The herald., 1898-12-31
FhE CLOSING YEAR
SITUATION AS REVIEWED
Ii NEW YORK FINANCIERs
ABOUT THAT RUSSIAN LOAN
The London Money Market-Marvels
in the Iron Trade--Incorpora-
tions-Realty Notes
OFFICE OF THE HERALD,

OFFICE OF THE HERALD,
LOSANGELES Dee 30, 1885,
The year is Closing with money at very
low level, and with nothing to indicate an
advance for some time to come. The shift
ing and adjustments of currency which are
usual at this season, owing to dividend re-
quirements, have been followed by no COM
! k7flications. According to the New York FL
nancier, an unusually large amount Of
money will be released during the next two
weeks, and the demand for January invest
ments is bound TO have an effect on cur
rent quotations. Never before in the his
tory OF the country have declarations of div
idends equaled the record OF this year, and
never, it may also be added, will such a
large percentage OF these dividends remain
in the United States. The general trend Of
exchange following domestic interest pay
ments will not, therefore, follow the course
of former years. We have spoken so fre-
quently of cur export situation that it is
.fuperfluous to add more here, but it should
not be forgotten that for every dollar Of
interest this country owes Europe, exchange
is making at the rate OF several dollars in
our favor. 1t will be recognized that these
facts forecast an excessive money supply
for some time to come. The disposition Of
this surplus is bound to be one of the inter-
esting problems of the new year.
The banks of New York are able to use
the funds flowing to this center, as the
weekly statements have revealed, but they
are now called upon to pay in installments
the remainder Of the Pacific railroad fund
ing bonds, amounting to about eight millions
OF dollars, still remaining ii their posses
sion. On the other hand, they will benefit
through the payment Of the currency .sixes,
$l4,0O0,O00 of which are due after January
lst.
With the exception OF a temporary furry
on Tuesday, says the Financier, when call
rates were forced to ~ per cent on the eX-
change for no particular reason, loans on
call are uoted at about per cent, with
exceptions III both directions. Time money
Is per cent for sixty days and four months
at 31a per cent for longer rates, with little
demand. The commercial paper market was
never slower. Duns canvass revealed the
fact that ten leading commercial banks put
out only 10 per cent of their funds IN mer-
camille channels. Two weeks ago the aver
age was 30 per cent, and three weeks ago
20 per cent. Rates ne quoted generally at
and 3la per cent for best endorsed bills
receivable, and 4 and per cent for good pa
per not so well known
The statement of the New York banks
Cor the week ending Saturday does net
favor an advance in rates Tor funds.
That Russian Loan
1t is complimentary to the United States
to know that foreign nations are now turn
ing to us for loans, but it is nconcevable
that at this period of our development ef
forts looking to the borrowing OF large sums
for a stipulated period can be consum-
mated. In. the first. place we are already
lending Europe an amount varousdy est-
mated at from sixty to one hundred mil
lions on balance. This money, it is true, may
not be regarded as a loan, but it amounts to
that in effect, and any sudden demand on
our part would add it to our domestic cap
ital. For that matter loan to Russia
would have the effect of wping out thi.
call loan, through the process of transfer
into Russian bonds. But this would also
mean violent fluctuation in exchange
which, at present interest rates, might re-
suit in heavy exports of gold from New
York. Certainly with rates in Europe al
ready high enough to warrant continental
centers borrowing heavily Of our surplus
funds, the conversion OF this money, or it.,
sudden withdrawal, would affect rates to
the point where new supplies would be I'M,
perative. Where this capital would be found
is uncertain. AS Europe still holds hun
dreds of millions of our securities, it is quite
likely that she would attempt relief through
realizing sales in New York, just as Ger
many has been doing for some time past.
This method, in fact, is the only one that
seems practical. In loaning to Europe,
therefore, the United States would not only
have to take the obligations representing the
debt proper, but it might become necessary
also to absorb large quantity of our own
securities now held abroad. The country,
granting that everything written concern
ing our prosperity is true, IS not equal to
the task. Another point to be considered
is that a great deal of the funds now in bank
in the United States are not available for
} other than local use, for the simple reason
that they belong to the treasury, and as
such are subject to call. This money amounts
to ninety-three or ninety -four millions. Its
first transfer into the treasury brought
about condition of affairs in the financial
world which is still remembered. DO bank
ers favor return to these conditions?
But granting that we have te money to
loan to Russia, is it desirable to encourage
the growt hof militarsm and selfis aggran-
dizement whc the lean assuredly would aid
in extending? Do American merchants wish
to see their money used in closing the far
east against their best customers? That is
the underlying cause which prompts Rus
sia to seek loan, and it seems rather incon-
gruous that aid therefor should be sought
from the great transatlantic republic The
United States, fortunately, has held aloof up
to this time from the entanglements of Eu-
ropean diplomacy, but the negotiation of
loan here would drag the nation deeper into
the maestrom of international politics than
might prove comfortable
London Money Market
The Economist says that Notwithstanding
the fact that the market has llenaid to the
bank all the money borrowed, 'the outside
supplies are still sufficiently abundant, and
as the number of bills offering has been
rather limited, discount rates have given
way, till now the quotation for best three
months paper is hardly better than 3-l6
per cent, although 3% per cent is the nom-
nnl quotation. The bank appears to have
been making no effort to control the market,
and seems to have taken back some of the
consols on which it had borrowed Probably
it is reckoning upon regaining control with
out any special effort at the beginning of the
new year, when the revenue payments will
sweep money off the market And between
now and then it hardly likely that rates will
fall lower, because of the increased demand
that always springs up as we approach