Omaha daily bee., 1902-09-28
LAST WEEK ON WALL STREET
Bank squssIs Of spoOulatou in Stocks
Comes to Natural End.
MONEY SITUATION RIGHTS ITSELF PARTLY
Contraction of Loans by hanks aud
withdrawal of Deposits ny In
~diVIduRIs TO Take Advantage
OF Rates Restores

NEW YORK. Sept. 27.-Heavy liquidation
Of securities has been forced in the stock
market this week by the calling Of loans
by the banks to make up the deficiency
in their reserves revealed by last Satur-
days bank statement. The market steadied
and recovered somewhat In the latter part
Of the week on the hope that the loan
contraction had been carried as far as is
Immediately necessary, and that the offer
Of the secretary G. the treasury to pay now
all the government interest due for the
remainder of the fiscal year, less a rebate
Of "a per cent, and to purchase bonds,
would relieve the money stringency. The
stringency Of the money market was solely
responsible for the weakness OF stocks, AMI
this was in part due to the large require
mnnts for currency and credits which are
an incident Of active business.
Ample warnings have been uttered by all
competent authorities of the conditions
which were precipitated this week, and
the lack Of sufficient resources to carry
through the large speculative commitment
in the market has been clearly foreseen,
without affecting, however, the confidence
Of the speculative contingent that means
of relief would be forthcoming. This con-
tingent has claimed that the United States
- J NStAN w e'NAAa " hAAbAe hAAhAc
relief to the money market; that a rise in
the money rate would Immediately bring
in gold, or that the supply of money In
the country was already so great that the
unusual demand upon New York for money
to move the crops would be RENTED this
year.
Government bonds Scarce.
The fact was ignored that all legal means
80 Eo.,r,gnr ,o,,r,n,,nF F,pd. 20 tba
money market require the security of gov
eminent bonds, and that the available sup
ply Of government bonds has become SC
depleted that the banks are not able to
increase their holdings for the purpose OF
placing them with the government as Sc
curity. The well-advertised fact was also
ignored that the obligations Of American
borrowers to foreign lenders we're already
so great that imports Of gold must be paid
The one point OF view OF the spectators
was that the country is in a condition OF
unexampled prosperity, which promises a
| continued demand and increasing value for
| securities. Powerful combinations OF spec
u~lators, commanding all the way from SIS,
0OO, 900 to $50. 600, 600, according to compe-
tent estimates, have long been engaged in
taking on all the stocks they could carry
with all the money they could borrow.
The cheapness Of call money, pending the
| season OF active demand for funds, slim
ulated this disposition, although this de-
ceptive cheanness was in itself due to the
expectation OF a rise in money rates for
long periods, and the desire of bankers to
keep their reserves in available forms.
Large holdings Of stocks thus taken on
had the effect OF lifting prices of securi-
ties, but they were not taken with the
purpose of permanently holding, but simply
held on margin to feed the more substan-
tial investment demand expected to de-
yelop. So long as the banks left the
credits undisturbed with which the pools
held their stocks, this condition might
have been maintained indefinitely.
Banks Had 20 Call Loans.
The deficit in bank reserves developed
last Saturday and the inability to replenish
1.-THE cash so as to make good the deficiency
left the banks no alternative, but to de-
mand the repayment of loans. The high
money rates which resulted tempted de-
| ~positors of all classes to draw down their
deposits to place them in call leans on thelr
account, instead of accepting the compare
lively meager interest paid by the banks
on deposits. The banks were thus forced
to extend the process Of calling loans and
| lut luuuCl hld wac AANS 'S~ANN
The process Of actual depletion OF reserves
has meantime continued though In dimin
ished degree. The governments customs
returns have continued to run over 81, 900,
600 dollars a day, practically all of whicc
are drawn directly from the New Yorl
banks into the subtreasury and the de
mands from the interior for purposes o
the circulation have continued. Only inter
nal revenue and miscellaneous receipts car
be legally diverted into bank deposits, ant
these are running light.
The stringency OF money has caused SOM
weakness Of foreign exchange. but has no
depressed the rate again to the gold impor
point. 1t has been the experience will
former offers by the Treasury department
to anticipate government interest that the!
brought little response from bondholders. l
is considered improbable that the bank
will put out again Immediately in the stool
market the loans which have been recalled
from there this week. For these reasons