Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1873-11-05
THE FINANCIAL SITUATION.

THE FINANCIAL SITUATION.
In an article reviewing the financial situa-
ton, the New York Times goes over the
events of the panic, and takes hopeful look
into the future. "The panic originally rose
says the Times, "ffom the extreme stringency
of money, which, on account of its scarcity,
was very hard to get. The trouble began
when greenbacks in Wall street lent for one
per cent per day. 1t was an easy task Ter
operators in stocks working for decline to
knock down prices when people were unable
to pay the interest required for carrying
stocks. The failures of large number of
houses, owing to the sudden and tremendous
fall, could not be averted. A few trust COM
panies, hundred brokers, several banks, and
dozen banking-houses, all loaded up with
stocks and securities of every nature, went
by the board. There is little else to chroni-
Gle. The parties who have failed did so be-
cause money could not be obtained to help
them out of their difficulties. The reason
why money was dear is obvious. The crops
of cotton and grain in the West and South
were larger than was ever known. Money
left Wall street, as it always does in the Fall
of the year. to buy up and move the crops.
A greater sum was needed than in previous
years. When the money went away the bot
tom dropped out of the stock market If
stocks had not been held at high prices there
would have been no such panic. 1t was an
attempt to hold up Wall street while money
was needed for the legitimate demands Of
the business interests of the country. The
money in circulation was too little to hold up
stocks, pay for the enormous crops Of grain
and cotton, and move them to the sea-board.
The panic. then, began on account of the
stringency in money, which was not artificial,
but brought about in the ordinary cause of
events. Confidence has been shaken now by
the numerous failures and the chatter con-
corning the instability of the moneyed insti-
tutions. A restoration of public confidence
in the safety of the banks and an ample sup
ply of money will bring about speedy recoy-
cry. As panic began on account of monetary
stringency, SO it will end by relaxation in the
rates of interest and proofs furnished that this
will be permanent. We have the money now.
There is more in circulation by fifty millions
of dollars than six weeks ago. The banks
have drawn largely upon their legal reserve.
The Government has paid out the surplus of
Sl5,000,000 in purchases of bonds, and has
also drawn upon the S++ o00,0 900 reserve.
Millions of gold have been sent over from the
Bank Of England, which are now in active
use here. The country needed more money,
and it has been obtained. The truth is that
before long currency will be gIut, and four
per cent. be considered high rate of interest
Every mandatory that closes, and every
iron forge which shuts down, instead of add
ing to the general stringency in money, tends
TO make it more easy. Money is dearest when
there is the greatest call for il to use in bust
ness requirements. 1t is cheap when it seek:
investment instead of being sought for. Tha,
great distress will come among the laboring
classes this winter is certain. The boards OF
the savings banks will be largely drawn upon,
and the deposits in these institutions will be
few and far between. The money accumulat-
ed by the poor and middle classes will be
drawn out and expended. But the butcher,
grocer, baker, and merchant will take this
money to the national banks and leave on de-
post what is not needed for immediate use.
The country banks will become ''fush" and
transmit their surplus to the New York banks
Business men who can give good security will
be able to get all the money they want on the
easiest terms.
1t is a matter of comment that so far the
mercantile community have held out nobly
and in the cases which have been brought
most prominently before the public where
houses have been questioned, it has been
found that their assets were far in access Of
their liabilities, and that taking them as sam.
Piles of the rest the business interests are
sound to the core. The banks will now be
able to extend the assistance needed, and re-
covery from the panic will be rapid. That
the financial system OF the country is excel
lent, needs no better proof than that right in
the time Of panic greenbacks have steadily
appreciated in value and are now within eight
and onehalf per cent. of gold. That the ma
tiOnal banking system is sound and mistaken,
is also evident when throughout the panic
greenbacks and national bank notes have been
of equal value and have all steadily risen to
a par with gold. The severe 'sscooping" to
which the street generally, was treated, on
Saturday, as bears in stocks, will be a warn
ing that unless some event, altogether un-
looked for, of a depressing nature occurs
shortly, it will not be wise to sell anything
not on hand. The banks, now interested in
advancing prices, the public eager to invest in
securities of real value, and a few heavy OPP
orators ready to make things warm at the first
opportunity, render bear movement ex-
tremely hazardous. Much of the faith of the
bears is at present pinned to the probabilities
of trouble in England, which has, so far, gone
comparatively unsca,hed. Whether there ill
be financial disaster there is as yet problemat-
ical. The Bank of England raised its rate OF
discount to eight per cent. on Saturday, which
is not regarded as favorable. But even with
troubles in London, prices have gone SO low
here that the influence will be not at all de-
moralizing."
RAPID COINAGE.
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