The record-union., 1899-07-18
A Week of Uneasiness in London
Financial Circles.
The Government Is at Present Using Vast
SuWs Of Money.
Will Not be Surprising if the Bank
Rate Reaches Four Per Cent.
During the Next Week, aud
Some Failures May Follow.

NEW YORK, July 1.-THE Times
London financial correspondent cables.
This has been Il week of furry in the
money market. All anticipations OF
ease have been completely falsified.
and discount houses have been badly
caught. Instead of the market escap-
ing from the grasp of the Bank Of
England, it continues so dependent
that the bank for the last few days
has done nearly all the fine discount
business, the other credit establish
ments being half paralyZed by fright.
No appreciable calming effect has yet
been produced by the advanced rate to
31a per cent. for the Bank of England
is not only discounting at that figure,
but still lending small amounts at Az
per cent.
A variety of causes have been at
work. Political fears engendered by the
Transvaal dispute induce caution, but
that, though it has been blamed, is
not the true source of the existing pres
sure, for such fears usually tend 10
make money easy. If people are not
inclined to use credit, credit cannot
become dear unless holders lock it up,
which they have not yet begun to do.
Credit is really more in demand AMI
more employed than ever because in
ternal trade is active.
1t is otherwise with domestic bus
mess, thanks to the enormous outlay
of the Government on warlike prepara-
tions especially ironclads. All the
dockyards are excessively busy and all
armor-plate works, all blast furnaces
and all engine shops accordingly. The
result has been an unprecedented de-
mand for currency with which to pay
wages and for banking credit in every
branch of business. Nothing proves
this better than the fact that SOW
ereigns are still being dispatched to
Scotland, instead of coming to the
bank. More than the amount of the
new gold bought by the Bank of Eng
land is passing into circulation in this
and other directions. The consequence
is that the London credit market is
unusually pinched for means at the
moment when the demand upon it is
mispk ia. excess of previous experience.
Then, also, we begin to suffer from
the effect of the reckless extrava-
gance of the past few years. and sew
eral minor and one important credit
institution this week have been whis-
pered against, for no discovered rea-
son. Our commitments in support OF
the German bankers are still enor-
nous, and will Chicago please note
that Germany is no nearer quiet times
than before. Each Stock Exchange
settlement that comes round further
more reveals greater depths of involv-
ment in unplaced loans, new company
fol 6,,a isal
spare-rigging commitments. The sight
of this condition of affairs induces the
more observant bankers to exercise
caution and to quietly accumulate a
little cash against contingencies, there
by increasing the strain on the Bank
of England supply.
At all points, therefore, the market
is being pulled upon. and it would not
be surprising to see the bank rate
per cent. next week. The discount
houses are quoting 35s to 3% per cent.
There would be nothing deadly in that
were our market alone rather hard up.
but it might be productive of consd-
cradle mischief from the mere fact
that all markets are alike incapable
of rendering each other assistance. 1t
is strange that in spite of the enor-
nous production of metal, the scram-
BILE between the markets for it should
threaten to become so intense in the
coming autumn as to upset the coach
somewhere.
No failures have been announced,
but there need be no surprise should
some occur. Several small discount
firms competed last month for bills
to arrive in July, until they drove the
rate below 2 per cent, and one house.
at least, contracted to buy Indian bank
bills arriving all through July at Us.
Heavy loss is inevitable from this
source of trading. Then. also, more
than one bad squall has already hap
pened on the continent by which our
market has been hit.