304 



FINANCIAL REVIEW OF 1890. 



The Money Market. Early in January the 

 market was stringent, owing to the low bank 

 reserves, the surplus being only $1,765,000 on 

 the 4th ; and also to the fact that a Government 

 call for deposits fell due on the 15th. Some of 

 the banks advanced the rate on call to 10 per 

 cent., and a few obtained 25, but these were nota- 

 ble exceptions. .After the first week the rate at 

 the Stock Exchange for bankers' balances fell to 

 2 per cent., averaging 6, and money was easy at 

 an average of 4 per cent, by the close, the banks 

 then showing a surplus reserve of $15,031,650, 

 which was the highest of the year. In February 

 the market was more or less affected by the at- 

 tempt of speculators to get control of the Sixth 

 National Bank, and by the efforts made by the 

 President of the Western National to arrange 

 the affairs of the above-named institution in an 

 equitable way ; but the rate for call money was 

 comparatively easy, although toward the close of 

 the month the chief dependence of brokers at the 

 Stock Exchange was upon bankers' balances, as 

 the bank reserves had been reduced to $3,700,800, 

 while the discount line stood on the 21st at $414,- 

 574,000, the highest of the year, and the deposits 

 on the 8th were $431,599,600, also the maximum 

 of the year. In March bank reserves increased to 

 $4,331,650 by the close, and money was compara- 

 tively easy, moving between 2 and 5 per cent. 

 In April the extremes were 9 and 2, and the 

 tendency was downward; but in May low bank 

 reserves and a good demand made the market 

 active by the middle of the month; but rates 

 grew easier by the close, falling from 11 to 3 per 

 cent. In June the supply of money was good 

 until toward the end, when 10 per cent, was re- 

 corded in consequence of preparations for the 

 July interest and dividend payments. After 

 these were over, in the following month, the 

 rate fell to 2, and the market was affected to- 

 ward the close by purchases of $6,000,000 bonds 

 for the sinking fund by the Treasury Depart- 

 ment on the 24th. In August money was very 

 active, and during the third week 186 per cent, 

 was recorded. The market was affected by gold 

 exports to London, and by a reduction in the 

 bank reserves from $8,959,550 surplus on the 2d 

 to a deficiency of $2,512.975 on the 30th. The 

 Secretary of the Treasury announced on the 22d 

 that he would redeem $20,000,000 4 per cents. 

 on and after Sept. 1, with interest to maturity 

 of the bonds, and this made the tone easier at 

 the close of the month. Sept. 5 money was ad- 

 vanced to 13, and on the 12th to 186 per cent., 

 fears then being entertained that under the 

 operation of the new tariff there would be an 

 urgent demand for money with which to pay 

 duties on goods in bond which would have 

 to be withdrawn from warehouse before the 

 bill went into operation. The Secretary of 

 the Treasury, finding that offerings of 4| per 

 cents, for redemption were comparatively small, 

 sought to relieve the stringency in the mar- 

 ket by offering to pay interest on the 4 per 

 cents, for a year. This failing to afford relief, 

 by reason of the small demand for this inter- 

 est, he decided on the 13th to buy 4-per-cent. 

 bonds. At the same time an amendment to 

 the tariff bill was introduced and subsequently 

 passed extending to Feb. 1, 1891, its operation 

 so far as regarded goods in bond. The Secre- 



tary secured $17,071,150 of 4-per-cent. bonds 

 called for by his notice of the 13th. and payment 

 of $21,617,673.77 for these at once relieved the 

 money market. The rate fell on the 19th to 2 

 per cent., and it was easy to the close of the 

 month. The bank reserves rose from a deficiency 

 of $3,306,925 on the 13th, the lowest of the year, 

 to $12,170,200 by Oct. 4. In this month money 

 was in good supply until the end of the second 

 week, when the bank reserves fell off to a de- 

 ficiency of $349,225 in consequence of a move- 

 ment of currency to the interior for crop pur- 

 poses and also of a drain for customs, and the 

 rate on call rose to 30 per cent., but toward the end 

 of the month money began to return from the 

 interior and the condition of the banks improved. 

 In November money was active until after the, 

 middle of the month, the bank return of the 8th 

 showing a deficiency in reserve of $2,544,250, 

 caused in great part by withdrawals of currency 

 in anticipation of financial troubles which early 

 in the month were seriously threatened, and on 

 the llth 186 per cent, was recorded in conse- 

 quence of the state of semi-panic which resulted 

 from the embarassments of the Bank of North 

 America and of the North River Bank. Con- 

 fidence was partially restored after the 12th by 

 the action of the Clearing House, which decided 

 to issue certificates for the relief of the embar- 

 assed banks, and, aided by these certificates, the 

 Bank of North America was immediately enabled 

 fully to regain its credit. The North River 

 Bank, however, was so seriously embarassed that 

 upon examination it was found that it could not 

 be relieved by the Clearing House, and it was 

 subsequently placed in the hands of a receiver. 

 On the 19th call money temporarily advanced to 

 186 per cent., because of a flurry resulting from 

 the rearrangement of a loan of the North Ameri- 

 can Company, but thereafter for the remainder 

 of the month money on call was comparatively 

 easy. The Bank of North America had by that 

 time returned nearly all the certificates obtained 

 from the Clearing House, but other banks, with 

 a view of getting into a position for the accom- 

 modation of mercantile borrowers, took out cer- 

 tificates, and on the 29th there were outstanding" 

 about $9,000,000 of them. When they were first 

 issued a charge of of 1 per cent, per month 

 commission and 6 per cent, interest was made, 

 but later the commission was waived, and then 

 the demand for them became more liberal. The 

 maximum outstanding was $15,205,000 Dec. 13 ; 

 but thereafter the amount was gradually re- 

 duced to $12,995,000 by the end of the month. 

 Early in December money on call was compara- 

 tively easy, but the bank return of the 6th showed 

 a reduction in reserve to $2,429,650 deficiency, 

 and on the 8th money rose sharply to 186 per 

 cent. The Secretary of the Treasury had on the 

 6th decided to buy $8,000.000 4 per cents., and 

 from the 8th to the 10th he purchased $7,995,- 

 850, disbursing therefor about $9,500,000, and 

 at the same time he bought liberally of silver. 

 Under the influence of these disbursements and 

 also of gold shipments from London, the rate for 

 money fell to 2 per cent., and it was easy there- 

 after to the close of the year, there then being 

 much less than the usual disturbance resulting 

 from preparations for the payment of interest 

 and dividends because bankers were well sup- 



