The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1899-12-27
Enormous Imitation of Credits and
Absorption Of Money Not Caused
by Legitimate Business.
MORE TROUBLE AT BOSTON
ASSIGNMENT OF TWO OLD, ALLIED
BUSINESS CONCERNS.
The John II. Lowell Arms Company
and the John p. Lowell Company
in Financial Difficulty.

WASHINGTON, Dec. 26.-Mr. Roberts,
the director of the mint, was asked to-day
as to whether the present monetary strln-
gency, in his opinion, signified an actual
scarcity of money TO meet the present re-
ouirements of trade. He said:
mo possible supply of money can pre-
vent stock exchange panics or periods OF
monetary stringency, because speculation
and rising prices will absorb any possible
increase until the pressure for ready cash
is lust as great on the new plane as it was
upon the old. The cry for more money is as
unappeasable as the demand for more
wealth. A new supply, instead Of satisfying
the demand, stimulates it. Men want mon
ey to buy things with-good things that
they think are going higher. Given easy
money in the banks and we have bankers
encouraging borrowers. AS a result, stocks
go UP and as they go up more people want
to buy and so the demand for money in
creases. You can't furnish money fast
enough to meet the demand of all who
would like to borrow while prices are going
up, nor could all the gold and silver mines
in the world together keep prices going up
forever.
IA marvellous era of increasing money
stocks began in 1850 and started a period
of speculation which ended with a grand
worldwide smash in 1857, when even the
Bank of England had to suspend payment,
without any decline in production, and with
the mints everywhere open to both gold
and silver. The real secret of these reac-
tions is in speculation on margins. These
people who are crying that they have been
forced to throw away their property had
overpaid for their holdings. They borrowed
money on cal, to make small payments,
hoping that a right turn in the market
would give large profits. But in that class
of operations losses come as easily as
profits. That is one OF the conditions of the
game. When they have profits they call it
prosperity, but when. they have losses they
think the country has come to a standstill
and want to know who is to blame. Moth
ing has happened, except that they have
been asked to pay what they owe.
'It is impossible to do away with such
speculation by any increase in the money
supply. If stock selling at 800 per share
has an advance Of $40, the investor who
owns it outright makes but 10 per cent.
while the speculator, who has up only a
margin of $40, makes 100 per cent. That is
the secret of marginal trading.
I'm short, it is not legitimate business
that causes the enormous imitation of cred
it's, multiplieS the bank reserves required,
and thus absorbs any possible money stock.
peculation-greed-will inevitably do it,
and as it is obviously impossible to satisfy
that appetite, it is absurd to point to
tight money market as a proof of an in
sufficient supply of money.
Undoubtedly the war in the Transvaal
has had influence upon our money market.
Anything that disturbs normal conditions,
which turns the currents of business out of
the course they have been expected to fol-
low, will affect business. With trade bal
ances as they are, our bankers early in the
season had reason to expect gold imports
this fall, and probably directed their busi-
ness accordingly. The war has not only cut
off remittance Of about s2,OOOOOO per week
to London from South Africa, but COM
relled heavy shipments the other way.
Such reversal of the regular and antici-
pated order makes money tight in all CEN
ters until the affairs are readjusted to the
new condition.
1.-The world does not depend on the Trans
vaal for it's stock of gold. Colorado will
produce more gold in 1900 than all North
America yielded ten years ago, and this
continent win yield more next year than
the whole world did ten years ago. Cripple
Creek is up to the record of the Transvaal
five years ago, and Cripple Creek, with
Alaska and the Klondike, WILL next year.
exceed the Trarsvaal production of 1897.
The golden tide, though checked for the
moment, is not going to subside''