304 



FINANCIAL REVIEW OP 1893. 



per cent, for the best double-named paper. The 

 supply was large, and in some cases mercantile 

 borrowers found difficulty in obtaining accom- 

 modation at their banks. The failures through- 

 out the country made buyers of paper very 

 cautious, and the banks, while disposed to ex- 

 tend all possible accommodation, were forced to 

 pursue a very conservative course. The de- 

 mands upon the banks of this city from their 

 correspondents in the interior for rediscounts 

 was quite noticeable at the end of May, and it 

 grew urgent early in June, resulting in a ma- 

 terial reduction in the bank reserves. Conse- 

 quently accommodations to the regular custom- 

 ers of the institutions had to be restricted, com- 

 mercial paper ruled at high rates, and there was 

 more or less distress among merchants. Bank 

 and mercantile failures throughout the country 

 grew more numerous, and the stringency in 

 money was felt in every city in the country, 

 some banks hoarding their funds, capitalists re- 

 fusing to lend, and general distrust prevailing. 

 The New York, Boston, Baltimore, Philadelphia, 

 and New Orleans clearing houses issued loan 

 certificates for the purpose of relieving the 

 stringency, but this action only partially re- 

 stored confidence among the depositors of the 

 banks in those cities. The rate for money on 

 call at the New York Stock Exchange at the 

 beginning of the month was from 2 to 3 per 

 cent. On the 9th there was an advance to 12, in 

 consequence of large shipments of currency to 

 the West, and on the 15th the rate moved up to 

 25 per cent. Then came a fall to 5, and the 

 market was only moderately active until the 27th, 

 when money loaned at 72 per cent., because of 

 the panic and general demoralization on the 

 news of the action of the Indian Government in 

 closing the mints of India to the public coinage 

 of silver. Early in the month very choice time 

 loans on stock collateral were made at 4J to 5 

 per cent., but soon after 6 per cent, was de- 

 manded for all dates on the best security. The 

 business in commercial paper was almost stag- 

 nant, and the few transactions made were on the 

 basis of 7 per cent, for the best double names. 

 Money on call loaned at 25 and at 3 per cent, 

 during the first week of July, averaging about 

 9 ; in the second week the range was from 20 to 

 3, averaging 6 ; in the third week loans were 

 made at 7 arid at 1 ; and in the last week at 72 

 and 1, the high rate then being due to the ur- 

 gent demand for currency from Western cities, 

 and particularly Chicago, where the rate of ex- 

 change on New York was as low as $10 per 

 $1,000 discount. The drain of currency was 

 caused by the general closing of mines in the 

 silver-producing States, bringing about great 

 depression in that section of the country, and 

 failures of banks in Colorado, Idaho, and else- 

 where in the West because of inability to realize 

 upon ample assets. A material reduction in 

 New York bank reserves created alarm through- 

 out the country, balances belonging to interior 

 banks were called home, money was hoarded, 

 and confidence was completely unsettled. After 

 the middle of the month money grew easier on 

 call, chiefly because many lenders, who would 

 under other circumstances have employed it on 

 time, were unwilling to place it for fixed periods, 

 and they offered it in the call-loan branch of the 



market. The demand for time loans was urgent 

 at | of 1 per cent, commission and interest for 

 thirty days, and -J- of 1 per cent, and interest for 

 sixty days on undoubted collateral, and some 

 merchants, who could not sell their paper at any 

 rate, negotiated time loans at these high figures, 

 for the purpose of obtaining funds necessary for 

 their business. A few private lenders bought 

 commercial paper at from 8 to 15 per cent, for 

 the best names. On the 31st of July the savings 

 banks of this city gave notice that they would 

 require from thirty to sixty days' notice from 

 depositors intending to withdraw their deposits. 

 This caused a demand for currency of all kinds, 

 and as soon as it commanded a premium it was 

 hoarded to a large extent. Banks had difficulty 

 in obtaining currency for pay rolls, some being 

 obliged to buy it from brokers for their custom- 

 ers ; in a few cases institutions refused payment 

 of checks where there was good evidence that 

 the currency was wanted for hoarding or sale; 

 bank customers were requested to draw their 

 checks payable through the Clearing House ; the 

 demand for notes was urgent in all the princi- 

 pal cities, and the currency famine extended to 

 gold. Brokers paid as high as 5 per cent, for 

 paper currency, and from 1 to 2 per cent, for 

 either silver dollars or gold. The foreign bank- 

 ers took advantage of this premium upon gold 

 to import the metal from Europe and Canada; 

 the Treasury Department brought $7,000,000 of 

 gold coin by express from California, in order to 

 supply the demand at this center, the Sub-Treas- 

 ury being entirely drained of notes, and the cur- 

 rency famine continued until toward the end of 

 the month, when some relief was afforded by 

 the arrivals of gold from Europe. Bank fail- 

 ures, suspensions of mercantile houses, and clos- 

 ing of cotton, iron, and other mills were of 

 daily occurrence. Early in the month the 

 Chicago money market was disturbed by the 

 collapse of the pork and lard deals, and by 

 the sharp fall in wheat. The suspensions of 

 national banks reported by the Comptroller of 

 the Currency for the year to Aug. 28 numbered 

 155, and of State and private banks 560. Al- 

 though money on call was in fairly good supply, 

 with loans at 10 and at 2 per cent., averaging 

 about 5, at no time could contracts for money 

 for fixed periods be negotiated at less than 6 per 

 cent., and a commission of 1 per cent, for the 

 shortest dates, and 3 per cent, commission and 

 interest was demanded for four months. Com- 

 mercial paper could not be sold except at from 

 12 to 18 per cent, for the best names. The ac- 

 tion of the House of Representatives on the 

 28th in passing the Wilson bill for the repeal of 

 the silver-purchase law, by a vote of 239 to 110, 

 had a marked influence upon the situation in 

 September. Money on call loaned at 7 and at 2 

 per cent, during the month. Time loans were 

 firm at i to | of 1 per cent, commission and in- 

 terest until after the middle of the month, when 

 they were freely offered at 5 to 6 per cent., al- 

 though prime collateral was required. Commer- 

 cial paper was 8 to 12 per cent, for double names 

 until the 15th, when the rate fell to 7 and 8 per 

 cent. After the House of Representatives passed 

 the bill for the repeal of the silver-purchase law 

 the measure was sent to the Senate for concur- 

 rence, but the Finance Committee of that body 





