Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1868-11-04
THE CURRENCY CORNER"
The Present Stringency Of the Money
Market and the decline I'm Stocks
Critical state of Affairs in Wall Street.

From the New York Herald, 28th ult
The present aspect of financial affairs
furnishes food for very serious reflection.
That affairs in the moneyed world of the
metropolis are in very critical condition
is obvious even to those who are most I'M
willing to decry danger IN the future
Money is scarce-that is, in a financial
seHse. 1t is true there is just as much
money in tie country now as there was a
few weeks ago but the sudden withdraw
al of SIS, 900, 900 from circulation and
the panic in the stock market here caused
lender rs to be extremely cautious in their
loans. They have also advanced the rate
to the legal and even beyond the legal
rate Of interest-a device peculiar to Wall
street. Seven per cent. is, of course, the
rate beyond which no lawful demand may
be made, but there is no statute to pre-
vent its payment in gold or the exaction
Of a commission, equivalent to a bonus
for the use of money. Hence in the pres
ent stringency borrowers have been COM
PEELED to pay as high as ten or twelve per
cent. interest. The cause Of this sudden
crisis in Wall street may be briefly told
and will be found an interesting narrative
Just about the middle of September in
each year money always becomes active.
1t was little late this season, owing to
the backwardness Of the cotton crops in
the South and to the retention Of the
Western crops by the farmers who were
seeking higher prices. Money was album
dant in the metropolis as a consequence,
and was loaning freely at four, FIVE and
six per cent. on what are known as call
loans. These are loans made upon collat-
eral, such as stocks and bonds, and liable
to be called in at the option of the lender
The ease in money induced the utmost
speculation in the stock market, and
everything in the shape of stocks was
bought with avidity. Prices ran up so
rapidly that an advance of twenty per cent.
took place in some Of the railway stocks,
particularly The Western ones, within a
few weeks. The situation afforded fine
opportunity for grand "bear" operation,
by which stocks could be. sold at price
below their market value, and then by
pressure forced below tue contract figure.
Such, at least, was the view taken of it by
prominent "bear" firm who induced
others to join them, and large "pool"
was thus formed for the purpose of break
ing down the stock market Stocks 90
up when money is plenty. Conversely
they go down when money is tight Hence
the 'pool' determined upon making mo
ney tight as the first step to their specula
ton, Accordingly they borrow money
by depositing collateral at the banks.
The sum thus obtained they deposited in
other banks, drew their checks against it
and had them certified. The certified
checks they cashed at still other banks,
and finally they locked the last amounts
in their safes. Any one familiar with
business at the banks will see that with
million of collateral the spectators could
easily tie up, or clock up" to use the
vernacular Of Wall street, the sum of
three, four, FIVE, or as many millions more
as could find banks willing to lend them
selves to the scheme. The sum of So
900, 600 or $4,0O0,070 was thus locked
up, and the spectators connted on the
usual activity of money to help them
But money did not become scarce, for
the reasons previously cited, and the re-
ma ming volume of currency ex panded so
as to meet the requirements of business
for "a few days. The attempt was fasco.
and after short time they took their
green backs out Of the safe and put them
III bank again. A second attempt was
made few weeks afterwards, but it was
hardly more successful. The stock
market, in each instance, vibrated little.
but the scheme being seen through
prices remained firm and the spectators
retired vanquished.
The third and the most successful at
tempt was inaugurated last Monday and
Tuesday, when the sum of SO 900 900
was suddenl y withdrawn from circulation
by the same pool and by the same
"locked up" process. The game now be,
gan to be desperate one on their part.
The stock market refused to respond as
they wished to the tightness in money,
and the screw was applied by the with
drawal on Thursday Of three millions
more of greenbacks. Still the market
was obstinate. The western railway
shares broke under the pressure, it is true.
because they were the most largely infat-
ed by the previous mania for speculation.
The objective point was Erie, however,
and that stock continued firm. A furth
Ell withdrawal of money was managed,
and Erie, after fighting Lard all day Fri
day, fell from Al to A, amid great ex-
element. The rest is soon told. The
withdrawal of more greenbacks, until
the sum Of Sl5,000,000 was taken from
circulation, completed the rout of the
stock market, and the hole list wave ed
and broke Erie fell, rose again half
way, and then relapsed to about SO. The |
vlctors are now content as yet. They are |
still pursuing the vanquished Erie, with
the threat that they will drive it down to
30. Meantime the greenbacks are lock-
ed up. When. it is remembered that the
total currency in New York city is only
from S7O,O0O,000 to $4,000, 900, it is
easy to find a cause for the pinch in money
when SIS, 100000 are taken out of cir
oulatlon the worst feature Of the situa-
ion is that the artificial ktringency is like
y to be aggravated by natural one, ow,