The herald., 1896-03-27
HENRY CLEWS' LETTER

NEW YORK, March 81, 1896.
Wall street has been somewhat dis.
turbed during the past week by the call OF
the treasury for 90 per cent of the proceeds
of the late loan deposited with the banks.
The banks were in well-fortihed position
to meet the demand, but it is perhaps not
surprising if they have been willing to
make the most of the circumstance. For
the last two weeks, commercial failures
have been more frequent. which has in
creased the caution towards discounts, ana
the usual April transfers of money to the
interior. for effecting the settlements due
at that period, will soon be here; add to
which the fact that the banks do not usually
disregard fair occasions for advancing
their rate of interest-;hese considerations
have made possible an advance in
the rate for call loans, and have
put check on time loans,
and caused some contraction in
the discounting of commercial paper. The
"bear" element iI speculation has not
count, and has especially sought to en-
courage distrust as to the condition OF
commercial credit and to excite apprehen-
sion of further failures among merchants.
At the moment, the banks have no special
interest in discouraging these tactics, as
they help the upward tendency in the rate
of interest; but, at the same time, there IL
in banking circles no real apprehension OF
any approaching stringency, and the feel
ing s general that, when the funds return
which may be withdrawn for the April set
Elements, the money market Will settle into
an easy condition and so remain until, at
least, the autumn outflow OF currency sets
in.
1t is not surprising that this new tempo
rary factor in the market has been attend
ed with some selling of stocks and that the
bears have made il an occasion for putting
out free lines of shorts. The bulls have
not regarded these conditions as favorable
to buying, and have therefore offered no
resistance to the attacks of their opponents
but hope to find their opportunity when
the time comes for covering the short
sales.
The market has also been sensitive to
the new moves on the chessboard of Euro
pean politics. From such vague accounts
as the diplomats are willing to let out, it
seems that international relations and
therefore international policies are under
going some highly important changes. The
press accounts appear to take it for grant
ed that, at last, Great Britain has really
entered into partnership with the dreibund.
In respect to what matters, or to what
extent, she has committed herself to the
Joint policy Of Germany. Austro- Hungary
and Italy, nothing is yet certain. But
as her purpose seems to be mainly to
provide an offset to the threatening att-
tude of the Franco-Russian alliance, and
as colonial policies now enter largely into
all the current international disputes, it
would seem highly probable that if there
be a new alliance it may cover an earnest
and comprehensive common policy. An
agreement between England and the three
great powers of central Europe would
seem to afford an invaluable guarantee of
future peace on the European continent; ;
but, for the moment, and until the policies
of the quadruple alliance come to be
known and estimated. there il ample
reason why the financiers of Eu'
rope should maintain an observant
attitude and await the upshot. Hence,
this new course of events has caused halt
in business on the foreign bourses; prices
have declined for national securities, and
Americans have suffered in sympathy with
these conditions. There is good reason to
hope, however, that if this reported new
alliance is an accomplished fact it may
provetto be the beginning of a general
European revival of confidence, from
which this country. as one in the family of
nations, could not fail to- reap its share of
advantage.
recovery of confidence is the marked i'm
provement in the relation between our inn
ports and exports of merchandise which
has occurred within the last two or three
months. The exports have shown large
rate of increase, while the imports have,
on the average, materially declined; the
result being condition OF the balance of
foreign trade much MOI e in our favor than
for any time during the last two years.
This means cessation of the over-impor-
tation which has been glUtting our markets
and encouraging distrust of credits in GER
tain branches of trade; while it shows a
healthier condition of the export markets
and of the agricultural interest.
hDc irnIt hut INN Won't
ant bearing upon the condition of the
treasury finances. 1t means. so far as it
is due to the commercial movement, a
probable reduction in the exports of spe-
Gle and as i. is the exports of gold which
constitute the chief necessity for drawing
it from the treasury, the less gold is need
ed for export purposes, the less will be the
amount Of noten presented at the SUBJ
treasury for redemption. This probability,
so far AS il represents a better regulated
condition of our foreign interests, is a mat
ter of conGratulation. And yet there are
considerations which make the conversions
of notes far from being the unmitigated
evil they have been considered. The
notes converted are held in treasury (so
long as they are not needed to sup
ply deficiencies of revenue), and can be eX-
tjugUshed without obstacle or further out
lay, whenever congress chooses to SO order.
There are at present sos ,O0O,0 900 net of
tie TWO klfuS OF lS0dl teIlueT Ill tDe udJuS
of the government. The treasury also
holds $l2s .O00, 900 of "free" gold, and has
silver bullion, held against the notes OF
1890. which at its present market value is
worth over $90,O0O,000. These two sums,
aggregating $21S, 100000, are offsets
against the notes and have been legally
provided for the sole purpose of liquidat-
ing them. Thus, the liquidation of S323,-
100000 of leg.l tenders is already pro-
vided for, and only 81 go, 100000 remains
for other treatment or Offset 1t will
thus be seen how much better position
the finances are in, for dealing with the
legal tender question, than is generally
supposed. In this situation of affairs, it
becomes a very interesting question.-how
long it will take for the treasury to gain
control of this balance of 16O.OOO,OOO of
notes through the current process of con-
versions? If the exchanges of notes for
gold were continued at the average rate of
the Two last years, $l 40 100000 of this
residue would be in control of the treas
ury in the spring of 1897 assuming that
the income of the government covered its
expenses.
These are matters for reflection and for
congratulation. A government whose de-
mand notes are under it's control to this
extent is not a fit object for the sneers
and discredit that foreign critics choose
to cast upon ours. The fact is