New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1889-07-09
FINANCIAL DANGERS And THE RESPON-
SIBTLITY.

Practically never before, certainly never since
1877, when the country began to approach specie
resumption, has the surplus reserve in the New
York banks been as low in the first week after
July disbursements as 1t was last Saturday. In
1887 IL was lower July 2, but that was before the
disbursements Of the month and half-year had
been felt and on the 9th the surplus was $685.
45O In 1ss2, also it fell In the last we6k of
June nearly as low as it was last Saturday but
Immediately rose the next week. Nor is that
precedent an encouraging one, for IL was IN that
same summer Of 1882 that the reserve became
exhausted before September. and financial pressure
followed until the latter part of November, aud
prices of stocks and commodities declined heavily
and that downward movement began which cul-
minated in the disaster Of 1884,
1t is something 10 remember too that the La
bilitics of the banks in those earlier days
were not nearly as large as they are now
Deposits are S445, 900, and last year
were only sil3, 100000, while in the other
years under consideration about $3.50, 900 was
a maximum, and in 1882 the reserve was only
S30j, 4O00 600 July l, or s140,OOO,000 less than
they are now. The larger amount of cash held IS
hardly an element Of strength. In 1883 the with
drawal of onethirtieth Of the total deposits left
the banks without the legal reserve but this year
the same effect The banks usually gain some
thing from the disbursements of July l, so that
the drain in the fall does not begin until they
are from four 10 six millions stronger. but this
year there is some for expecting the fall de-
mand 10 set in rather earlier than usual The
crops are early, and the state Of the markets is
such that there may be a desire TO get products
forward without delay.
The rapid outco of gold s32 700 in about
two months, has left the banks in this position,
but their heavy expansion of loans during the
last week, and even more during the first quarter
of the year, has much to 90 with it, The eX-
panson Of $50, 100000 during the first quarter
was partly prompted by speculative activity hut
may also reflect in a measure the accumulation OF
commercial Indebtedness in consequence of the
open winter and the failure of Europe to buy
wheat and -four. Speculation, again, was the
cause of the retention of wheat and flour until
Europe had supplied its needs from other quarters
The unusual mildness of the winter caused
multitude OF dealers 10 fail in distributing the
heavy stocks of goods they had purchased, and
large amount of Indebtedness was then carried
along, which may have been liquidated only i'll
part as yet &c the cause what il may, the banks
certainly failed 10 reduce their loans to ordinary
limits as the season wore on, ana so are found in
July with over s423,O00, 900 OF loans outstand-
ing
The one reliance i'm Wall Street is the willing
ness OF Secretary Window to diSbUrse money rs
freely as ne can under existing laws. But the
needs of the money market since March are the
obvious and sufficient answer to the criticism
that he should have suddenly removed Gov
eminent deposits from the banks. The oppor
tnnity to do 50 with safety has not yet presented
itself Lest week he purchased bonds more freely
than before, and that has also been critic sed, on
the ground that disbursement would have been
more effective later in the season. But it is not
70 be presumed that the banks will make haste
TO scatter as fast as they can the money now
disburscd with intent to fortify them against
coming emergencies. Nor is IT certain that
equally desirable offers of bonds will he made
later in the season Ii the monetary market gets
into such n state that distrust prevails, those
investors who hold Governments may feel more
indisposcd than they are now to seek other uses
for their money.
II is proper TO notice these features OF the
Situation now, before any disturbance or apprc-
bension arises. because they are direct fruits of
thc refusal Of a Democratic Congress TO make
uroyision, by law for the public needs. Congress
would neither reduce the revenue nor give to the
Secretary power TO use a surplus otherwise than
in the purchase of bonds and, if lnconvenlent
consequences follow, the Democratic members OF
Congress must bear the responsibility.