The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1899-11-13
TIGHT MONEY AND THE GOVERN
MENT.

HE present feature in Wall street is the relation
OF the banks to the comparative dearness OF
money, which bids fair to continue Tor some
little time yet. The huancers say that the law
oblges the banks maintain castron reserve under
all circumstances, which prevents them from increas
ing their loans to meet the current expansion OF
trade and are agitating Congressional action in re
gard to the currency with the view the situa
ton 1t has been suggested that the Government
buy 500 100000 in bonds which would Immediately
increase the circulation this amount, but the Gov
eminent retors that whatever strngency exists is not
due to the wise maintenance OF the reserves, but
overspecuiation the part of the public and that it
does not intend to pull any speculative chestnuts out
OF the Wall street fre-and there the matter rests
There is a good deal OF truth on both sides OF the
controversy Both are right to a certain extent. 1t
is true that the banks are hampered in their loans
by their obligation to maintain their legal reserves
for any tyro can see that bank without a sufficient
reserve is bubble liable burst any moment; and
it is equally plain that the circulation should be
arranged that it respond the demands OF trade
whenever occasion requires, else something is apt
to give way. Trade is elastic and expands and
tracts precisely like the mercury in the thermometer
and if it encounters castiron reserve in periods OF
expansion it is unable to find relief where it has the
best right to expect it. In the present the Gov
eminent says that the money market is being art6-
cialy manipulated, and indeed it is charged that par
ties are borrowing large amounts high rates and
then locking up the money which they do not want
to themselves, that nobody else it
By this means great sums are withdrawn from circu
lation and abnormal rates OF interest are maintained
Under these circumstances the Government refuses
to interfere.
Meanwhile trade continues to expand. Wool cot
ton pgiron, hides and leather, boots and shoes and
many minor commodities quoted at further ad-
vance and the end is apparently yet II there is
any financial suffering this outside OF Wall
street it has not yet manifested itself There were
rurilors last week that New York bank was in
trouble, but the clearances for the week showed
gain OF 368 per cent the week in 1903 and
the failures only I57, against last year OF
all the important cities in the country Omaha was
the only one to exhibit loss in cearings, but this
town has been doing this and off for months
Although the New York bank statement for the pre-
vous week showed that the averages of the clearing
house banks were below the legal limit the stock
market was unrufhed and money was comparatively
quiet There some liquidation in stocks along in
the middle OF the week but was supposed to be for
account of those SPECTATORS who had become tired
Of carrying them in the face of high money market
and had no bearing the general prosperity of the
country. At the close OF the week. indeed there was
q moderate rally the covering of shorts and favor
able reports about the money market both good
signs OF inherent strength Perhaps the ease with
which the advances in the great staples were main
tanned by the manufacturers had something to do
with this though there signs that the enormous
demand for goods, which has prevailed all over the
country for year, becoming satisfied though
still more less behind the production The tables
have been turned in this respect for metals which
for months led ali advances, are weakening while
manufactured goods, such textile fabrics, which
Jagged behind distinguished by great firm
and activity. The gross situation, therefore
remains unchanged.
Leading financial and mercantile observers in the
East nothing TO indicate any halt in the countrvs
prosperity for months TO come Barring the tight
Of the money market all conditions point to
further expansion in trade OF course it must come
to halt time, but the end is yet in sight