350 



FINANCIAL REVIEW OF 1885. 



The Money Market. The average rate for 

 money on call represented by bankers' balances 

 during the first six months of the year 1885 did 

 not exceed 1 per cent., although in April and 

 May there were occasional loans made at 3 and 

 at 4 per cent., which rates, however, only mo- 

 mentarily prevailed, an abundant supply imme- 

 diately coming upon the market. The rate 

 gradually hardened after July, so that the aver- 

 age was about 1| per cent, until October, when 

 it became 2. In November an average of 2f 

 was reached, and on the 5th of this month the 

 market was manipulated, with a view to its 

 effect upon stocks, so that 10 per cent, was 

 recorded, but the rate at once fell to nor- 

 mal figures. In December this average de- 

 clined to 2 per cent., and the demand for 

 money was easy until toward the close, when 

 the rate averaged 4 per cent. Commercial 

 paper was in light supply throughout nearly 

 the whole of 1885, and the inquiry was in July 

 and August so urgent that very low rates ruled. 

 The extremes were 5 per cent, early in the 

 year to 2 in the summer, for prime, and single 

 names were more freely taken than was the 

 case in 1884, not only because of greater confi- 

 dence in them, but by reason of the urgency 

 in the demand for notes. The scarcity of pa- 

 per was largely due to the fact that goods were 

 to a greater extent than before sold for cash ; 

 and where notes were given the purchasers of 

 the goods were generally able to market them 

 before the maturity of the notes, and therefore 

 this class of paper did not come upon the street. 

 In the absence of home supplies many of our 

 banks sought notes made in interior cities, and 

 obtained satisfactory returns therefrom. The 

 movement of money for crop purposes was 

 comparatively light this year. The early re- 

 ports of serious damage to the winter wheat 

 stimulated the speculation in that cereal to 

 such an extent that the export demand was 

 checked, and producers were disposed to with- 

 hold their surplus until they could determine 

 what would be the result of the spring- wheat 

 crop. Pending the maturity of this class of 

 wheat, the markets were more or less influ- 

 enced first by the unsettled condition of politi- 

 cal affairs abroad, and next by the speculation 

 based upon the actual outcome of winter 

 wheat, so that it was not until early in the 

 fall that the requirements of money for mov- 

 ing the crops became sufficiently urgent to 

 compel the withdrawal by the interior banks 

 of any considerable portion of their balances 

 on deposit in the New York institutions. Even 

 then the movement wag unmsually small, and a 



return flow of money set in toward the end of 

 November. The refusal of the United States 

 Treasurer to permit the exchange of gold for 

 silver certificates, by which, under previous 

 administrations, the transfer of funds to the 

 interior had been greatly facilitated, tended to 

 limit the flow of money to the country, for 

 when bank-notes or legal tenders became 

 scarce gold had to be shipped at unprofitable 

 rates. On the other hand, the withholding of 

 new small legal-tender notes by the Treasury, 

 confining the circulation to those which were 

 mutilated, created such a demand for ones, 

 twos, and fives, from all parts of the country, 

 that our city banks had great difficulty in sup- 

 plying the inquiries of their correspondents, but 

 accommodated them so far as was possible, 

 and this movement will partly account for the 

 shipments in the summer and early fall. The 

 New York banks received comparatively little 

 foreign gold during the year, the condition of 

 exchange not permitting free importations, and 

 their supply was chiefly derived from the Treas- 

 ury through the Clearing- House. Late in Janu- 

 ary it became evident that the relations be- 

 tween the banks and the Treasury Department 

 would soon have to be changed, in case of the 

 inability of the latter to maintain gold and 

 legal- tender payments of its debit balances to 

 the former, and a conference between repre- 

 sentatives of the banks and the Secretary of 

 the Treasury was held with a view to the 

 adoption of some plan which would temporarily 

 at least prevent the disturbance resulting from 

 the enforced payment of any portion of such bal- 

 ances with silver dollars or silver certificates. 

 The Secretaryhad already determined that it was 

 unwise to make a call for bonds, as that would 

 tend to aggravate the trouble by increasing the 

 debit balance of the department. He asked 

 the co-operation of the banks in the efforts to 

 maintain payments on a gold basis, and this aid 

 was promised. Shortly afterward, Jan. 26, the 

 Secretary was placed in a somewhat embar- 

 rassing position by the passage by the House 

 of Representatives of a resolution calling for 

 information as to whether any favoritism was 

 shown the banks of this city in the matter of 

 silver payments. The Clearing-Houses at Bos- 

 ton, Philadelphia, and some of the Western 

 cities had for some time been receiving silver 

 certificates in part payment of balances due by 

 the Treasury, and complaints from some of 

 these banks are understood to have instigated 

 the action of the House Committee on Coinage 

 and Currency. The embarrassments of the 

 Secretary were happily relieved, Feb. 9, by 



