The Goodland republic. [volume] (Goodland, Kan.) 1891-1907, 1897-11-12
iMPoRTgNe COLO



hanks Eegsed 10 BEins Money INTO
the Country 20 support Prices.
The first large importations of gold
since October, a year ago, arrived early
this month During October, 1896, we
imported so, OO0, 900 Of gold, in SePtem-
Der s34, OOO,O 900. This gold was borrowed
in London by the New York banks. De
posts were being pulled down, there
vas a semi-panie, the reserves Of the
banks were well-nigh exhausted, they
had to bring gold from abroad, euTtail
loans greatly aud precipitate the panic
that threatened or resort to an issue Of
clearing house certificates, not a popu-
lar move in the face Of the presidential
election. So they brought gold.
Earlier in the year, in July, exports
Of gold pulled down the treasury gold
reserve below the 100000 600 limit, and
it was evident that unless a turn soon
came in the tide a bond issue would be
necessary to repienish it. And another
bond issue right in the midst of the
presidential canvas was feared. The
bankers Of New York came together
and resolved to do what they could TO
prevent it. AT another time they would
have welcomed a bond issue, and the op-
portunity of profit thereby offered.
But not so then. They did not want to
put additional ammunition in the hands
of the opponents of the gold standard.
So, instead Of organizing to raid the
treasury, they organized a syndicate to
protect the treasury. They deposited
gold in the treasury in exchange for
legal tender notes and took steps to
prevent further drain on the treasury
reserve for gold for export. They an
nounced that they had arranged to draw
exchange on London to an amount Of
S5O,OOO,OOO, or, if need be, S75,OOO,0OO, to
staye off gold exports until cotton and
grain would commence to move freely
in September, and make sufficient ex-
change to meet requirements. Until
sufficient exchange was made natural
ly the syndicate would make it artiti-
cially by borrowing in London. So gold
exports were checked. But, as we have
said, depositOrs drew down their depOs-
its in the summer and first autumn
months Of last year; the reserves of the
New York banks were depleted. Those
banks found themselves cramped, con-
frOnted with the necessity of curtailing
loans, replenishing their reserves with
imported gold, or the issue of clearing
house certificates. They dared not con-
tract their loans, for it would have
meant panic, disaster to customers Of
the banks and the banks alike; they
dared not issue clearing house certiti-
Gates. They chose the other alternative
borrowed gold abroad and imported
it.
And now the New York banks, as last
year, find their reserves depleted. It is
not drain on deposits that has depleted
their reserves this year, but the great
extension Of loans on American securi-
ties returned to us by European holders,
an extension which the banks have had
to make TO support stock exchange
quotations. But this extension went on
until the banks could extend no longer.
The taking Of the money so loaned away
from New York to pay for grain bought
by foreigners and for which they sent
securities in payment, made a serious
drain on the cash reserves of the New
York banks. Those reserves being
drawn down close to the legal limit the
banks had TO stop making extensions,
bad to ourtail loans. This at once
brought the upward movement Of
prices on our stock exchange to a stand
still. And as loans have been further
curtailed, prices have fallen. But to
greatly curtail loans meant a great fall
in prices, to be followed inevitably by a
drain on deposits. So the banks have
not wanted to curtail loans. They have
locked for gold imports as an escape.
Two banks imported gold at a loss a
couple of weeks ago, that they might
build up their reserves and avoid the
necessity of curtailing loans and fore
ing fall in prices, And this week S.
100000 more of gold has come, but
failed to keep stock exchange prices
from falling. If prices are to be sup
ported more, much more, gold must be
imported.-American.