The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1902-09-29
TIGHT MONEY'SWORK
STOCK PRICES LOWER AND UN-
SETTLED BECAUSE OF CUR
TAlLMENT OF CREDIT
END OF THE STRINGENCY
is NOT YET IN SIGHT
General Conditions, Aside From the
Money Market Are Excellent-Sue-
qestion That President Roosevelt
Give Some Attention to Currency
Recommendation in the Future
Perhaps Too Strong.
Snecial to The Globe.

Perhaps Too Strong.
Special to The Globe.
NEW YORK, Sept. 2S.-Tight mon
ey eXerted precisely the effect antlcl-
pated upon the stock market. Prices
were unsettled and lower in spite of
strong support and unusually st1mu-
lating influences. A week ago Satur-
day bank loans showed further con-
traction of nearly $12,000,000, making
a shrinkage of about $52,OOO,0OO dur
ing the last five weeks. This is pref
ty stiff curtailment of credit in so short
a period, and it is surprising that it
has been accomplished with so little
inconvenience Thus far there are no
signs of injury as a result of this con-
traction, and if the test continues
without serious consequences in any
quarter it will prove very satisfac-
tory demonstration of financial sound
ness in this market.
The end of the present str1ngency is
not yet in sight, and it would be
hazardous to presume that the worst
had been passed Western crop de-
mands are estimated at between $780,
100000 and $90,000,00 goodly portion
of which falls indirectly upon this mar
ket. Both crop and trade requirements
are Inucn larger lIldu d year dSO, anu
funds sent to the interior for these
purposes will not begin to return for
another four to six weeks, if then.
Further Contraction Likely.
While no anxiety need be
felt at the fact that the banks
are slightly below the legal re-
serve-that margin being ample
for safety, especially in present
conditions of general soundness-it is
evident that we must not be surprised
at further contraction in loans, I'M
less bank reserves are replenished by
larger arrivals of gold than those now
on the way. The latter will afford
only a temporary relief; and, since
money, like any other convenience,
goes where it is most wanted and
commands the best returns, it is proba
BILE. that Europe will have to allow US
the temporary use of part, Of the pres
ent surplus of gold in the big Eu-
ropean banks. Very likely some i'm
portant loans which were to have been
f1oated in the foreign markets this au-
tumn will be postponed until Ameri-
can demands are satisfied.
Unfortunately the situation is much
aggravated by the awkward working
of our treasury and currency systems,
which always fail us in times of emer-
gency and need. Treasury absorp-
lions are after all the most serious
menace in a situation that otherwise
might be self corrective. The treas
ury continues to take it's funds more
rapidly than 1t can return them. The
very same trade activity that causes a
large demand for money is stimulat-
Ing imports of foreign commodities
upon which the tariff exacts a large
revenue.
Obsolete Financial Machinery.
Legislation cannot Immediately re-
adjust revenue and expenditures; so
the process goes on, and our cumber-
some, obsolete fiscal machinery is kept
running by all sorts of devices and
eXpedients with no serious thought Of
adopting in its place the most mod
ern and scientific methods. At present
we are having a plain object lesson on
the necessity of a moderniZation of the
United States treasury laws. Secre-
tary Shaw has exhausted every re-
course in his power to offset treasury
arrangements, and they amount to lit
tie compared with the relief coming
from natural sources. 1t is not yet
sufficiently understood in the United
States that all enlightened govern
ments, except our own, have with
drawn from the banking business,
leaving the duty of issuing currency
to the banks, whose interests, as well
as those of the public, lie in having
the supply Of currency rise and fall
In accordance with the demand and
thus avoiding extremes of redundancy
in times Of Stagnation and stringency
In times of activity
1t should be fairly recognized that
speculative interests are not suffering
by the present stringency; they can
readily wait for suitable opportunities;
in fact high rates for money can easily
be made to play into their hands by
forcing stocks out Of weak and timid
holders.
Those Who Suffer Most.
The real sufferers from these ex-
tremeS in the money market are the
merchants and the small AGRICULTURAL
borrowers scattered all over the coun-
try away from Wall street; the big
borrowers and spectators usually
having provided themselves against
such contingencies. Our popular and
universally respected president would
do we'll to give some Of his attention
to currency reform as we'll as to trusts
and tariff 1t cannot be forgotten that
currency reform is an inseparable part
of the sound money campaign upon
which President Mckinley twice rode
to victory.
By some short sighted individuals it
is supposed to be good politics to delay
action, so that the issue may be avail
able for third campaign. If, how.
ever, during the interim q monetary
panic should develop, what then would
happen to those who played political
football with one Of the most vital
and delicate issues of the day? And
If the present currency system works
so badly at a time when confidence is
~
work under reversed situations?
General conditions affecting the
stock market are unchanged. Business
prospects are excellent, railroad earn
lngs continue large, and it Is certain
that the roads will be taxed to their
fullest capacity in handling freight for
another six months. Already there
are fears Of serious car famine.
Great Demand for Iron.
No abatement is shown in the gen
eral demand for iron. Home furnaces
cannot supply the demand and orders
for about $4,000 tons steel billets and
100000 tons pig iron are being placed
in English and German markets; while
over $4,000 tons of foundry iron have
already been imported into this coun-
try. Here and there signs of reaction
can be detected, and the horizon is
not cloudless by any means; but
thanks to a good harvest, the outlook
is satisfactory far beyond what any
human Judgment could have foretoId
three months ago.
Confidence in the future Is running
strong; too strong, perhaps, for entire
safety. for the chief danger now lies
in the excuses which inevitably ac-
company a period of prolonged pros
perity. Were it not for the restraint
of tight money, we should now prob
ahlIr hn In thu lnnidct Of LIZ.