St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1889-05-27
AS a Result Of Light Crops and
No Road Building in
the West.
Prominent st. Paul Bankers
Discourse of the Money
Situation.
They All Presage Good Times
for Fall, Contingent on
the Crops.

st. Paul, will reveal the following facts:
First. that there is an unusual paucity
of money in this part of the country;
second, that there is an unusual
plethora of money in the East. The
causes for this may be summarized in a
few words. A series of bad crops have
caused the farmers in this and other
Western states to experience tight
ness in their financial condition, while
all the time money has been going
East for the necessarieS of life. For
The past two years there has been little
to bring money into the state and much
to take it out. Again, railroad con-
struction has almost ceased. This
has been caused to great eX-
tent by adverse and oppressive legls-
lation, while many lines have
built to the extent of their require
ments. This has cut off large supply
of money. all OF which was spent in the
country, and has also had the effect of
soaring capitalists into selling out their
railroad securities, and looking carefully
for other and safer investments. While
they are casting about them for chan
nels of investm ent their money has
been lying idle in the banks. Mortgage
loans have been easily obtained, and
the rate of interest has been dropped
off. In short. quiet times have caused
the present financial situation.
And the outlook for the future? From
an inspection of the following opinions
of st. Pauls tinanciers, it will be seen
that they almost without exception,
predict good times by next fall:
Still. they all admit that
~ }c ronH
Should this years crop belle the indica-
tons and prove failure. none OF them
suggest the result. which can but be
disastrous. So far as the finite eye can
see, so far as the human mind can
Judge, the prospects are for a good
crop. This will waken things up,
bring money into the country, enable
the farmers 10 pay off their indebted
ness to the country storekeepers, allow
him to meet his obligations to the city
merchant. who will again settle up
with the bank. That there is no cause
for alarm is apparent from the sanguine,
not to say optimistic, view taken by all
the gentlemen whose interviews are
here published.
William Dawson, President Bank of
Minnesota-During the last thirty
years the conditions have changed Won
derfully and wealth has increased so
rapidly that to-day we are one of the
richest nations on the face of the earth.
To-day money is as easily obtained i'll
the East on good security as in any
money center in the world. Our pros
perity has been unparalleled in the his
tory of the world. Wealth is only by
comparison, and the same is true of
rates of interest. Thus we say that
money is plentiful in the East and
scarce in the West, whereas. in point of
fact, 1t is more plentiful in the West;
but there are more fields and greater
enterprises to absorb it. Interest is
lower to-day than it was ten years ago.
at which time per cent was the cur
rent rate in the East, while here in st.
Paul it was 12 per cent; at the same
time in Europe money could be obtained
at 3 per cent. To-day, in New
York, 21l per cent bonds and
United States securities command
premium. while here in the West AZ
per cent bonds command very large
premium-take st. Paul city bonds for
instance. Thus the relative rates as
between East and West continue in
much the same ratio. Local causes gov
ern the rise and fall of the money mar
ket. When we have good crops we con-
poor dull times and tightness of money
prevail in the agricultural parts of the
country. One reason why money is so
tight now is that there is no activity in
real estate, and yet the city is rapidly
building up. This indicates that while
there is no money for speculation,
there is abundance for improve
ments. and even for the purchase
OF remunerative building lots. You
will always notice that men are free
with their money in the face of a rising
market, but that they close their
pocket-strings in falling market. De-
probation in the value of railroad stocks
has caused wave of prudence to strike
railroad securities has not been much
less than 3311 per cent, while the bonds
were increased. This has made those
In the habit of investing in railroads
afraid, and has in this way permitted a
large surplus to accumulate in the East.
/ see no cause for alarm, however. as
good crop will bring back the sunshine
to the money market.
Col. r. NJ. Newport, President of the
Seven Corners Bank-The Eastern
banks have good deal of unem-
plUytu Capital, WlllCli Is dill luUlCdGlOu VI
dull times. There has been cessation
of railroad building all over the coun-
try, and manufacturing industries have
been quiet. This has caused plethora
of money in the East. l cannot say
that the same is true of this part of the
country, as there is so active demand
for money that good safe investments,
at a fair rate of interest, can be found
without much difficulty. Still, the
superabundance in the East and the
natural lowering of the ruling rates of
interest have made themselves felt here
to some extent, causing money to be
cheap. The law Of supply and demand
Is more forcibly felt perhaps in the
money. market than in any other,
and it regulates the rate at which
money can be had all over
the country. There is more Eastern
capital offering for investment than
there ever has been before within my
knowledge. Capitalists who formerly
relied upon railroad bonds for invest
ment. are becoming distrustful, finding
that this class of securities constantly
fluctuateS and is precarious. They are
now seeking for channels of investment
which will return them a safer and
Bteadier income. Every day sees men
who formerly spent their leisure time
in Europe coming out mere and buying
up real estate mortgages. If we have
indication of our having, it will tend to
give strong tone to this sec
ton of the country. When the
farmers prosper they pay their
Indebtedness to the retail country mer-
chants, who pay the money back to the
wholesale merchants here in st. Paul.
These then pay money borrowed from
the banks, spend more in every way,
and times become more prosperous.
The whole thing hinges upon the
farmer, who is capital-produccr, so to