The Montgomery advertiser., 1902-10-05
WALL STREET REVIEW
CONFUSION AND EXCITEMENT
 IN THE MARKET.
Failure of the Conference in Wash. ington to End the Coal Strike Prevented Appearance of
 Expected Recovery.


 confusion and excitement in today's stock market which resulted in last prices at level from 1 to. points lower than last night for most of the prominent active stocks. The failure of the coal confer ence at Washington to effect a settlement prevented the recovery, which would naturally have followed from the refuta- ton of yesterdays false rumors that the Controller of the Currency had overrUled the decision of Secretary Shaw to remit the requirement. upon national banks to maintain p per cent reserve against government deposits. After an active recovery, the market received a second shock from the appearance of the bank statement without change in its form to indicate the reduction in reserve require ments permitted by Secretary Shaw. That IS to say government deposits are still included with the deposits and reserve requirement. estimated as 25 per cent of the total, with the result that a de- crease in the surplus is indicated of Sl,- 4l7,425, bringing down that item to Sl, Sl9,2W. The clearing house commission was long in session before the bank state ment was given out and no statement ac- companied it to show what policy dtc- tated it. foot note to the bank state ment gives the amount of government de- posits with clearing house banks. What ever may be the motives impellng the ac ton of the clearing house, the operators in stocks jumped to the conclusion that for stock market purposes the position of the New York banks is to be regarded as though Secretary Shaw's ruling was not in force. The fact remains that the Secretarys permissive latitude upon the banks is available in case of a determina- ton by the clearing house to change its decision or to relax its rule at it's own dis erection. The marked strength of foreign exchange as a result of the weeks easy money market and the shutting off of any hope of gold imports. or even with some apprehension of possible demand for gold imports, or even with some apprehension To ply Influenced the clear ing house authori- ties. The imperial bank of Germany fol- lowed example of the Bank of England and advanced it's discount rate one per cent today. The Londan StatiSt makes the point that political uneasiness in France is inducing the withdrawals of savings banks deposits, and aggravating the pressure for money, leading to with drawals of French credits placed with foreigners. Banking conditions had be- come such at the opening of the week that considerable loan contraction was imperative, and loans placed in the stock market were called in such large volume as to run the call loan rate up to 8 per cent and precipitate crisis in the stock market. Monday evening the market closed in a state of demoralization and there were grave fears that a panic would ensue on Tuesday. But the next morn- ing the announcement had been made for the drastic measures for the relief of the money situation offered by Secretary
 
 bound in prices of stock which rather more than wiped out the semi-panfc de- cline oI Monday. The nervousness and excitement of the trading decreased from day to day until the market settled down into dullness towards the end of the week. The level of prices had reached about that of last weeks closing and was higher in some cases. So much for the mar ket effect of the important steps taken by the Secretary Of the Treasury. The effect of the money market was equally Uarked but not so prompt. The extreme stringency of the market was relieved and a stop was put to the forced liquidation In the stock market, but rates continued high in all departments. Call loan rates settled down to about an s per cent basis and time loans up to four months com manded a premium over the per cent. legal rate. The conviction emerged that high money rates are likely to be main- tained for the remainder of the year. 1t is felt that a prodigal replacement of the relief fund in stock exchange loans would endanger the situation again and the policy of bankers and large | financial powers has been enough to discourage any renewal ,,, or speculative activity for the present. The steps taken by the Secretary of the Treasury are too well known to need re- equalization. Undoubtedly the most ef- fective was the remission of the require ment upon national banks to maintain 25 per cent cash reserve against govern ment deposits in their vaults, as those deposits are held to be amply secured by the government bonds placed in the GUS tody of the government. As the govern ment deposits in the banks are over $780, 0OO 900 it was estimated that this would release &1OO00O0 or over of cash to the money market. of which over SlO.WO,OW would be in vaults of New York banks. It was estimated from this that a basis would he established for additional cred it's of $15O0OO,0O0. but the present decline upon the banks grows out of the expand ,.Et | 11 ,In fi1rN irh m be met by credits. The crop moving pe- riod brings a large increase in the need for money to pass from hand to hand in the payment of wages and for small lots of farm produce in cash. The with drawal of cash on deposit with the banks for these purposes neceSsitateS a con- traction of loans in the proportion Of $3 for every dollar withdrawn from the of the banks were already placed up to their utmost available limits, this drain upon reserves left no alternative but the drastic loan contraction which was threatening the stability of the financial fabric. As a large need for additional circulation still remains to be met, there is disinclnation on the part of the bankers to put out loans against the newly available cash, upon which fur ther calls may yet be made. The easing of the local money market has also met with a prompt response to the foreign exchange market, showing the large eX- 
 foreign lenders and their. disposition to reduce them. Reports from London, Paris and Berlin indicate that money lenders at those centres are not disposed to extend their credits in New York and further at present and some dissat- isfaction has been express'd with Amer ican loans for collateral. Exhibits of the Bank of England, of France and the Imperial Bank of Germany show that they have lost gold in large amount and have been called on for large amounts of credits. The advance in the Bank of England discount rate from to per cent Is the index of the strengthened con dhlon of the foreign money market and the unwillingness to part with any Of their gold reserves. Next week the final 20 per cent installment on the British consol issue calls for about $25. 1000 in the London money market. The pro- posed Tr9nSvaal loan looms In the per captive aFd is expected to be for S2SO,OO0 600. A Ja. a.ranese loan. a French loan, a Russian loan and loans to various small European governments are in the back ground to prompt conservation of re- sources fin the European centres. Our imports for September were of record proportions. Cotton has gone out quite freely, but the high price of wheat, ow- ing to the September speculation and the slow movement of corn to market has kept down the exports of those staples o,a tba eunpI,, If exchanRe bills to meet