336 



FINANCIAL KEVIEW OF 1886. 



amounts for interest, and moderately for the 

 calls maturing September 1 and 15, and the 

 banks gradually grew easier, so that they pur- 

 chased paper to a limited extent ; but mainly 

 for the purpose of replacing matured notes. 

 A few were in a condition to offer money at 

 the Stock Exchange, but they exacted good se- 

 curity, and demanded the best average rates. 

 The Secretary of the Treasury issued a call for 

 $15,000,000 on the 15th, and directed that any 

 of the called bonds be paid with interest to 

 the date of presentation, without waiting for 

 the maturity of the call, but, tor reasons above 

 stated, redemptions were comparatively light. 

 One feature toward the close of the month, 

 was a slight flurry at Boston, Providence, and 

 Hartford, caused by defalcations by the Presi- 

 dent of a Portland (Me.) bank, and by the 

 President of the Charter Oak Life-Insurance 

 Company, and of the Union Manufacturing 

 Company. Although in an improved condition 

 as regards reserve, the banks were not dis- 

 posed to be liberal in their offerings of money, 

 as they desired to make preparations for meet- 

 ing the mercantile demand, which was expected 

 from the 1st to the 10th of October. The low- 

 est rate for commercial paper was 6 per cent, 

 and some banks were seeking to make six 

 months time loans on stock collateral at this 

 rate, but borrowers generally declined to make 

 engagements running beyond the end of the 

 year. Early in October, a 10-per-cent. rate on 

 call was recorded, caused by calling in loans, 

 and also by a demand for money on collateral 

 unacceptable to conservative lenders. Borrow- 

 ers with good security had no difficulty in ob- 

 taining funds at 6 per cent., but the speculation 

 in fancy stocks, and the rapid rise in a few 

 specialties, compelled some houses to ask loans 

 on these properties as collateral, and they were 

 required to pay from 7 to 10 per cent. Twice 

 during the month 1 per cent, was recorded, 

 but as the day's demand had then been sup- 

 plied, this rate was not fairly quotable. To- 

 ward the close of the month, the banks became 

 easier, and there was a better inquiry for first- 

 class commercial paper at a minimum rate of 

 5 per cent. One feature was a rise in United 

 States bonds to the best figures ever recorded, 

 caused by a good demand and a very moder- 

 ately supplied market. In the following month, 

 however, there was a sharp fall in these secu- 

 rities, followed by an important rise. It was 

 stated that the purchases by the banks of 4 

 and 44 per cents, with which to replace called 

 bonds were light, and confined to amounts 

 which would satisfy the requirements of the 

 national banking law, and the majority of the 

 banks seemed disposed to reduce their circula- 

 tion rather than pay the current prices for new 

 bonds. One cause for the reduction in the 

 bank reserves was the deposit of money at the 

 sub-treasury in exchange tor new silver certifi- 

 cates, which were largely issued during Octo- 

 ber, and distributed among the banks of the 

 entire country. Early in November, money 



was active on call, partly because of manipula- 

 tion, but mainly in consequence of the demand 

 for loans upon undesirable collateral. Subse- 

 quently, the market became easier, but toward 

 the close of the month the enormous specula- 

 tion at the Stock Exchange, which largely in- 

 creased the inquiry for funds, caused rates to 

 advance, and 20 per cent, was recorded during 

 the last week. The average for the month 

 was from 5 to 7 per cent., according to the 

 collateral offered. The rates for commercial 

 paper at the close were 5 to 6 per cent., 

 for sixty to ninety day indorsed bills receiv- 

 able ; 6 to 7 for four months commission- 

 house names, and 6 to 8 for good single 

 names having four to six months to run. The 

 rate for money on prime stock collateral for 

 four months was 6 per cent. Nearly all the 

 paper taken was bought by out-of-town insti- 

 tutions. Early in the month, the Secretary of 

 the Treasury ordered the payment without re- 

 bate of the interest due December 1, amount- 

 ing to $2,812,500, and with a rebate of 3 per 

 cent, per annum of the interest due January 1, 

 amounting to $9,316,469, making a total of 

 $12,128,969, the object being to relieve the 

 money market. December opened with ac- 

 tivity in loanable funds, caused in great part 

 by the speculation in stocks and staples, and 

 by the demand for loans upon indifferent col- 

 lateral, but, as was the case in the previous 

 month, borrowers with good security were 

 accommodated at an average of about 6| per 

 cent., while others had to pay from 7 to 12, 

 and even more in exceptional cases. On the 

 15th a panicky fall in certain stocks, which 

 had been sharply advanced, caused a calling in 

 of loans by banks and private lenders, the rate 

 for many rose before the close of the day to 

 186 per cent, per annum, and the excitement 

 did not subside so as to permit the market to 

 resume its normal condition until the 17th. 

 Thereafter, for the remainder of the month, 

 money was not unusually active, relief being 

 afforded by Treasury disbursements of inter- 

 est, that due January 1 being ordered paid 

 without rebate, and also by arrivals of gold 

 from Europe. At the beginning of the year, 

 the banks of this city had an average of $89,- 

 721,100 gold. This was increased to $100,212,- 

 200 by the end of January, and after this there 

 was a gradual reduction, mainly due to gold 

 exports, and a drain into the Treasury for cus- 

 toms, so that by July 17 the average amount 

 held was $63,723,700, the minimum of the year. 

 Thereafter, principally through gold imports, 

 the amount was increased to $80,709,700 by 

 November 20. On January 3, the banks held 

 an average of $28,808,200 legal-tender notes, 

 which was increased to $35,882,600 by Febru- 

 ary 13. Then came a reduction to $26,241,100 

 April 3, caused by a drain to the interior. 

 This was followed by a gradual increase to 

 $45,069,000 July 17, when the demand for the 

 country again set in, and by November 6 the 

 amount held was reduced to $16,242,600, the 



