New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1877-08-28

THE BANKS AND THE MONEY N1RhEE
On Saturday afternoon, August %, slight
pressure in the money market caused sud
den reaction in stocks. The sinking was only
temporary, but it served to show that mod
crate stringency in money may at any moment
cause the collapse of speculation which
has been pufied up by ease in money
and low rates of interest. Perhaps it may be
well to notice that on Tuesday, August 26,
1873, when speculation had in like manner
been fostered for months by extreme low
rates of interest and by prospects of an enor-
nous crop, a sudden stringency caused for the
moment great alarm. Rates quickly ran up to
per cent on call, as on Saturday last, and
stocks tumbled. The elder and stronger Van
derbilt was prompt to sustain his favortes,
and things went on swimmingly the next
week, but prudent men asked, even then,
"What will happen in September, if this mar
"ket cannot stand seven per centW
What happened in September, 1878, we
know, and every one hopes that nothing like
it may happen in September, 1877. But it is
plainly wise for all who are employing in
connection with speculation the money OF
others, OF money which they cannot afford to
lose, to exercise great prudence at this time.
If New-Yorl Central is worth 1928, and
Lake Shore 63A, and Lackawanna 1912,
and Hudson 49l2, let us all rejoice, but
let us not be IN haste to bet the
money of other people upon the belief.
Men loaned $60,000,000 in that way four
years ago, and it was not well with them.
More than $6O,000,0O0 has now been loaned
in like manner on stocks which were not
-, Inn ft,o cd ot,
them. and it would be very bad for borrowers
and lenders both if anybody should be COM
PEELED to realize by selling The fewer irons
the New-YOrk banks keep in that fire, the
better will they deserve the confidence of the
commercial community, which depends on
them for indispensable services in the Fall.
Last week nearly two millions in currency
went out to move the crops. The prospect is
that this natural outflow will continue, first
for the great crops of wheat and oats, and
then for the cotton and corn, until tho close
of the year. But the banks of this city re-
ported on Saturday only $5O.7S9,O0 in legal
tenders, 1856 per cent of deposits less specie
This is about per cent higher than the re-
serve held by these banks at this date in
1873, and if there is needful prudence the
with success. The prudence should not be
lacking, however, for the operations of the
Treasury must inevitably contract the legal
tenders during this month and the next 1t
appears from weekly reports that the re-
tirement of legal tenders required this month
must largely exceed that of July, and, owing
to the failure of appropriations at the last
session, considerable sums that would natu-
rally have returned to circulation, are now
locked up in the Treasury. Legal-tendcr re-
serves at Boston and Philadelphia are very
small. IL is not time for the New y Ork
banks to neglect their legal-tender balances,
and vet there are eleven banks which report
each less than 30 per cent of their deposits
These eleven banks together report $40, 49,
400 deposits, and only 1888, 400 in legal
tenders-sbout $5,OO0O00 less than they
should have to he in line with other banks.
The prospect as to the crops is decidedly
good but it has been repeatedly shown that
the railroads. up to this time, at least, are
moving much smaller proportion of the crop,
and smaller quantity of grain, than they moved
last year. Gross earnings, already much
smaller than last season at this time, must in
evitably fall still further behind as the season
progresses, and the extraordinary economies of
last year cannot well be surpassed. The hope
of the country is in legitimate business, which
stock speculation threatens The hope Of the
spectators is neither in Legitimate nor in lille