St. Paul daily globe., 1896-03-23
DRAWING IN HORNS
BULLS ARE TURNED INTO BEARS
BY THE TREASURY CALL FOR
DEPOSITS.
MARKET VERY SENSITIVE,
BUT THE SITUATION DOESN'T
FULLY WARRANT THE SENTI-
MENT DISPLAYED.
TREASURY is ON BED ROCK.
Is Now In Situation to Control
Nearly Its Entire Output of
Demand Notes.

Special to the Globe.
NEW YORK, March 22.-In his week.
ly review of the financial situation
Henry Clews says:
Wall street has been somewhat disturbed
during the past week by the call of the treas
ury ' 1or ~ per cent of the proceeds of the late
loan deposited with the banks. The banks
were In well fortified position to meet the
demand; but it is, perhaps not surprising if
they nave been willing to make the most of
the circumstance. For the last two weeks
commercial failures have been more FREQUENT
which has increased the caution towards dis
counts; and the usual April transfers of
money to the interior, for effecting the settle
ments 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-these considerations
have made possible an advance in the rate for
call loans, and caused some contraction in the
d1scounting of commercial paper. The "bear''
element In speculation have not failed to turn
these circumstances to account, and have
especially sought to encourage distrust as to
tne condition of commercial credit and to eX-
cite apprehension of further failures among
merchants. AT the moment, the banks have
no special interest in discouraging these tao
ties, as they help the upward tendency in the
rate OF interest; but, at the same time, there
is in banking circles no real apprehension of
any approaching stringency, and the feeling
is general that when the funds return which
may be withdrawn for the April settlements
the money market will settle into an easy con-
tumn outflow Of currency sets in.
1t is not surprising that the new temporary
factor in the market has been attended with
some selling of stocks and that the "bears''
have made it an occasion for putting out free
lines of Shorts" The bulls have not re-
garded these conditions as favorable to buy
ing, 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 been sensitive to the new
he hoo r5 Of
ties. The press accounts appear to take it
for granted that, at last, Great Britain has
really entered into partnership with the drei-
bund. 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.
There is good reason to hope that if the re-
ported new alliance is an accomplished fact, it
may prove to 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.
One factor that should contribute to a re-
covery of confidence is the marked improve
ment in the relation between our imports 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, ma
terially declined; the result being a condition
OF the balance Of foreign trade much more in
our favor than for any time during the last
two years. This means a cessation Of the
over-importation which has been glutting our
markets and encouraging distrust of credits
in certain branches of trade; while it shows
healthier condition of the export markets
and of the agricultural interest.
Moreover, it has an indirect but important
Hbearing upon the condition of the treasury
finances. 1t means, so far as it is due to the
commercial movement. probable reduction
is the exports Of gold which consti-
tute the chief necessity for drawing it
from the treasury, the less gold is needed for
export purposes, the less will be the amount
presented
demption. 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
the treasury ESQ long as they are not needed
to supply deficiencies of revenue), and can be
extinguished without obstacle further out
lay whenever congress chooses to so order.
There are, at present $105, 000, 900 net of the
two kinds of legal tender in the hands of the
government. The treasury also holds $12s,-
held against the notes of 1890, which at it's
present market value is worth over $50, 900 900.
These two sums, aggregatfng $21S, 600, 600, are
gally provided for the sole purpose of liquidat-
ing them. Thus, the liquidation of 1923, 900, 900
of legal tenders is already provided for; and
only $3.50, ,000.0 900 remains for other treatment
or Offset. 1t will thus be seen how much bet
ter position the finances are in, for dealing
with the legal tender question, than is gen.
orally supposed. In this situation of affairs
it becomes a very interesting question-how
long it will take for the treasury to gain con-
troll of this balance of $3.50, ,000G 600 of notes
through the current process of conversions?
If the exchanges of notes for gold were con-
tinued at the average rate of the two last
years, $140, 900 of this residue would be in
control of the treasury in the spring of 1897
assuming that the income of the government
covered its expenses. These are matters for
reflection and for congratulation A govern
ment whose demand notes under its con-
and discredt that foreign critics choose to
cast upon ours