The Providence news. (Providence [R.I.]) 1891-1906, 1902-09-25
The Present Money Stringsncy
Caused by Needs Of the Crops
A LEADING FINANClER TALKS
Points Out That Shortage Is Not Unusual,
and That Liquidation Seems the
Safest Remedy.

New York, Sept 25.-The causes that
have led TO the present monetary strin-
gency in Wall street-and bear In mind
that this stringency is confined to New
York--are the usual ones which are ac-
tive at this season OF the year. New
York is the financial centre of this coun-
try. said the president of one of Wall
streets largest banks yesterday.
All the available funds of the country
naturally gravitate 10 this centre In nor
NAL times of the year. This is the best
money market. because great enterprises
are usually hoated here, and money com
mands the best average rate here.
The result is that during the greater
part of the year the country banks-and
by this term / mean the banks in the
smaller cities and townsend their idle
funds here TO be loaned on the stock ex
change or wherever there lis a profitable
market for them. 1t is very usual
thing for our small correspondents TO
telegraph or write us such a letter as
this
Please lend $4,000 for us on the stock
exchange at market rates"
Sometimes we are instructed TO lend
this money on time at good stock ex-
change collateral. Now this bank. for
instance. sees no need for this money
until the farmers in Its section desire TO
cut their grain and stack IL and move
IL to market.
MONEY MUST BE RAISED.
Then there becomes necessity in the
community which this bank represents
for actual currency. The farmer does not
pay his hands by check He must have
the actual money TO place In their hands.
The bank must provide itself with these
funds. Therefore. It writes to us:
Please call i'm our $50, 900 and forward
Obeying this instruction. we notify the
broker that he must pay of the loan and
receive back his collateral. IL he can
not make another loan conveniently he
must sell the stock TO raise the money TO
pay us This is called liquidation. and
that Is what took place today.
Now. there is no great financial crisis.
There is plenty OF money in the coun-
try, but IL is not available for stock
speculation at this time. 1t may be six
weeks. may be longer, but business Is
prosperous everywhere. Railroad earn
prises are thriving. The collections OF
merchants are good: manufacturers are
finding ready markets for their goods;
there are few failures. and none expected
in Wall street
Money rates are not abnormal In other
in demand for legitimate enterprises. In
other words. to quote a very excellent
article in The Sunday World Of two weeks
ago:
"There is plenty OF money to meet all
the legitimate demands Of business. There
is none to encourage the over-inhation of
securities"
SECURITIES ovER-INFLATED,
There is no doubt that there has been
an over imitation of securities under con-
ditions now existing. When a stock at
the present market quotations yields less
than a high-class bond there is imitation,
and liquidation must necessarily follow,
because that stock Is selling too high.
There are a number of railroad stocks
which at present market prices yield less
than some gilt-edged bonds.
Now as TO measures for relief. They
are four, as follows:
First. the increase of government de-
posits in the national banks.
Second the increase OF circulation by
the national banks.
Third. gold Importation.
Fourth liquidation.
AS TO the first. Secretary Shaw has
freely offered to increase government de-
posits. which. in the city OF New York
alone. now amount TO sac. .000, 900. when
ever the national banks turn in to him
United States bonds and securities.
The country has been practically
secured for United States bonds The
banks have been able TO produce only
about $1,000. 900 worth. and the govern
ment deposits will be increased 70 that
extent This $40, 600 900. however. will
be scattered throughout the country
Only small proportion of 1t will come
TO New York at this time.
The second remedy Is the taking out OF
additional circulation by the banks.
BANKS DISLIKE THE RISK.
There will be very little increase OF
circulation. for at the present high rate
al which government bonds are selling
few national banks feel that they can
afford 10 take the risks involved I'm buy
ing at these high prices ana taking out
they desire TO retire this circulate tion and
sell the bonds the price OF the bonds
may have declined. and considerable loss
would result TO the bank.
AS TO the third measure OF relief:
Under present conditions OF interna-
tional trade gold does not naturally
that some of the financial institutions or
this country have bought gold.
IL has been purely speculauve trans.
action. IL Is said that within the next
four weeks something like 10000 In
gold will probably come here. Bankers
have bought Il because they can see n
profit In lending AZ at the high money
rates prevailing. but II Is not at present a
natural condition.
The reason for this Is that we nave
not begun 10 ship our crops 10 Europe.
our grain is stlll all being garnered and
shipped TO the primary market. our new
cotton has not been ginned, baled ana
ready for shipnent. This process Is
now taking place In the South and In
the West
That is why money Is needed there and
we are shipping a. BY and by these
crops will reach ports and bills OF .ex-
change will be drawn against the ship
ment abroad. Then you will have healthy
imports of gold because thesc bills have
20 he paid In specie. Then We will have
a relaxation Of the money market here
from natural causes.
LIQUIDATION THE REMEDY.
Liquidation. therefore. remains az The
only effective measure % relief for the
present situation. This Is bound 20
come. The BANKS have. got 70 provide
| their selves with sunNient funds 10
protect their reserves and 10 meet the
demands from the West.
iion. This liquidation Will be gradual,
and think II will cause but little dam
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