The San Francisco call., 1899-09-22
Ne1u York Money Market.

The New York circular Of Henry Clews says:
I'VE cannot be certain that anything now
remains to cur credit of the large balance
arising from our extra ordinary surplus Of ex
ports over imports; the contrary, there are
Indications that the return of securities
has about liquidated that balance, and we
have for some time been closely verging upon
the possibility Of an outflow of gold 10 Eu-
rope.
While these external possibilities confront
Us the condition OF the home money market
is not assuring. The extraordinary revival Of
business has caused a corresponding expan-
sion OF bank loans and has at the same time
increased the demand for currency in the
retail circulation. With a banking system
that indirectly compels the banks to augment
their stocks of lawful money in proportion
as they extend their loans we are brought
face TO face with an acute scarcity in the
circulating medium The universal employ
ment OF the working classes at rising rates of
wages, the increased holdings Of cash among
country retailers, and the rapid rise In the
prices of goods have conformity produced
necessity for expansion of the volume Of
money; and this need makes Itself felt at
the moment when the banks Of the interior
are drawing their deposits from the metro
politan banks in order to facilitate the mar
keting of large crops of cotton and cereals.
Unfortunately. we have no effective resource
for increasing the amount of the money cir
Culation in order to satisfy these necessities;
and the result appears in a reduction OF the
cash reserves Of the New York banks to close
way IN the usual fall efhux Of money to the
agricultural sections.
This Is not promising situation: Un1 n
things IN which the national prosperity threat
ems to be seriously crippled through the legal
restraints upon our banks and by the in
elasticity of our currency arrangements. Had
our laws relating to note circulation been
such as to admit OF an expansion of bank is
sues proportioned TO the wants of the crop
movement, there need have been none of the
draining OF the lawful money reserves of the
tI11,g &c
and the compulsory contraction of loans and
the stringency in money and the exhaustion
of the reserves would have been easily avoid
able At its coming session Congress may
find reason enough in the present situation
for far more thorough measures OF currency
and banking reform than appear TO be enter
tained by members claiming to be leaders in
financial reconstruction.
What however most concerns Wall street
at the moment is not so much that we are
confronting a Theoretically faulty system of
finance as that we stand face to face with
a delicate and difficult financial situation
Two millions Of surplus reserve and to 3
per cent for call loans at the middle of Sep
tember are ugly and dsquieting facts. The
situation comes so near 70 deadlock that
there must be some yielding somewhere in
would be INDUCING a frail hope 70 expect ef-
fectual relief from importatiOns of gold. The
situation OF the foreign exchanges hardly sug-
gests such a probability. A fall in the prices
OF securities, or cotton, cereals might so
stimulate exports to bring exchange to the
gold importing point; but who would desire to
see gold procured at such a cost? and relief
could not come from such a source until It
Uas TOO late 70 he Of much service Nor
Is It possible for the Secretary Of the Treasury
TO afford any help to the situation beyond
prepaying some $5,6o0,OO0 OF interest due of
the first of October; which though a rela-
lively small palliative, would be valuable
mid under the circumstances. Much, however,
may be hoped from the resourceful expedients
of the banks which were never stronger or
more effectively administered than to-day. The
hedgling corporations which. pending the re-
cent extreme ease in money, obtained a GER
tain recognition among lenders, must expect
10 take care of themselves; and the relief from
that resource TO borrowers more entitled to
consideration may prove TO be quite import
ant.
not warrant alarm