The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1902-09-21
BANK STATEMENT
SHOWS SHORTAGE
As Result Stock Market Meets
an Acute Problem
LOSSES WERE NOT SEVERE
Situation In Money Market Has oomi-
mated Speculation In Stock for
Week-Iron Market Is Ex-
traoreinarly Active.
LOSSES WERE NOT SEVERE

New York. September 20.-The stock
market was thrown into an acute stage
today by the disclosure of the bank state
ment that the reserve of the clearing
house banks were s1.642O5O below the
legal requirements. This was in spite of
the contraction of the loan account of
s11,9e4,5OO. the shrinkage In the cash hold
ing having reached $780, 700, as against
preliminary estimates of less than s4,-
100000. An active selling movement fol-
lowed the appearance of the statement.
which effectually wiped out the previous
gains which had been established under
the leadership of an aggressive advance
of ~ on large buying of st. Paul.
There was no appearance of urgency
demands In the selling. and the losses es-
fablished were not severe The market
closed distinctly easy, with no effective
rally from the decline beyond the cover
ing demand of the room traders. who
took quick profits on the decline. The last
time when a difficulty developed in the
reserves of the New York banks was
for the week ending November 4, 1893.
The reserves continued at a deficit for
several weeks, following in spite of large
loan contraction, the deficit reaching ST.
sSS,95O on November Ii and disappearing
on November % as a result of the relief
afforded by the offer of Secretary Gage
to purchase $25 900 per cent and 4s
of 1907. This was the period of the first
large fiotation of industrials and the over
speculation which had occurred in them
left the stock vulnerable to the influence
Of he f4er1,A
December. Further loan contraction is
clearly indicated by the present eondi-
tons of the banks.
The situation and outlook In the money
market have dominated the speculation
in stocks throughout the week. Losses
have not been severe at any time and the
early declines were largely recovered to-
wards the end of the week as the rates
for call loans at the stock exchange
showed a steadier tendency. But there
was no revival of the animation which
characterized the speculation. Up to then
1t was interrupted by the money squeezes
and only a few stocks showed any con-
siderable activity, even after the relation
In the stringency of the money market.
1t Is probable that the restraint of the
speculation had much to do with the
quiet tone of the money market, although
some relief which was afforded from the
process of depletion of New York bank
ing reserves without, however. entirely
arresting it.
Extraordinary activity continues in the
iron market, the production and the
making of contracts being limited only
by the supply of material both domestic
and imported, the domestic supply still
suffering from shortage of fuel The
iron and steel stocks quite generally ad-
vanced and various other industrials re-
Elected the favorable conditions in their
special trades. The tight condition of
the money market and the danger thereof
of future flurries was the only apparent
drawback to the advancing of stocks
With unusually large crops to be
moved, a condition of expended credits,
the country over and the foreign ex-
change situation complicated by the
heavy decrease in exports due to last
years crop shortage and large foreign
borrowings made in anticipation of a sus-
stained export trade. the situation is
still further aggravated by the unexpect-
eddy large customs collections and the
approximate exhaustion of the available
means for releasing the governments
surplus revenues to the market Since
July 10 the government has collected
over six millions of dollars more for
customs than in the corresponding period
last year, which is several millions more
than the reduction in the international
J. It is only by reason of an increase
of over SIG, 100000 in the government ex-
penditures with current surplus has been
reduced about one-third, but payments
for customs duties are made almost ex-
clusively in New York and made daily
drain on New York bank reserves.
The offer to pay the October l govern
ment interest has resulted in the dis
bursement of less than two million dol
lars to the New York money market.
Free government bonds held by national
banks have been used to the extent of
over 100000 900 as securities for increase
Of government deposits with banks prac-
hcally none of this has gone into New
York banks
The payments to the New York SUBJ
treasury on account of customs and de-
posits with that institution of currency
for telegraphic transfer to the interior
have largely exhausted the disbursement
of government interest so that bank re-
serves have not enjoyed any actual re-
cuperation from that source. The FEAST
bility of additional measures of relief
nv the treasury department have been
actively discussed during the week In
Wall street but none has been found
which meets the approval of the secre-
tary of the treasury. The per cent money
rate on Monday sent the sterling ex-
change rate down a point, which made
possible the engagement of gold for i'm
port to the extent of $3,5Oo,0O in London
or to transit to that point. Shipments
from Australia made this week or before
being the total gold bound for this point
10 about So, 00000 due to arrive in the
next three weeks The future condition
Of the local market 1t is believed. will
turn upon the additional amounts of for
eign gold which can be secured on profit
able terms for shipments to New York.
Bankers agree. however that with the
additional interior requirements for cur
rency still to be met there is a probability
of tight money in New York for several
weeks to come.
Bonds have been dull and irregular in
sympathy with stocks. United States IS
advanced 4, new as Y. the IS y, the 2s
and the old As IA per cent as compared
with the closing of last week.