The Business Week [excerpt]

THE POSITION IN NEW YORK.

PROBABLE GOLD IMPORTS FROM EUROPE.

     The deplorable attack upon Mr. McKinley has created some nervousness as to the monetary position in New York. Had the unfortunate event not occurred the position of the New York banks, as shown by the return published on Saturday last, would have necessitated higher rates for money and an endeavour to secure gold from this side. At the present time the banks hold a combined surplus reserve of only £1,384,000, and they have to face a probable demand for cash for the interior of upwards of £10,000,000. Last year on September 8 the reserves of the Associated Banks stood at £50,525,000, and in spite of the receipts of nearly 6 millions sterling in gold from abroad in September, October, and November, the reserves were reduced by November 10 to £42,476,000. A portion of the gold received in November did not, however, arrive till the second portion of the month, but, allowing for this circumstance, it is clear that the outflow of cash from New York to the interior last year in the two months ended on November 10 was upwards of £10,000,000. In 1899 a similar movement occurred. It then began somewhat earlier, the reserves of the banks having stood at £45,382,000 on August 26, and having steadily declined until £36,692,000 was reached on November 11, a decline of nearly £9,000,000. In that year, however, the receipt of coin and bullion from abroad in September, October, and November was only £1,500,000. In view of the drain of cash to the interior which the Associated banks have now to face, of the smallness of the surplus reserve on Saturday last, and of the difficulty in curtailing loans at a time that the President’s life is in danger, the Secretary of the Treasury was asked to render assistance to the market, and he, of course, immediately responded to the call of the New York bankers announcing on Monday last that he would receive proposals for the sale of Government bonds on account of the sinking fund of the Three per Cent. bonds loan of 1908-18, the Four per Cent. of the Funded Loan of 1907, the Four per Cent. loan of 1925, and the Five per Cent. loan of 1904, the amount not to exceed $20,000,000. Further, he ordered internal revenue receipts to be deposited with the National Bank depositories to the par value of all bonds deposited. On August 31 the cash held in the National Banks to the credit of the Treasurer of the United States was $96,373,000, and the increase of the sum to par value of the bonds deposited meant that over $5,000,000 were at the service of bankers. Advantage has already been taken of the offer to buy bonds to the extent of $8,500,000, and it is probable that fully $25,000,000 will be released from the Treasury and placed at the disposal of the Money market for the purpose of meeting the interior drain. Should, however, the drain to the interior reach upwards of £10,000,000 as appears probable, a further sum of about £5,000,000 would still have to be found, and apparently London and Paris are to be called upon to provide a portion of this amount. With this position American bankers have not been willing to lend freely at the recent low rates, and rates up to 6 per cent. have been charged for call loans. There has, however, been no stringency, for anyone having adequate security and willing to pay the rates asked can secure whatever money they need. Indeed, the Clearing House banks have let it be known that they will lend whatever sums are necessary to prevent undue disturbance of the Money and Stock markets, and there is consequently no reason to anticipate any untoward results from the existing short supply of money, or the nervousness created by the attempt on the life of the President. During the past few months the speculation in Wall Street has been very greatly reduced and stocks are now held in strong hands. Further, the indebtedness created in Europe for the purpose of purchasing stocks at the time of the Northern Pacific panic has also been largely if not entirely liquidated. Moreover, it has to be borne in mind that the trade balance in favour of the States continues to be very large and that at this time of the year, when cotton and wheat come forward in large quantities, the trade balance is always largely in favour of the States. Consequently, New York will have no difficulty in obtaining whatever gold it needs to meet the home demand. Gold imports and Treasury money will doubtless enable American bankers to meet any demand that may be made upon them for cash, without the necessity of bringing about any appreciable reduction in their facilities to borrowers. Last week the loss in the reserve reached £2,021,000, and the banks reduced their loans by £2,008,000. Hence, the reduction in the deposits was as much as £4,086,000. In spite of this large decline in the deposits, however, the surplus reserve was reduced by £1,001,000 to £1,384,000, an unusually low figure in view of the autumnal drain of cash to the provinces and the difficulty of calling in loans at the present time. The higher value of money in New York, and the efforts of the banks to bring about gold imports, have caused the sight exchange upon London to decline to 4·85¼, the rate for cable transfers to fall to 4·85¾, and the rate for 60-day bills to touch 4·82¾. At these figures it almost pays to ship gold from London.