FINANCIAL REVIEW OF 1898. 



800 



was on i ic -l.-il Nov. 1. The Boston, Pittsburg, 

 Philadelphia, and some Southern clearing Inm-rs 

 also isstifil cert ilicatt's in nmdi-iale amounts, tint 

 tli.'ii^li (lit- Chicago hunks drew heavily upon 

 \ ork, the Clearing House of that city per- 

 M-ti'iitly refused to issue certificates. The sur- 

 plus reserve of the New York banks, Jan. 7, was 

 . i:.o, and on the 28th it was $28,148,800. 

 Then there was a gradual fall to $4,643,275, 

 March 1, followed by a rise to $25,489,925, May 

 27. From that point the fall was comparatively 

 rapid to $l(i,5-4r>.:{?r) deficiency, Aug. 12, making 

 a loss of $41,985,300 in eleven weeks. By Sept. 9 

 the surplus was $2,966,375, influenced "by a re- 

 turn flow of currency from the interior and by 

 imports of gold from Europe, and on Oct. 21 the 

 surplus was $42,640,775, a gain of $59,186,150 

 in reserve compared with the low point on Aug. 

 12, a period of ten weeks, and this was mainly the 

 result of receipts of currency from the interior 

 and of large payments in gold by the Sub-Treas- 

 ury of deoit balances at the Clearing House, 

 which together increased the cash holdings of 

 the banks by $71,557,000, while the deposits were 

 augmented during this period only $49.465,400, 

 but loans were reduced from $411,795,700. Aug. 

 12, to $392,145,600, Sept. 28, and it was not until 

 the retirement of loan certificates became rapid 

 that loans were increased. The surplus reserve 

 of the banks was steadily augmented during the 

 last quarter of the year, and at the close it was 

 $80,815,150. 



In January money on call opened at 7 per 

 cent, gradually falling to 2 by the 21st, and it 

 closed at 2^. T^ime money was in fair demand at 

 5 per cent, early in the month, but it was freely 

 offered at 4 for thirty to sixty days by the 15th. 

 Indorsed commercial paper ruled at 5^ to 5f per 

 cent, at the beginning and at 4f to 5 at the end 

 of January. Early in February the New York 

 and Boston banks made liberal exchanges of gold 

 at the sub-treasuries in those cities for legal-ten- 

 der notes, the object being to enable the Treas- 

 ury to meet the drain of gold to Europe without 

 encroaching upon the $100,000,000 of reserve, 

 and about $8.000,000 gold was turned over to 

 the Treasury by the New York banks alone. 

 Money on call at the Stock Exchange loaned at 

 2 per cent, early in the month, irregularly ad- 

 vancing to 12 by the 20th in consequence of ap- 

 prehensions of trouble arising from the refusal of 

 the Treasury Department to issue bonds with 

 which to procure gold for the reserve fund, but 

 by the end of the month the rate fell to 3. Time 

 money on stock collateral advanced from 3$ to 4 

 per cent, for thirty to sixty days to 6 for all dates 

 by the close, and lenders discriminated against 

 industrial securities. The city banks were out 

 of the market for commercial paper during near- 

 ly the entire month, and rates were 5 to 5| per 

 cent, for indorsed names. In March money on 

 call was active, loaning at 12 per cent, on the 3d 

 and at 60 on the 13th, in consequence of a de- 

 mand for currency from the interior banks, 

 who were fortifying themselves against a possi- 

 ble crisis. Then came a supply from the pro- 

 ceeds of exchange loan bills, and a return of some 

 money from the West and from parties who had 

 locked it up for speculative purposes, and on the 

 21st loans were made as low as 1| per cent. 

 There was a more confident feeling resulting 



from an advance in the Treasury net gold from 

 $100,982,410 on the 9th to $107,109,968 by the 



'Jut h. On the 80th there was a ri>e in call money 

 to 25 per cent., due to calling of loans prepara- 

 tory to the April settlements. After the middle 

 of the month time loans were 6 per cent, for all 

 dates, and indorsed commercial paper was nom- 

 inally 6 per cent., with little doing. There was 

 a very close approach to a currency crisis in 

 April. Gold moved to Europe in moderately 

 large amounts, reducing the net gold in the 

 Treasury, and on the 17tn it was announced that 

 this balance was $100,040,000. On the afternoon 

 of that day there was a rumor that the Secretary 

 of the Treasury had decided to regard the re- 

 serve of $100.000,000 as exclusively for the re- 

 demption of legal tenders, and that when this 

 reserve was encroached upon the option under 

 the law of July 14, 1890, of paying silver for 

 Treasury notes issued by virtue of that act, 

 would be exercised. The Secretary had on the 

 15th directed the suspension of the issue of gold 

 certificates, and foreign bankers who were under 

 engagement to ship gold were apprehensive 

 that when they wanted the metal it would be 

 refused unless they presented gold notes or legal 

 tenders. Exchange at once advanced to above 

 the normal gold-exporting point, and bankers ar- 

 ranged to ship gold on the 24th and 25th, and 

 Canadian bankers began to withdraw their bal- 

 ances. All the markets were excited until, on 

 presentation by a foreign banker of Treasury 

 notes of 1890 and his receipt of gold therefor, 

 it was shown that there had been no change in 

 the department's policy, and it was asserted that 

 no change would be made. This was confirmed 

 on the 24th by a statement by the President 

 that the parity between gold and silver obliga- 

 tions would be maintained as contemplated by 

 the act of July 14, 1890. The excitement then 

 subsided, and confidence was fully restored on 

 the following day. The rate for money on call 

 was easy, at an average of 4 per cent, in April 

 until the 21st, when there was an advance 

 to 15 because of withdrawals of gold for ex- 

 port, but it fell to 5 on the 22d, reacting to 

 12 on the 24th, and closing at 3. Quotations 

 for time loans were 5$ to 6 per cent, for all dates, 

 and commercial paper was nominally 6 per cent., 

 and there was little disposition to buv, Eastern 

 banks being affected by failures in Minnesota 

 and at Nashville. Early in May money on call 

 was active, and on the 4th it was bid up to 20 

 per cent., falling immediately to 6. On the 5th 

 there was an advance to 40, the movement being 

 affected by the disturbed condition of the stock 

 market, due to shifting of loans and discrimina- 

 tion against certain collateral. Toward the 

 middle of the month call money grew easier, 

 because of a lighter demand, resulting from the 

 large short interest in stocks and liquidations by 

 commission houses, and the rate fell to 1 per 

 cent, on the llth. There was no special feature 

 in this branch of the market for the remainder 

 of the month, although failures of banks and 

 mercantile houses throughout the country were 

 frequent and important. Time contracts on 

 stock collateral were in good demand at 6 per 

 cent., and in manv cases repayment in gold was 

 stipulated. The business in commercial paper 

 was almost stagnant, and quotations were 6 to 7 



