Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1875-03-06
THE COURSE OF THE MONEY
MARKET.
New York Bulletin, March 4

It is not difficult to discover symp-
toms Of a gradual tendency in the
money market towards greater activity
and higher rates. At this season Of
the year, the loan market Is usually
IN a condition of extreme ease. The
forwarding Of products is interrupted
By the suspension of interior naviga-
ton, and the sale Of large quantities Of
merchandise to all sections makes New
York a creditor IN the exchanges with
all the commercial cities. For the first
three months Of the year, therefore,
the banks are ordinarily full of money,
as the phrase goes, and plethoric
in their reserves. The present cOndi-
ton Of the banks Is no exception to
this rule. But, notwithstanding the
present comparative amplitude Of the
reserves and the extremely low rates of
interest, there are movements at work
which suggest a probability that this
state Of things may sooner come to an
end than some appear to anticipate. 1t
seems to be overlooked that the loans
and discounts of the Clearing House
banks have steadily risen TO
nearly three hundred millions.
This IS an amount that has been
rarely exceeded in the most active
periods and shows that, after all
the talk about the difficulty Of employ
inc funds, there has been more demand
for loans than Is generally supposed.
And this fact further conveys an infer
ence that there is more activity IN trade
70 4
Another fact IN the banking situation,
which deserves more attention than 1t
has attracted. Is that the reserves are
declining at a somewhat rapid rate.
a year ago the banks held $780,
10000 of legal tenders and
500, 100000, making a total of
SS6, 100000 Of funds that count as re-
serve; now, they hold S52,OOOOOO OF
legal tenders and Sl5.SOO,O 900, or to-
gether S67. 100000; being a decrease Of /
SIS,600,G00 as compared with a year
ago. The surplus of reserve beyond |
legal requirements was a year ago |
sd S75, 900, computed according to the
old methods: on the Doth ult., the sur
plus, estimated under the new law, was
S7,9O0000, or reckoned according to |
the old method, would be only 81, 3d. !
900.
There has not been that increase in
the reserves since the opening Of the |
year that generally occurs during those |
two months; but on the contrary an
almost steady reduction. Yet we must |
expect, from this time forward for some |
weeks an increase in the volume Of pa
per seeking discount. Inthis condition |
Of things, and with the loans already |
standing at a figure which the banks /
have usually shown an indispOsitiOn /
to materially exceed, 1t is apparent |
that a moderate increase n the demand /
for advances would be apt to tell very /
directly upon the rate Of interest.
a month hence, the banks viii have to
meet the demand for currency that
always arises from the April settle
ments; which, although involving only
a temporary withdrawal of money,
always produces a slight furry. A
month later, and navigation will be
opened, with the usual forward.
ing Of large amounts of Western
produce and a condition Of interior
seems reasonable to expect that these
movements, conCurring with the In
creasing local demand for loans, viii
ere long stimulate a healthier activity
in the money market. There seems to
be no reason to suppose that we are APP
anything ike the old time
but rather, that we
NAV soon witness a situation mid |
way between that and the opposite
extreme Of excessively low rates
that has 50 long prevailed. A return
to normal rates Of interest is to be de-
sired on every account. 1t would be
an evidence Of restored health IN trade;
1t would make capitalists more dis
posed to invest IN commercial and in
dustrial enterprises; and 1t would put
a stop to unhealthy movements that
have arisen from the abnormal circum-
stance Of loans being cheaper here than
in Europe.