The Minneapolis journal., 1905-11-19
WHAT MAKES MONEY
SCARCE

tC1uuy "AoAA 1IO4C Cudu sOiuludry III
terest. 1t was expected to tell the
story of interestArates to come. So
very favorable were the figures that its
is unlikely much more will be heard Of
tight money for the present. The New
York clearing house banks cut down
their loans no less than. $27 ,2O4 900. De-,
posits, it is true, also. fell off proper
tionately, but the reserves increased
$5,343,ooQ. This last item is the most
important. ..f !: sssS% L. @
Last week the fear was sMidespread
that a money stringency was at hand.
and 90 per cent call loans made it look
that way. To for see the trend of money
is not easy at any time, and it is es-
pecially difficult when New Y ork rates
are so unsettled, for so many specula-
tive Interests are favorably or adverse
ly affected, that an opinion, from how
ever. high financial source, very often
reflects only the wish Of the one ex-
pressing it. II J y ~. IS =
A point overlooked, by many is that
the statements are made under clearing
]shouse,: regulation: 3 Had. this been in
! mind, in connection with the known
requirements of the clearing house rule,
the report Of Saturday would not have
Eappeared so bad. Some observers even
took the deficit of $2,428,8O0 to mean
that the banks had violated the law,
by continuing to loan money after legal
i reserves were exhausted. g. AS a matter
of fact the reserves held totaled $16,.
100000. The national banking laws re-
quire reserve of 25 per cent, but there
are seventeen state banks in the clear
ing house membership. Fifteen per cent
is the state requirement. The clearing
house. however, takes the national law
as the basis, and figures its reports
thereupon, and makes the 25 per cent
reserve of gross deposits apply to all.
Hence when the statement went out
that the clearing house banks had
drawn upon their .reserves,,-i it showed
a situation that warranted much con
cern, but had no such serious import
as would a drain below actual legal
requirements. ~:
The Boston sensationalist took ad-
vantage of the moment to issue a. bull
letin, and so the seriousness aofssthe. sit
uation was somewhat magnifed.
Right here the question comes up as
to the legitimacy of the demand for
i money. If a repetition Of high rates
comes later, there is sure to be an ae-
I compartment of critical comment as to
the bad effects of speculation, and the
probability of easy money if Wall street
wolld let up booming stocks and allow
, the country to have the money for legi
innate business purposes.
This is a matter about which it is
not, safe to assume#too much.
Wall street has se-indeed4 been an Of
j fender, in this, respect in many seasons
/ and, since there tis sahe knowledge that
money is often manipulated in the eas
G for ssfectIand something of&a feeling
Of hostility to Wall street exists any
way, the first thought of many observ
+ ers will be- that Wall street should le
: UP" OH it's insistent call for money will
which to carry along stocks and boon
prices, and thus the government woult
; not be- put in the position of being
l asked to help out spectators. This il
, a popular view and one too often justi
! fed, but it does not appear to indicate
/ conservative analysis of the situation
!, at this time. Az. .,.,-..,r .--..',
The ies Of heTJ7o' he r: ashoov
that, with the exception of some stock
in. which particular MISUNDERSTANDING
plans were supposedly under way, an(
!, which moved out Of proportion to tn
: general market, leading issues are. to
e day somewhat under the high point
2 of the year. Moreover, the record
a show that from Oct. 1 to Nov II, thru
r the fluctuations of the day, with occa
9 3 sional sharp advances, and the hig
p records of the few exceptions noted
the undercurrent. has. been. easier, tn
Y general trend rather $lower, 4 Perha PSI;
{. still better. indications is that ef=actI7ai
l. ty., During the fall seasonhaof 1904 tn
l. total business Of the New York Stoc]
;. exchange ran close to 48,0O0,000 shares
|, yet call money did not 60 bove pc
q cent that year, and in this time o
9 heavy trading average ~ to 4 pc
=. cent. or the pefl0d corresponding, l.
9 the present year, the total transaction
e were about 32,00o,ooQ, or approximate
. ly 100000 shares less.
The bond. market transactions Of
r. year ago ran to@almost $3.50 100000 i
Il a seven-week period, and fora CORE
s spending time this year the figures ar
r $140, ,0O0,O00.s> Hence speculation i
Il stocks and sstock-market activity woul
:, scarcely h61d good as the basic reaso
a for the recent squeeze in money. Spec
ulatiye demand Sis one Of the most III
sIportant Influences, at all times, but
5sEis aSsmistake. to attach the high rate
Ito itSthis year. ..E..
S1, The fact.of it is, the country is usin
Ethe moneYin it's business. One has onl
a toElook at&thes statements Of Minneapt
s lis banks published in T. h e Journ a
this week. Figures larger than eve
PIPER ,&sis:s s;Ss:s F; E: bsssi., biss:
!