The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1869-11-01
FINANCIAL AND CONNER cIAL.

SUNDAY, Oct. 81, 1859.
The salient and curious feature OF the financial
situation Is the abundance OF money in New York and
the scarcity OF 1t In the other cities OF the country
During the two weeks which have just elapsed the
rate on call loans ranged from four to seven per
cent. AT times the figure did not 90 below 1--WE per
cent ana frequently not beyond slx but the extreme
fluctuations were within the limits above specified.
In seeking an explanation OF this lare state OF ar
fairs we shall find new proof OF the fact that the
progress OF our city is still toward the position OF
employer and capitalist for all the varied
enterprises or the Union. In previous years
at this season our local money market
has been characterized by the greatest
activity, II not strlngency. year ago money in
Wall street was worth from ten to q hundred per
cent per annum, such was the demand created by
the heavy shipments OF currency TO the West and
South. The old state OF affairs has been looked for
day after day. and lenders have as general thing
refused TO make time loans, expecting . recur-
renee OF the periodical fall s,rln9ency. But the
season has 80 far advanced and the abundance OF
funds at this centre is so great that many are
inclined TO think that money can hardly be active
beyond the legal rate OF interest. The money
demanded by the South commenced gong in the
summer, and its drain has been so steady that It's
absence is now not felt, While the great fall In
stocks by the panic OF last month has
released margin more than sufficient to meet the
continuance OF the demand from all sections. Week
before last there was q considerable movement OF
the crops from the West, but 1t has been checked
and suspended by the decline in gold. The reports
from Chicago and Cincinnati record the extreme
stringency prevailing in money ut those centres.
Tho banks are almost barren OF funds and loans
command eAtravagant rates Of interest The dead
lock between the East and West, noticed few
weeks since, and which was partially freed by the
Initiation Of shipments OF wheat this way in the mid
die Of the month"; has again set in, OWING 10 the d.
versity OF opinion between the dealers in both places
The East Is unable to export wheat at present prices
The Western spectators are unwilling TO sell at q
sacrifice The money remains here and the crops
there. AS for the scarcity OF money in western
Cities 1t Is the natural result of this situation. The
spectators, the "gobetweens," who live upon the
margin between the price OF production and the
price OF consumption, have drawn down their de-
Doslts In the Western banks to pay the farmers
Until they can ship their purchases both they and
their banks are devoid OF funds. New York, stand
ing In the relation OF capitalist TO all sections says
to the West, we cannot buy your wheat be-
cause We cannot sell 1t except at loss.
Our city has not only It's capital but the surplus
originating from the profits made in being the entire
pot OF the country with the world. Heretofore this
surplus has been largely employed In carrying the
6tOCkS duu securities wall street, but TIE panic
has produced shrinkage OF twenty-five TO fifty nil
lions In the value Of these securities. There is
therefore, margin over and before the necessities
fraction Of the capital underlying all our moneyed
operations. For this reason we fad money almost
drug in Wall street and PRIME neces
sity in other parts or the coantry. Unfor
tunately, however, this abundance does not rebound
to the advantage OF the merchants, for lenders are
80 infatuated with the system OF loans from day
to day that there Is general ndlsposon to deal In
mercantile paper, and hence we mud the best notes
passing at ten TO fifteen per cent discount, when loans
on call are made one-half these rates The usury
laws are set so utterly at defiance that in cases OF
6trlngency lenders can obtain IS much interest In
one week they would ordinarily earn IN a whole
year. The recent prosecutions by the Grand Jury
have only sharpened the practice Of the street
on this point and while there was danger
before from the frequent open violation OF
the law, there Is now no risk whatever.
Those who are familiar with the technicalities OF
Wall street will easily understand how in tight
money market, lenders, By the process OF buYiDg
stocks for "cashn and selling 'reguiar'' in one
transaction, obtain the most eXtravagant rates
for the Of their money In the strlngency Of the
recent panic this plan was universally adopted and
although IL is virtual usury there is portion OF it
evil may ITSELF II may interpret the present
signs. We are now at the advent OF November.
The money market must become stringent within
week or two, or not at all. Last year the
first stringent day was October 20, and the last
somewhere towards the close OF December. Then
the bank had but ten millions surplus TO meet the
DRAIN This year they have twenty millions, while,
as the crops cannot move except at greatly
reduced valuation as compared With last year. the
demand u ION them cannot be near as great. The
weekly statement Of the associated banks, presented
OH Saturday, Is quite favorable. There Is a total
gain IN reserve Of over two and half millions OF
dollars against an increase In deposits OF i've mill
lions. The banks now hold IN excess OF the legal
reserve $50 362 647an increase during the week of
nearly million and half OF dollars. The increase
in specie Is due to Treasury disbursement in pay
ment OF the November coin interest on the public
debt The gain in legal tenders II trihing, but any
Increase at this time OF tho year remarkable. me
statement contrasts with its predecessors as fol-
lows
,o,ns so. oc ~ 25 VA 600 0c a. 3D. &,
Loans $50, 2goVto Szoo 1850
Specie .................. 1882, l0l 2lgl6,0l6
(lrculatloD. .........,.' oi,EV7,8,o 81 ioo,L45
Deposits. ............., I5,I9Selo leU625,Ss2
Legal tenuerS.. 0<,V1f,oVf o<,ifi,eS5
The changes in each item are as lollows:
Increase In loans. ...........,..... .. Sl003,7bO
increase N specie. z,ozo,34o
Decrease III circulation ................." 6o,I56
Increase in deposits. 5u29,903
Increase In legal tenders ................ l40,279
The stock market was very dull and the volume OF
business quite limited Operators have not as yet
recovered from the caution inspired by the panic
and In the general apathy there was yielding OF
prices nearly the whole list, the exceptions being