302 



FINANCIAL REVIEW OF 1890. 



of the previous year to France and the Argentine 

 Republic. The* bank minimum was advanced to 

 6 per cent. Jan. 1, and it is not surprising that, 

 with a further export to France and to South 

 America threatening that the situation became 

 grave soon after the beginning of the year. The 

 news from Buenos Ayres was disquieting ; there 

 was an unsettled state of political affairs in Por- 

 tugal and in Spain, and business on the principal 

 exchanges was depressed, Toward the close of 

 the month the arrival of 1,000,000 gold from 

 St. Petersburg, the result of a negotiation by the 

 Barings, gave some relief, but this was followed 

 by an export of gold to South America, and the 

 uneasy feeling which this movement caused was 

 intensified by the fear that gold would be sent to 

 Paris in consequence of the negotiations for the 

 new French loan. It was not until after the mid- 

 dle of February that the tension was relaxed, and 

 on the 19th the Bank of England rate was reduced 

 to 5 per cent. Then labor troubles on the Conti- 

 nent and in England tended to depress trade, 

 and by the close of February a fall in Argentines, 

 due to the political crisis in Buenos Ayres and 

 also to the dissolution of a syndicate formed to 

 underwrite the conversion loan of the Republic, 

 had an unsettling effect. March 12 the bank rate 

 * was reduced to 4, and on the 19th to 4 per cent. ; 

 and then the bank held 24,252,365 bullion, and it 

 was in so strong a position that less anxiety was 

 felt although there were indications of a movement 

 not only to South America but to Berlin, where 

 the bourse was in a critical condition, owing to 

 overspeculation. The resignation of Prince Bis- 

 marck caused a flurry in the London and Conti- 

 nental markets toward the end of March, but 

 the excitement soon subsided. The Argentine 

 crisis was grave early in April, and it had an un- 

 settling effect upon the London market, for it 

 was well known that the Barings and financial 

 houses on the Continent were heavily loaded with 

 securities of the Confederation which they had 

 been unable to sell, and it was feared that the 

 decline in the market value would embarrass 

 them. But this feeling was not reflected by the 

 Bank of England, for on the 10th the rate of dis- 

 count was reduced to 3| and on the 17th to 3 per 

 cent, and then the bank held 23,503,178 bull- 

 ion. Speculation on the London Exchange was 

 dull, and about the only feature was the shipment 

 to New York of large amounts of American se- 

 curities, but toward the close of the month the 

 trading in these properties grew active, and 

 there was extensive rebuying of them, stimu- 

 lated by the outlook for the passage of a silver 

 bill by Congress. Early in May it was evident 

 that the Argentine Republic would require large 

 amounts of gold, but the fear of this withdrawal 

 seemed to be counteracted by the advancing ten- 

 dency of all silver properties dealt in on the Lon- 

 don Exchange, and the market was active and 

 strong for the remainder of the month, Among 

 the important financial negotiations was one by 

 the Barings to rehabilitate Italian credit, and the 

 Rothschilds arranged for a loan to Spain. Money 

 was then cheap at all the principal centers, specu- 

 lation was encouraged, and there was a decided 

 advance in copper and in silver, the latter stimu- 

 lated by a rise in the price in New York. Dur- 

 ing the first Tveek of June an Egyptian loan for 

 30,000,000 was brought out by the Rothschilds 



and the securities of all foreign governments 

 were strong. Suddenly money grew stringent in 

 London, caused by the gravity of the political 

 and financial crisis at Buenos Ayres and also by 

 the failure of a heavy speculator on the London 

 market in American securities. On the 25th the 

 Bank of England rate was advanced to 4 per 

 cent., the stock of bullion having been reduced 

 to 21,573,307, and it was feared that gold would 

 be sent to Berlin for account of Russia to repay 

 the 2,000,000 sent from St. Petersburg to Lon- 

 don in the fall of 1889. Early in July the Ar- 

 gentine National Bank suspended payment of 

 interim dividends, and this had a depressing 

 effect upon Argentine securities in London and 

 on the Continent. On the 30th the Bank of 

 England rate was raised to 5 per cent, on news 

 of the financial panic in Buenos Ayres and Mon- 

 tevideo, which caused an advance in the premium 

 on gold to 220 per cent. Heavy selling of South 

 American securities followed, and the feeling on 

 the London Exchange was at times panicky. 

 The passage of the Silver bill by our Congress 

 brought about another rise in the price of the 

 metal in London, but it did not greatly stimu- 

 late rebuying of Americans. Toward the close 

 of the month there was a more confident feeling, 

 due to the receipt of gold from New York, but 

 at the same time there was a movement of gold 

 from London to Lisbon and Argentines con- 

 tinued feverish. Early in August news of the 

 resignation of President Celman of the Argen- 

 tine Republic had a reassuring effect. The open 

 market rate in London fell on the receipt of 

 more gold from New York, and speculation in 

 silver was encouraged by the signing of the Sil- 

 ver bill by President Harrison. At that time, 

 however, there were fears that the great houses 

 which were committed to Argentine finances 

 would be seriously compromised by the shrink- 

 age in these securities. On the 20th the Bank 

 of England reduced its rate to 4 per cent., al- 

 though then the demands from Spain, South 

 America, Egypt, Portugal, and other countries 

 were expected to be large. The lowering of the 

 bank rate stimulated speculation in London ; 

 there was an improvement in Argentines on the 

 belief that the crisis was over and the tone of 

 all the European markets was strong at the close 

 of the month and early in September. About 

 the middle of that month, however, shipments 

 of gold to South America made the markets 

 stagnant, and there were fears of a movement of 

 the metal to New York in consequence of the 

 stringent money market at that center, but these 

 fears were allayed by news of large purchases of 

 bonds by the Secretary of the Treasury. Oct. 

 1, the Bank of England rate was raised to 5 per 

 cent. ; there was an urgent demand for gold for 

 Portugal, Brazil, and Egypt, and the stock mar- 

 ket grew feverish with wide fluctuations in sil- 

 ver as the feature. Failures in the South Ameri- 

 can trade, bank suspensions in south Africa, and 

 the lock-out of the iron men in Scotland com- 

 bined to cause an uneasy feeling for the' remain- 

 der of the month. Early in October the Ameri- 

 can branch of the London Exchange was depressed 

 by rumors that large houses trading in these se- 

 curities were embarrassed, and at the first semi- 

 monthly settlement one house had to be assisted 

 over. About the middle of the month there were 



