The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1893-08-26
THE TIDE TURNING IN NEW
YORK.

For four or FIVE consecutive days money
on call has been loaned at New York as
low as or per cent-that is to say, the
! money market has reverted to Its normal
condition. Simultaneously, prime mer-
camille paper has sold at or 10 per cent,
which is not normal rate, but it is vast
! Improvement on the state OF affairs when
| paper would not sell at ALL 1t must not
/ be assumed that all or even the bulk of
! the loans on call are being made at or 4
/ per cent. Borrowers are generally paying
/ much higher rates. But after the rank
and file Of the brokers have made up their
accounts there is a surplus of money over
that cannot find employment at better
rates than or per cent. This, again. is a
marked improvement over the situation
two or three weeks ago, when there was
no money over at 3 o'clock, and brokers in
active business had in many cases TO lie
down on their banks. The signs of the
times indicate that the corner may have
! been turned.
The first spot in New York to feel a
money pinch is the Stock Exchange
Among the banks the rule is 70 accOmmO-
date their commercial customers first, and
! only TO lend in Wall street such sums as
cannot be used in the purchase of CONNER
| cial paper. Thus, whenever the demands
/ for discount are pressing, bank money is
withdrawn from the exchange, and brokers
! are put TO II to find funds outside TO make
! good their accounts. They feel the COM
! ing storm before any other class. Pres
| emily, If distrust spreads, merchants be-
/ gin TO suffer; and, when their distress be-
! comes acute, 1t spreads 10 the banks. A
money pinch always pursueS this course,
which is as well understood as the several
stages of an epidemic disease. When the
tide turns, recovery follows the same lines
in the opposite direction. When money
/ flows into the city TO fill vacuum. ii first
seeks employment on the Stock Exchange /;
the first Sign OF returning capital and con-
fdence is observed In the decline in the
current value of money on call. Next,
money seeks employment at the discount
houses and among the note brokers. Mer-
chants who have been unable to sell their
paper at all find that it will move, first at
high rates, then, after a time, at rates
which are nominal. Then alarm gradu-
ally subsidies; moneys which have been
boarded return 10 bank; men of means al
low their deposits to swell; and one bank
after another grows stronger and less
! nervous over the clearings.
We seem to be witnessing the first sign
of the turn of the tide in the quotations
for call loans in Broad street. Recovery
will not be assured until the banks stop
issuing clearinghouse certificates and be-
gin to call in those which they have issued.
The total issue TO date is far larger than
that which was put forth on former occa-
slons of financial depression. But all GER
tifcaies are supposed to be based on Al
collateral, and as the present paralysis
works off liquidation will take place and
the certificates will be Cancelled.
There is reason to believe that the dura-
tion of the present crisis will be shorter
than that of its predecessors. There is
quicker sympathy between the money
markets of the world than there used to
De. In 1873 London and Frankfort gazed
helplessly at the money crisis in New
York, not knowing where it would end
Now. London. Frankfort and Paris are
keenly alive to the opportunity afforded by
the present wane Of distrust in the United
States TO earn big interest on money. Ar
mour of Chicago is carrying wheat with
French gold. which Melted its owners for
the first week about 26 per cent. Such
rates of interest are sure to draw money
from every financial center, and the ad-
vance in the rate by the Bank of England
will not check the drift. Coin will continue
10 flow to New York as long as it is worth
more there than 1t is at London, Paris,
/ Frankfort or Berlin, and so long as there
is no evidence that the present disturbance
is ANYTHING more than a sentimental panic