The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1897-11-25
MUCH IDLE MONEY.
Chicago Bankers Use Money to
Buy Foreign Paper.

Chicago, Nov. 25.-The Times-Herald
says:
There is a plethora of money in Chi
cagO. Foreign balances in favor of
Chicago banks are twice as large as
they were a year ago. This fact is the
proof that there is plenty. 1t also arts
es from conditions of trade.
Chicago banks have money to supply
local demands and In addition are
buying American bills against foreign
houses.
one year ago the First National
bank had a foreign balance of 81, 0OO,-
600. Today it is about 81, 600, 600 This
does not mean that Chicago money is
being invested in foreign paper for an
indefinite time. 1t happens because
there is no profit in dealing in futures.
Cash wheat brings a better price than
future sales, and elevators are empty
instead of full Foreign demands have
created a better price than usual, and
local dealers are hurrying to get their
produce across the water. Banks are
in a sharp competition to buy the bills
thus held against European merchants.
There is plenty of idle money on hand
and trade conditions have furnished
an opportunity to invest in these bills,
which are mostly payable within six
ty days.
We're affairs different and futures
better than cash, Chicago elevator men
would be borrowing money to enable
them to hold their grain AS it is,
there is either a flow of money into
Chicago Golfers or foreign balances
grow larger and larger.
Chicago bankers deny they are using
money to buy foreign paper A state
ment recently made by former Gov.
Flower of New York that Chicago
banks We're investing millions in for
eign securities probably arose from
the marked increase of foreign balan-
ces in favor of Chicago houses
James 3. FOrgan of the First Ma
tiOnaI bank attributes the statement to
that fact.
I'VE are buying bills held by Chicago
dealers against merchants of Europe,
he said. We do it because it is the
best use we can make of the money
There is plenty of idle money, and be-
cause the elevators are being emptied
to supply eastern demands there is a
constant draft on foreign houses. We
encounter sharp competition in buying
these bills, and there is not much in it,
but it is the same as the loans we
formerly made to elevator men to en-
able them to carry their grain for fu-
ture prices.
Under the present condition the
money is received within so days As
a result of the large shipments our
foreign balance has doubled. Our bank
is not buying foreign paper, as report
ed, although I believe some private
banks in New York have made pur-
chases of small amounts. Perhaps the
fact that we recently bought some de-
sirable New York securities may ac-
count for the report that we are max
ing foreign investments"
I should think that the amount of
Chicago money now in England and on
the continent is $6OOO,0 600 or So, 900, 900,
said John J. Mitchell of the Illinois
Trust and Savings bank.
1T is my belief that London, Paris,
Berlin and other continental banks
owe United States banks, at a conser-
vative estimate, over 500 900, 600 in
bank balances, bills of exchange and
loans. The balance of trade is decid-
eddy in our favor, and the balances are
being allowed to accumulate on the
other side because they are able to pay
us a better rate of interest than we
can get on this side. The rate is per
cent in the open market in London and
per cent on the open market in Ber-
lin.
THE bills of exchange are on money
loaned by our foreign correspondents
to merchants on purchases payable
with interest at from 315 to 4 per cent
on 60 and 80 day bills. The bank bal
ances draw from 2 to per cent and
the loans are drawing 4 or AZ per cent
The large balfUace of trade in our fav-
or and consequent lack of demand for
money in our own country is accounta-
BILE for this accumulation over there
We are not only sending grain and pro-
visions. but locomotives. steel rails,
cast iron water pipe, armOr plate for