Omaha daily bee., 1899-11-21
NO RISE IN DISCOUNT RATE
Action of Secretary Gage in Buying Bonds
Affects English Market,
INDIA HEADING TOWARD BANKRUPTCY
London Correspondent Calls Attcn-
tIon to had Finnncicring-Con-
tincnt UnIonds Its BUR-
den Upon London.

NEW YORK, Nov 2O-The London fnan-
cial correspondent of the Times cables: Last
week was much quieter in the credit mar
ket than had been anticipated. For reasons
explained in my last letter, everybody feared
large applications at the Bank of England
on Wednesday, and not one took place On
Tuesday few loans were taken, but from
fright, not necessity.
Various causes induced the market to
miscalculate. Fewer treasury bills were
bought by bill brokers than had been esti-
mated, Japan and the national debt office
taking perhaps half of the G3,000,0 900 issued
between them, and, a more potent influence
STILL the Bank of England paid money out
instead of drawing II In. We all calculated
that by the middle of the month its enor-
nous bill case must be in process of empty
ing and beginning to deplete the open mar
ket credits and forgot that in order 20
ensure these bills it HAD irst to borrow
heavily from the market on stock. Last week
It's repayments OF these loans gave to the
open market nearly 100000 more than the
bank had to receive on bills becoming pay
able. Accordingly time loans in the discount
market never rose above per cent, and
were usually SR to S% per cent. In its
nervousness about money and in fear of a
drop in New York, the exchange market had
worked discount to AS per cent, but in the
last three daye of the week it fell back
rapidly and finished yesterday at 4% per
cent.
Money rates always in the long run govern
discounts, but the drop would not have been
SO rapid but for the action of Secretary Gage
in buying bonds, and the consequent recovery
of your exchange. Still, we are not nearly
out of the woods, and the moment the mar
ket dips to a point that allows the continent
to draw gold we shall have another tug up
ward and another fright.
And at just time when we require all
our gold the India council steps in as
buyer on the fantastic plan l secuted last
week. The Bank of England kept mum by
order until Thursday, when all the press
reporters were ushered in and told that the
government of India had begun the accumu
lation OF a gold reserve here, in order to
assure fixed value to the silver rupee. AL
ready C ISL 900 had been accumulated.
Driving Toward bankruptcy.
How Is it done? BY the process of con-
Quoting India toward bankruptcy. The cir
culation of the silver rupees Is restricted in
India through the stoppage of the mints, |
and as revenue payments accumulate cur
rency in the government treasures, bankers
and merchants are compelled to buy India |
council drafts in London with which to pro-
cure currency from the government stocks |
in India. This forces exchange up and |
creates an artificial demand for the means
OF remittance. portion Of the proceeds of |
these sales is now to be invested in gold |
kept apart by the Bank of England.
All the time, except when retrieved by loans |
aieol tr 7 i,h
are much in excess of the trade balance in
favor of the peninsula. Therefore, the ulti-
mate consequence of this gold boarding de-
vice must be another sterling Indian loan.
To have tried such plan now when the war
expenditure of the home government is sure
to place great strain on our market, when
G 10000 month of our gold supply has
been cut off for an indefinite period, and |
when every market in Europe, great and
small, has a wolfsh hunger for the metal
as support for its laboring credit machn-
cry, is a striking illustration of the wisdom
of our Indian bureaucrats. Persisted in, the
boarding by a government which cannot one
year after another pay its way, might be
just that last straw necessary to drive the
bank rate to 6 per cent.
At the moment the tension has family
in Germany and France but must
come again almost Immediately in Germany
at least. Months ago | told you that the
German bankers had shifted the burden of
the Russian trade partly on London
by discounting their own paper here for the
means to hold the Russian commercial paper.
This operation is becoming increasingly diff
cult and at the same time Russian require
nents are growing more urgent; therefore,
renewed stringency in the Berlin market is
probable at early date
France, on the other hand, may hold on
onger without A per cent bank rate, thanks
partly to the apparent strength of the pres
ent ministry. Its financiers have also con-
rived to shift portion of their loads of
he Spanish bonds to Berlin and Frankfort
md have sold enormous quantities of African
shares in London, thus making themselves
more comfortable.
Our domestic trade is still splendid, but,
hough wheat is cheaper bread is rising ,
md most things else. The government is {
,aying 10 shillings ton for steam coal.