St. Paul daily globe., 1889-05-26
THE | UCRE LOCATED.
Western Money Is Tightly
Locked Up In Eastern
Bank Vaults,
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.

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
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 legis-
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 investment 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. PauPs financiers, it will be seen
that they almost without exception,
predict good times by next fall.
Still, they all admit that
this is contingent on good crop.
Should this years crop belle the indica-
tiOnS 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 good
crop. This will waken things up,
bring money into the country, enable
the farmers to pay off their indebted
ness to the country stOrekeepers, allow
him to meet his obligations to the city
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, Pres ident Bank of
Misunderstanding 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 in
the East OH 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
In ,r,hn in, >E
fact, it is more plentiful in the West;
but there are more fields and greater
enterprises to absorb it. Interest is
lower today 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 IL per cent; at the same
time In Europe money could be obtained
at 8 per cent. To-day, in New
York. ~ per cent bonds and
United States securities command a
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-
tinue prosperous, and when crops are
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
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 a wave of prudence to strike
the capitalists. The depreciation in
railroad securities has not been much
less than 3371s 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
large surplus to accumulate in the East.
l see no cause for alarm. however. as a
good crop will bring back the sunshine
to the money market.
Col. r. M. Newport, President of the
Seven Corners Bank-The Eastern
banks have a good deal of unem-
ployed capital, which is an indication of
dull times. There has been a cessation
of railroad building all over the cOun-
try, and manufacturing industries have
been quiet. This has caused a plethora
of money in the East. 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 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
Capitalists who formerly
relied upon railroad bonds for invest
ment. are becoming distrustfuI, finding !
that this class of securities constantly
fluctuates and Is precariOuS. They are
now seeking for channels of investment
which will return them safer and
steadier income. Every day sees men
who formerly spent their leisure time
in Europe coming out here and buying
up real estate mortgages. If we have
good crop this year, as there is every
indication of our having, it will tend to
give a 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
IN,