New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-12-04
THE FINANCIAL MARKETS.


| there accurate figures showing to what
| extent the United States is indebted to Europe
it may be said that the mounts up into
| scores OF millions.
| While not widely known, IL is nevertheless
/ true that great volume of speculative pur-
| chases OF stocks and bonds that made in
! the New-Yors market being carried under
a direct arrangement with lenders in London
In most instances the method pursued was for
borrowers in New-York. concluding their
gotiations for loans in London, to draw Lon
don for the amounts of the loans. The securi-
ties serving collateral for the loans were at
tached to the drafts, or bills, they are usually
called, and the bills sold in the exchange mar
ket. In this way the borrowers obtained their
money without transmission of funds from
London. Not infrequently the securities serv-
ing as collateral were deposited in trust with
bank or trust company in New-York. and in
their place letters other written authority to
draw London was affixed to the bills. When
this latter plan was adopted the bills were dis
posed of in the exchange market in exactly the
same fashion as the bills accompanied by the
securities The bulk of the European capital
that has been borrowed this year however has
been obtained by dealing with the foreign ex-
change houses in New-York.
A peculiar and possibly significant element
has been injected into the monetary situation by
the forwarding OF gold from New-York to Mex
leo The gold goes to Mexico to pay for Mexi-
can silver pesos or, as they ordinarily des-
ignated Mexican silver dollars The CONNER
ctal value OF silver has risen until the silver in
a Mexican pesos is worth more than its gold rat
ing. There is. therefore, a profit in buying sill
pesos with gold. The pesos are not being
acquired to be melted down into bullion. but to
be shipped to China and other countries in the
East, where they readily pass current money.
| w have x-oI,,o IN
their mnted form than they would have in bars
or ingots. Mexico Is placing itself on gold basis,
and it will derive a special benefit from eff
fux of It's silver pesos and influx Of United
States gold coins which it can rernint into gold
coins Of its own The silver production OF
Mexico is enormous. and that country fur
nish all the silver pesos that may be called for
in exchange for gold. The cause Of the advance
in the price of silver is not altogether clear.
There has been contraction in the worlds
output OF silver but on the contrary. an en-
largement which can hardly have been equalled
by an expansion in the utilization of silver in
the arts. One country after another has aban-
doned silver money standard and thereby
restricted the use of silver as money, and as a
consequence there has been augmentation Of
stocks of silver money to explain increase in |
the demand for and consequent gain in the |
price of the metal. The advance in the price |
or silver may De llOL Is one Oh
changes that come about without visible moving |
cause. There are some financial authorities who |
entertain the idea ttat the rise In silver is to be
ascribed to the enormous addition to the worlds |
output Of gold but this is question upon which |
there would be unanimous agreement, no |
matter how far the discussion of it might pro-
coed.
While the currents of money in the United |
States are somewhat diverse at this iuncture, the
tendency of cash the whole is TO toward |
New-York and the other leading banking points
in the East and the Middle West. and cash
holdings at those places must in the near fut-
assume much larger proportions It has
been demonstrated that there is no shortage in
cash In the United States. All that is required
IS to accomplish a redistribution of the coun-
try's stock of money In a few weeks, at most,
the cash holdings at places where there is the
largest want for money Will be more than am
pie and rates will be established a very low
basis. Certainly soon after the turn of the year
rates have had precipitate fall. for a prodig-
ious amount of money will be released by the
January / disbursements.