The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1873-02-17
The Weakness in Foreign Exchange
and Its Effect Upon Gold and
the Money Market.
,ATURDAY'S BANK STATEMENT.
WALL STREET,

at first Independently Of each other, but latterly
more or less in combination. The speculation for
rise In the gold premium has been Of longer
duration, and dates back to the early days Of the
Winter, and has been subjected to innumerable
vicissitudes, as such an unpopular speculation
always must be, when the public sentiment favors
a return to specie payments, and regards gold
gambling as the most reprehensble portion Of the
more questionable practises OF Wall street. Two
weeks ago it was threatened with sudden oblitera-
ton by
THE SYNDICATE
negotiation of the three hundred million of five per
cents, and the price Of gold on the eve of the
Syndicate operation las they term the transac-
ton in Europe, where these matters are so frequently
fell Off to 1125. But the shadow OF this threatened
calamity has passed from over the movement and
In the sunshine Of the Syndlcate's partial failure
the gold clique have renewed their operations with
greater vigor, the price having been advanced on
Saturday to 114sS, the highest quotation since last
September. Their plans have been checked only
by the weakness OF the foreign exchanges, steady
decline in which has occurred during the past ten
days, Notwithstanding the fact that
THE BANK OF ENGLAND
has been loser Of specie the past two weeks and
that the street rate for money in London has been
frmer. Weakness in foreign exchange is, how
ever, negative rather than q positive influence.
decline In rates serves not to bring gold this
way from the other sde-unless as has happened
only rarely in our history they fall to less than the
par of exchange-but to prevent gold from going
abroad which would otherwise be shipped in settle
ment Of the balance Of trade. Furthermore the
weaker condition OF the market recently has been
due less to pressure to sell bills legitimatey
made than to heavy sales OF
BORROWED STERLING,
advanced to SPECTATORS against the pledge of
stock collaterals With money in London worth
only ga per cent in the open market it is easy to
see the temptation to foreign bankers to lend their
capital here on terms which net them fully 10 per
cent. The active, not TO say stringent condition
OF the money market the past few weeks, has sent
many Of the heavy holders of stocks to the agents
of London banking houses in search of accomoda-
ton Of this kind, the granting OF which in the form
of bills on London has been the chief reason of the
heaviness OF the foreign exchanges. Indeed some
surprise has been manifested that with over eleven
millions OF
IMPORTS, AND EXPORTS
OF less than six millions week, the rates have not
been up to the specie shipping point in face of the
abundance OF these borrowed bills; but in this CAL
culatiOn the fact is lost sight OF that while New
York is the entrepot at which two-thrds OF all
the imports Of the country are introduced, the
exports therefiom only about two-ffths OF
latter proportion is decreasing annually because of
the growing trade facilities at every seaport along
the coast The mercantile capital of this city gives
it control of the imports but year by year the ex-
ports are going more freely from the
THOUSAND AND ONE
great and little seapOrts along the Atlantic and
the Gulf The condition OF the money market has
been exceedingly active Tor this season of the
year, and borrowers on call pledging stock COL
Aterals have paid as high as y per cent per day.
equivalent to As per cent per annum while the
average rate in transactions of this kind has been
fully 1a2 per cent equivalent to nearly IL per cent
per annum. Here, as in the case of the gold
market, the relief furnished by borrowed bills of
exchange is also
NEGATIVE AND NOT POSITIVE,
for these bills add cent to the currency of
the city, and help only the few parties who borrow
them. The continued scarcity OF money is con-
sequence of the influences already fully explained
IN the backwardness OF everything this Winter
arising out OF the interruption OF trade and bus-
ness by the exceptional severity OF the season,
both in its GOODNESS and In It's snow storms. AS
will be seen by the bank statement, which is dis
cussed further on, the banks are losing green
backs, the result of shipments to Chicago and Gin
cinnati, from which points We have heretofore
usually received money at this time OF the year.
forecast OF this abnormal situation of the money
market started vigorous speculation for
A FALL IN PRICES
at the Stock Exchange, which had been only more
or less successful until Saturday revealed the
actual condition OF the banks and discouraged at
last the daily deferred hope OF relaxation in
money. The speculation for a fall in stocks in
cludes the great majority of the professional opera
tors and all or nearly all, except those who, as
previously intimated are borrowing foreign capt.
tai TO enable them to keep their holdings. The
'bearish designs of the cliques WILL 1t is threat
ened, be helped by artificial means in rendering
the money market more stringent. 1t may not be
Just the time for buyers to come into the market,
but outsiders who now sell specuatively should re-
member that the banks, when low in their re-
serves, are most likely at the depth of their
poverty, and that the chances OF future improve
ment and of reaction rather in their favor
than otherwise.
GOVERNMENT BONDS.
The government list was lower early In the week
upon the further confirmation OF a failure on the
part OF the Syndicate to negotiate the entire
amount OF new five per cents, but became frmer
with the advance in gold and eventually strong,
the last prices OF Saturday being about the highest
OF the week, the upward tendency being quite
marked and restrained from larger results only by
the activity in the money market. or course,
while money is worth so much for use In call loans,
1t Is not so likely to find investment in securities
paying only a g per cent The following were.
THE CLOSING PRICES
Saturday evening for government bonds limited
States currency skies, 1l47s a 1I5L; do. skies,
1851. registered, l17x 1179s; do. do. DO, cou-
pom, lls% l1s%; do. fve-twenties, registered.
May add November, 1857 a II5sS; do. do. 1862
coupon, do, ll51s 115ss; do. do, 1894 do d.
1853 1l5%; do. do, 1866, do. do, I15x q 1lo
do. do, 1867, registered, January ana July, I14s
a 1142s; do do, 1856, coupon, do, 114H a 114x:
do. do, 1867, do. do, 1lsk li6X do do, 1854
do. do. lleH lleX: do. teniorties. registcred.