The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1899-10-02
English Financial Circles Are
Badly Frightened.
Gold is Leaving the Country in
Large Amounts.
THEY CAN'T STOP 1T.
Dread of Consequences May Pre-
vent a War.
America Has Power to Precipi-
tate a Panic.

New York, Oct. 2-The Times London
financial correspondent cables:
Last week was one of great. tension
and excitement destructive to business
Even the money market was in a con-
dition of suspended animation and the
Bank of England all the week did the
cream of the discount business. Until
Friday the open market worked at s5s
per cent, taking 80 days bills at that
rate but quoting 3$l and per cent te
foreign correspondents for bills coming
forward. An advance in the bank rate
to per cent was fully expected on
Thursday. When no change was made
the position did not improve, but grew
worse, for the bank statement was
weak The market had drawn &1.500, 600
from the bank by bills of discount and
the whole of this save s63.00O had dis
appeared either into active circulation
or worse still in gold exported.
And still gold flows away. More than
G2,000000 have already gone to the
Cape and the real surplus in metal over
liability notes in circulation is now un-
der 5000, 000 The bank itself refused to
work below 33z to per cent on Friday.
and Saturday did nothing under per
cent, charging per cent for loans. The
open market accordingly quoted to
Az per cent for 80 day remitted bills,
and did little business. The hope is ex-
pressed that gold may come back from
the provinces this week. but the proba-
bility of that is small. The tension how
ever is sure to be less in the loan mar
ket because banks are now calling in
loans to make a show of strength in
their monthly balance sheets.
Here is a crude statement of our posi-
ton Under an antiquated banking sys-
tenn provincial English, Scotch and r.
ish banks all issue notes on their credit
alone. They are not bound even to hold
government stock against a fixed lsgat
issue. The aggregate of these uncover
ed issues is about 81O.00 900 and the
banks enjoying them are only obliged
to keep gold against notes issued IN eX-
cess of their statutory limits The Eng
lish banks never reach that limit; the
Scotch and Irish are always above it.
The Bank Of England stock of gold
therefore is really about e2,00o,0O0 short
now of the amount required to cover the
fduciary note circulation Of the three
kingdoms. There is no real danger in
the position as long as the public is not
frightened by rapid exports of gold
but given active fears, notes could not
be met, and suspension of specie pay
ment looms in view.
1t is necessary to insist on this point
in order to warn your bankers that we
cannot now spare gold from the Bank
of England. Should a South African
war come, as is almost certain, all we
can spare or Scrape would be required
for it and should other foreign demands
spring upon us credit smash is almost
a matter of days
Dread of this smash alone can now
prevent war. All our resources are fully
engaged in industry and commerce., IN
sustaining credit in India and the col
onies. in financing Japan and Egypt
and in innumerable other directions.
Abstract capital for war purposes
and the entire machine is liable to be-
come deranged with disastrous results.
Already the TransVaal government has
intimated that it will keep the gold
produced from the mines until the war
is over, all except the amounts minted
for expenses-an ominous notice our
thoughtful bankers not in the majority
I regret to say have been alarmed at
the prospect for some time, and one or.
two have begun to collect private
stocks of SovereignS. These are too
slender as yet to do much to stave or
confusion should export proceed and
new supplies of metal cease Your banl-
ers therefore would do well to restrict
their demands to consignments procure
able from bullion dealers
The stock exchange remains deserted
by all except those who must buy or
sell, such as insurance companies. trus-
tees, etc, but the position seems strong,
and large failures are said to be inn
probable. Speculative accounts, low
ever, are not now all carried in the
market as formerly, but largely by the
banks, so the real position is hard te
guess. The only pcint certain is that
business is stopped. Even Paris is be-
coming afraid. General trade has not
yet begun to suffer appreciably from
the uneasiness. Stimulated by enor-
nous government orders, the iron and
steel trades are buster than ever, and
orders for ships for the mercantile
marine are also excellent In other
directions we have been less favored
The trade returns for September viii
probably exhibit a serious further
shrinkage in South African business
and trade with most parts of the con-
tinent as we'll as with Australia
French finances are again exciting
comment. The budget for 1900 exceeds
140, 000, 600 pounds. The expenditure the
year before the war with Germany was
only 75 600, 900 and the population is only
a little larger now than then. In France
as in Spain the military caste dominates
| and imposes it's demands on the nation