide which of two forms has the more symmetrical structure, and with 3-halogen derivatives of stereisomers, whose melting points differ considerably, the maleinoid modification may have, as has been explained before (18), the higher value. This relation may also appear in derivatives of such stereomeric acids, where the carboxyl group has been modified chemically. Thus the chloride of the mal. B-chlorocrotonic acid is a solid (94°) and the fum. derivative is a liquid, and the melting points of the naphthyl esters conform relatively to those of the acids. If the hydroxyl groups of these acids are replaced by NH2, that is by a radical which in this position is decidedly positive to hydroxyl (22), the maleinoid melts lower (100°) than the fumaroid derivative (110°), and it is not impossible that the energy relations have been reversed in these compounds. On the other hand, the anilide (124°), naphthy! amide (169), and phenylhydrazide (130°), of the mal. chloro-acid, in which NH2 is replaced by less positive radicals, melt higher than those of the fum. derivative (105°, 155°, 114°) (23). The latter contingency is barred by the catalytic convertibility of maleic and citraconic esters into fumaric and mesaconic esters, and we should therefore expect from the energy relations, that the boiling-points of these products should lie close together, but that the first-named esters should show somewhat lower values. Evidently, an unusual factor of importance enters into the property in this class of derivatives, which may possibly be that the maleinoid esters have a smaller specific heat than the fumaroid derivatives, and which could well cause the anomalous relationship in the boiling points. For reasons explained above, the difference in the energy relation of maleic and fumaric acids and their homologues decreases with the replacement of nuclear or acidic hydrogen by primary alkyl groups (33), and as it should, in a direct proportion to the size of the radical. The boiling points of such derivatives are in agreement with theory; thus, the difference, which between the to 7.5° in the ethyl esters; and that between the methyl esters of citraconic and mesaconic acids is only 5°, which decreases in the ethyl esters to 2:3° (34). The former rule, that the fumaroid form always shows the higher melting point, is, therefore, too general and requires modification in the above sense. The explana-methyl esters of the maleic and fumaric esters is 15°, falls tion of the relation between melting point and structural or stereo-structural symmetry, should be based on the relative free energy contents of the compounds. According to the "thermo-chemical law of structure" (24) the symmetry of positive radicals in isomeric substances towards a common negative nucleus is connected with an increase in the heat of formation, i.e., with diminution of free energy, and this is also true in stereomeric bodies. As the change in the state of aggregation consists in overcoming the intermolecular attraction to a certain degree, it seems in accordance with the less free energy in the more symmetrical isomer and stereomer, that a greater heat increment is necessary to bring them into the liquid state (25). Boiling Point.-Boiling may be considered a continuation of the melting process; and the same reason why the fumaroid should melt higher than the maleinoid form exists in regard to their boiling-point relations. The former rule (26) that the fumaroid stereomer shows the higher boiling-point is still valid, with the exceptions that Occur in the relations between the esters of several dibasic ethylenic acids, where the maleinoid products show somewhat higher values (27). When one of the acidic hydrogen atoms in maleic acid is replaced by sodium, the free positive energy still residing in the metal is further converted into bound energy and heat by the oxygens of the remaining carboxyl group. This final conversion is possible only to a much lesser degree in the corresponding acid fumarate, owing to the greater distance in space between the metal and the respective Oxygens (28). Corresponding changes occur again in the formation of the neutral salts, and the energy relations in them are close together, but the reverse of those in the acids, that is, there is an excess of positive energy in the fumarate, and probably, also, in the maleate, but certainly more free energy in the first than the latter salt. This mutation in the energy relations is plainly manifest in the gradual change in the properties of these and analogous derivatives. It shows itself, for instance, in the much greater values of the secondary affinity constants of fumaric and mesaconic than those of the maleic and citraconic acids; in the greater value of K for the acid sodium fumarate than for the maleate (29); in the altera tion of the titration curves for fumaric and maleic acids, which are about the same after half neutralisation but are very different before (30), and in the oxidation of potassium fumarate to the salt of the more acidic racemic acid (31), while the decomposition of fumaric acid dibromide, by boiling, gives the weaker mesotartaric acid (32). A similar change in energy values occurs in the conversion of maleic and fumaric acids into their acid and neutral esters, since in the esterification process a neutralisation of acidic energy takes place. In the acid esters the difference in the energy contents must be much less than in the acids, and that in the neutral esters should either approximate each other, or the relations might even be reversed. Viscosity. According to Reyher (35) the viscosity constants of the sodium salts of aliphatic acids increase, generally speaking, with the decrease of the affinity constants of the corresponding acids; later Lauenenstein (36) showed that irregularities occur, which are particularly noticeable in the salts of the aromatic acids. As sodium is a strongly positive metal, there is an excess of positive energy in such salts of most monobasic organic acids, and the viscosity relationship appears to stand in a direct relation to the free, positive energy in the salt. In accordance with such a relation, the viscosities decrease with unsaturation; thus, in passing from (cis) sodium succinate to the comparable sodium maleate, the viscosity falls from 13914 to 12390, to increase with sodium fumarate to 13371. Although, in the next homologous series the values of the salts of the unsaturated acids are less than that of the saturated derivative, and in accord with the K, relations are larger than those of the maleate and the fumarate, the relations in the salts of the two saturated acids and in those of the ethylenic acids in the series are displaced (37). Viscosity is a developed constitutive property, and the relation existing between it and the energy content would doubtlessly appear more marked, if compounds existing in solution in a strictly comparable molecular condition were used as the basis of comparison. Notes. 1. Fourn. Am. Chem. Soc., 1918, xl., 704. 2. Fourn. Am. Chem. Soc., 1918, xl., 706. 3. Unless otherwise stated, this molecular relation is assumed in the paper. 4. Ann. Suppl., IV., 1865, 158. In this remarkable paper the relation between the molecular volume of inorganic and organic compounds and state of saturation was first formulated. 5. Ber., 1882, xv., 1270; Ann., 1883, ccxx. 291. 7. Ibid., 1882, ccxiv., 138. 8. Ibid., 1883, ccxxii., 102. 9. Zeit. Phys. Chem., 1896, xx., 583. 16. See footnote under heading "Heat of Combustion" (prox.). 11. Anschuetz, Ber., 1879, xii., 2280; Perkin, Journ. Chem. Soc., 1890, lviii., 585; Walden, Zeit. Phys. Chem., 1896, xx., 383 and 583; Walden and Swinne, Ibid., 1912, lxxix., 738. 12. Michael, Am. Chem. Fourn., 1908, xxxix., 14. 13. Anschuetz, Ber., 1879, xii., 2282. 14. The densities of the acids do not differ very much i.e., that of fumaric acid is 625 and of maleic acid is 1590 (Tanatar and Tchelebijeff, Journ. Russ. Chem. Soc., 1890, xxii., 549). The value for ethyl fumarate is 1.0496 CHEMICAL NEWS, Jan. 10, 1919 Control or Metals, Chemicais, Machinery, and Plant. and for the maleate is 10658, both at 25°. With the, increase in the size of the alkyls, in the replacement of nuclear and also of acidic hydrogen, the difference in the gravities decrease, which is in agreement with theory. 15. The value for the crotonic ester is o'924 at 20° and for the allocrotonic ester it is o'927 at 19° (Geuther, Zeit. Chem., 1871, xiv., 243). The latter value should be somewhat laiger, as the allo-acid used contained more than 50 per cent of crotonic acid. 16. Ann., 1896, ccxc., 69. 17. Michael, Journ. Prakt. Chem., 1895 [2], lii., 345. 18. Journ. Am. Chem. Soc., 1918, xl., 710. 19. The two a-methyl-3-chlorocrotonic acids (Otto and Holst, Journ. Prakt. Chem., 1890 [2], xli., 475; Ber., 1894, xxvii., 948, 1351), if they are stereomeric, stand in the same relation to tiglic and angelic acids as the 8 chlorocrotonic do to crotonic and allocrotonic acids. That is, the higher melting acid (73) is a derivative of the fumaroid tiglic acid, but is maleinoid, because the halogen in it is cis- to the carboxyl group and it is, therefore, more soluble in water. 20. Phil. Mag., 1882 [5], xiii., 116. 21. Journ. Prakt. Chem., 1894 [2], lii., 345. 22. Michaei, Ibid., 1899 [2], Ix., 430; 1903, lxviii., 496. 23. Autenrieth, Ber., 1896, xxix., 1665; Autenrieth and Spiess, Ibid., 1901, xxxiv., 189. 24. Michael, Journ. Am. Chem. Soc., 1910, xxxii., 1004. 25. Werner ("Lehrb. d. Stereochemie," 211) appears to have overlooked the work of Carnelly, Franchiment (Rec. Trav. Chim., 1897, xvi., 142), and the writer, and whatever original information he has added to the subject is not tenable. His suggestion that para and fumaroid derivatives have similar configurations is unwarranted, as stereo-structural relations in such aromatic compounds are not known, and the assumption would imply the existence of stereomeric para derivatives. It is, also, arbitrary to assume symmetry in the structure of para in contrast to that of ortho compounds, as is evident by placing the groups in the first class of substances on the apexes of the hexagon, and not, as Werner has done, on the opposite sides. The connection between the melting points of aromatic isomers and structure is the same as that of fatty isomeric and stereomeric substances; that is, generally speaking, the body with smaller energy content shows the higher figure. Some of the exceptions to the rule may be explained as has been shown in the first paper, eg., the reversed order in p-chloro o-toluic and o-chloro-p-toluic acids which stand in the fum. and mal. relation, analogously to the reasons given for that in B-chloroallocrotonic and B-chlorocrotonic acids (Fourn. Am. Chem. Soc., 1918, x!., 710). 26. Michael, Journ. Prakt. Chem., 1895 [2], lii., 345. 27. Anschütz., Ber., 1879, xi., 1644; 1880, xii., 2280. 28. Michael, Am. Chem. Journ., 1910, xxxix., 14; Michael and Cobb, Ann., 1908, ccclxiii., 68, where the similar influence of ortho-hydroxyl group is discussed. 29. Ostwald, Zeit. Phys. Chem., 1892, ix., 559; Chandler, Journ. Am. Chem. Soc., 1908, xxx., 694. 30. Thiel and Romer, Zeit. Phys. Chem., 1908, Ixiii., 725. 31. Kekulé and Anschütz, Ber., 1880, xiii., 2150; xiv, 713: Michael, Am. Chem. Fourn., 1908, xxxix., 14. 32. Lossen and Riebensahm, Ann., 1897, ccxcii., 295; 1899, ccc., 5. 33. The relation doubtless prevails, too, with secondary and tertiary radicals; the differences in this particular, and in some other physical properties, should decrease in the order of primary, secondary, and tertiary group. 34. Evidently, the difference between the energy contents of ethyl citraconate and mesaconate is inconsiderable; in esters with so positive a radical as the tertiary butyl (Michael, Journ. Prakt. Chem., 1899 [60], Ix., 423, footnote 4 and 432), the relations may be slightly reversed. That such changes in the energy relations are induced not only by aqueous solution, and by partial neutralisa 19 tion of the acids in question, but also by esterification, is ample evidence of the insufficiency and untenability of the explanation based on the ionisation hypothesis (Ostwald, Zeit. Phys. Chem., 1892, ix., 558). 35. Zeit. Phys. Chem., 1888, ii., 744. 36. Ibid., 1892, ix., 417. 37. This subject will be considered in a later paper. (See Journ. Am. Chem. Soc., 1918, xl., 119, footnote 2). (To be continued). (a) Ordinary civil orders may now be placed and executed in Class C without priority permits or certificates. No further applications need, therefore, be made to the Priority Department of the Ministry of Munitions unless it is desired for national reasons to raise the priority of an Order. (b) Uncomplete contracts for the Admiralty, War Office, and Ministry of Munitions, which have been placed in Classes A or B, need no longer be given the priority attaching to them under the Order of Priority of March 8, 1917, except in cases where the contractor is notified in writing or by official notice in the Press that a particular classification is still required to be given to any particular contract. II. Metals. (a) Modification of Control.-(1) Iron, Steel, and NonFerrous metals may be ordered, supplied, and used for Class C orders without priority classification or reference number from the Ministry of Munitions; and stocks purchased and held by Government Contractors may be used for any class of work. (2) No permit is now required for the manufacture or sale of Iron and Steel Wire or Wire Rope for Home Trade, and until further notice manufacturers of Forgings, Stampings, and Castings in Iron, Steel, or Malleable Iron are at liberty to accept orders for priority below Class B. (3) The Control Orders forbidding dealings in Non-Ferrous Metals without a licence are suspended in the case of Tin, Copper, Brass (including swarf and scrap), Cupro-Nickel, Scrap, Spelter, Lead, Platinum, Chrome ore, and Type Metals. (4) All restrictions as to the sale or purchase of Calcium Carbide have been removed subject to a maximum price to consumers of £40 per ton for quantities of 1 cwt. and over. (b) Export Licences.-(1) Manufacturers must still continue as hitherto to obtain licences for export for articles made of Steel and Non-Ferrous Metals covered by the various schedules of the War Trade Department, but every effort will be made to grant these licences as freely as possible. (c) Prices.-(1) The maximum prices of steel for Home Trade are to continue at their present level until February 1, 1919, when the direct subsidies paid by the Government on Steel will cease, and a corresponding increase in price take place. A schedule of the prices to come into force on February I can be obtained on application to the Ministry of Munitions (C.I.S.P., Room 104, 8, Northumberland Avenue, S. W. 1). The present maximum prices of Pig Iron are to remain unchanged until April 30, 1919, but post war conditions are not yet sufficiently stable to warrant a fixing of prices after that date. (2) A schedule of fixed Report Prices for Pig Iron and Steel, to take effect from November 18, 1918, has been issued, and can be obtained on application to the Ministry of Munitions, 5. Owners of Steam-driven Lorries and Trailers are no longer required to make returns of changes of ownership. FINANCE FOR TRADE. as above. The prices which are based upon the existing | 1918, prohibiting the experimental manufacture of Aerohome prices, plus the subsidies paid by the Government, Engines, are suspended. will remain in force until further notice. Upon all exports of Pig Iron, unmanufactured Steel, and certain classes of semi-manufactured Steel, a drawback will be collected by the Board of Customs and Excise, equivalent to the amount of the subsidy already paid by the Government on the articles in question. The items on which the drawback is chargeable are those whose prices are controlled and included in the schedules referred in the preceding paragraph. Application for the schedule showing the amount of the drawback to be collected should be made to the Board of Customs and Excise, Lower Thames Street, London, E.C. (3) The following is a schedule of the present prices of Non-Ferrous Metals from holdings of the Ministry : THE Committee on the provision of Financial Facilities for Trade after the War was appointed jointly by the Chancellor of the Exchequer and the Minister of Reconstruction in November, 1917, under the Chairmanship of Sir Richard B. Vassar-Smith, of Lloyds Bank. They introduced their Report (now published by the Ministry of Reconstruction) by expressing the emphatic opinion that the primary factor in repairing the wastage of capital Delivered works. caused by the War lies mainly in increased production and actual saving. Discussing the financial requirements of industry after the War the Committee foresee : £125 specification £93 Do. Spelter-G.O.B. £57 Do. Refined 99'9 p.c. £61 Do. (a) Alcohol.-Alcohol and Methylated spirit are now available for industrial purposes, and can be obtained through the usual channels subject to the regulations of the Board of Customs and Excise. (b) Glycerine.-Arrangements have been made to enable Glycerine Producers to supply their customers with substantial supplies of glycerine for general use. (c) Shellac.-The Shellac Control Order of March 12, 1918, prohibiting dealling in shellac except under licence, has been revoked. (d) Benzol, Naphtha, Chlorine, &c.--The Orders prohibiting dealing, &c., in Benzol, Naphtha, Tar (Coal and Water Gas), Chlorine, and Chloride Compounds, and Acetic Acid are suspended. (d) Building Bricks.-The present controlled maximum prices for bricks are not to be reduced, provided the present system of control continues, for a period of six months from January 1, 1919. IV. Plant and Machinery. 1. Restrictions as tɔ dealing in and prices of new and second-hand machinery and treadle lathes have been withdrawn; but purchases of new machinery can only be made from firms holding trade permits from the Ministry of Munitions. 2. Contractors in possession of plant and machinery owned by the Ministry of Munitions are at liberty to use it for civil work provided they notify the Superintendent Engineer in their area within one week from the date on which it was first used. If the Contractor does not ultimately wish to purchase the machinery he will be required to pay a reasonable hire not to exceed the rate of 20 per cent per annum on the cost price of the machine. 3. The Crane Order of December 30, 1916, prohibiting the sale or supply of any Cranes except under permit, and the Motor Engines and Vehicles Order of January 6, 1917, prohibiting the manufacture except under permit, are revoked. 4. The Orders of March 30, 1917, prohibiting the experimental manufacture of Aeroplanes, and of May 10, (a) A considerably more than normal demand for (d) New fixed capital requirements for extensions or The Committee point out that the ability of industry to cope with these unusual financial problems during the reconstruction period will be most limited in the case of entirely new firms which have come into existence owing to the demand for war material. They have been urged strongly that it was not in the national interest to allow these firms to peter out, and that every inducement should be given them to continue in business, even to the extent, if necessary, of granting State financial assistance. The Committee express the opinion that it might be regarded as unjust to enable such firms by means of State aid to compete with old-established firms in the same industries, and also that it would be very difficult, if not impossible, to guard against wastefulness and inefficient management. The solution in these cases appears to them to lie in the establishment of new industries, the capital for which should be furnished by the investor or by the individual partners in the business. The ability to attract the necessary capital will depend upon the inherent soundness of the proposition in each case. The Committee further point out that it would be of great assistance to manufacturers in making plans for the future if the future policy of the Government were made known as early as possible in regard to (a) Fiscal policy; (b) Rationing of raw materials; (c) The break clause in connection with the termination of Munition Contracts; (d) The disposal of National Factories and surplus stores. Before discussing means of providing credit facilities after the War the Committee give a short explanation of our Credit System as existing before the War. In normal times the amount of credit varies with the amount of gold, the necessity for keeping the gold standard effective acting as an automatic check upon the expansion of credit. As the balance of indebtedness of this Country with Foreign Countries became unfavourable, and the exchanges in consequence moved against us, it became profitable to export gold to pay debts abroad. | The constant shrinkage in the amount of gold in the Country, and the reduction in the Bank of England ratio of reserve to liabilities, necessitated a rise in the Bank rate, which in its turn brought about a general rise in rates of interest. This rise in interest rates had a twofold effect. It attracted gold to this country, and induced gold, which would otherwise have been exported, to remain; secondly, it induced people to pay off loans and discouraged the raising of new ones. If the drain of gold was severe enough to make money "tight," it became difficult to renew existing loans, and this caused the sale of goods and produce upon which the loans were secured, so bringing about a fail in prices, which encouraged exports and discouraged imports, so that the situation was gradually adjusted. Further, from the point of view of purely internal trade, the fact that gold was the only legal tender was equally effective in preventing an undue expansion in credit. Banks being obliged to maintain a proper relation between the extension of credit facilities and their available supply of gold. Thus the gold standard acted as a wholesome restraint upon overtrading, and often adjusted situations, which unchecked might have developed into a severe commercial crisis. The position to-day is entirely different. As there is no free international market in gold, the operation of the foreign exchanges has been interrupted, while at the same time the internal gold circulation has been replaced by a currency note issue. As there is no legal limit to the amount of currency notes which may be issued, there is therefore no automatic check upon the expansion of credit. The very large extent to which expansion bas taken place is shown by the fact that whereas the total deposits at the banks of the United Kingdom, exclusive of the Bank of England, amounted at the end of the year 1913 to £1,070,000,000, the amount of deposits is now nearly £2,000,000,000. The enormously increasing purchasing power thus created has, in the Committee's opinion, been one of the main factors contributing to the general rise in prices. In regard to the position after the war the Committee express the opinion that it is essential for the reconstitution of industry and commerce to impose restrictions as soon as possible upon the creation of additioal credit by the restoration of an effective gold standard. To attempt to rebuild industry by the further indiscriminate expansion of credit would endanger our position as the financial centre of the world, and would inevitably lead before long to grave disaster. The Committee accordingly seconded the cessation of State borrowing as early as possible, all available money being required for the financing of commerce and industry. The Committee also consider that any Government guarantee to bankers to enable them to provide by means of credit for fixed capital expenditure for the reconstruction of industry is undesirable, as being likely to occasion a further expansion of credit followed by an additional rise in prices. It is also recommended with a view to the gradual reduction of credit inflation, arising from the enormous volume of short dated Government debt, that the State should undertake funding operations at an early date for this purpose. As to banking facilities for carrying on ordinary businesses the evidence submitted to the Committee led them to the opinion that the situation might safely be left in the hands of the banks. To enable the banks to give facilities for extended credit it is recommended that every facility should be given by the Government to enable the banks to issue any new share capital which may be found necessary to strengthen their position. It is thought that the rationing of available supplies of raw materials will provide a valuable guide to the banks in selecting the directions iu which loans will be best secured and are most urgently required. The policy of trade organisation which is now in 21 evidence is welcomed by the Committee as furnishing a sound basis for the granting of credit facilities to industry. They also believe that if a portion of the new issues of shares, which will be necessary for many manu. facturing establishments, in the form of preference shares giving a good return in dividends, were reserved for the workpeople in these establishments, it would materially assist both financially and in other equally important directions. The Committee consider that the continuance of some measure of State control over new issues is desirable for a certain period, and that with a view to the further prevention of unsound promotions the Companies Acts might be strengthened. The enormous potential increase in the number of small investors, as shown by the figures published by the National War Savings Committee, and the importance of the encouragement of this tendency for the rapid reconversion of trade and industry, are emphasised by the Committee, as is also the necessity for genuine saving to make good the des ruction of capital during the War. In regard to State aid, while the Committee does not recommend the guaranteeing of banks by the Government or the investment of public money in loans to persons who have been unable to obtain them from other quarters, it is considered that cases of hardship may arise in connection with firms who have undertaken, under considerable pressure from the Government, the manufacture of munitions of war. To meet such cases the Committee suggest the establishment of a small Committee of Government officials and business men in leading industries to consider claims of this kind in the first instance, or to act as a tribunal to which applicants can make appeal. The Committee are also of opinion that it would be of very great assistance to manufacturers and others, who had been prevented from forming adequate reserves by the present high rate of Excess Profits Duty, if arrangements could be made by which a proportion of the tax should be retained for a period as a loan upon terms likely to secure early repayment. PROCEEDINGS OF SOCIETIES. CHEMICAL SOCIETY. Ordinary Meeting, November 21, 1918. Prof. W. J. POPE, C.B.E., F.R.S., President, THE PRESIDENT referred to the loss sustained by Messrs. S. J. Green and A. L. Bloomfield were formally admitted Fellows of the Chemical Society. Certificates were read for the first time in favour of Reginald Christopher Bickmore, 5, Clarence Road, Sydenham Road, Croydon; Stanley Edward_Bowrey, B.Sc., 115, Hainault Road, Leytonstone, E. 11; Benjamin Richard Heasman, B.Sc., Rutherglen, Throwley Road, Sutton; Harry Jephcott, M.Sc., 43, King Henry's Road, wood, The Green, Sidcup, Kent; Ernest Edward PendleHampstead, N.W.3; John Parrish, B.Sc.Tech., Ringbury, "Moss Bank," 184, Wellington Road, Eccles; Francis Henry Sweeting Warneford, B.A., B.Sc., 21, Rochester Avenue, Sedgley Park, Prestwich, Manchester; Leo Daft Williams, 16, Hauteville Court, Stamford Brook, W. 6; Charles Thomas Woosnam, M.A., 22, Royal Avenue, Lowestoft. The meeting was then adjourned and the Informal Meeting declared open. |