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Stock Exchange [excerpt]
THE POSITION.
T attack upon the President of the United
States and the preparations by New York bankers for strengthening
their position have been the chief factors affecting markets this
week. After the first shock to markets a hopeful feeling prevailed
by reason of the steady recovery which Mr. McKinley was reported
to be making. But a severe relapse occurred early this morning,
and fears of fatal results have to-day caused heavy sales of American
securities. To-days relapse has[,] moreover, increased the expectation
that the States may take a considerable amount of gold from Europe
to strengthen the position of the banks, rendered necessary by the
shock to markets of the attack upon the President, by the comparatively
weak condition of the New York banks, and by the large outflow of
cash from New York to the interior, usual in the two months ending
with the second week of November. Although close attention should
be paid to the position in the States there is no cause for serious
uneasiness.
America at the present time holds
a vastly different position to that of 1881, or of any former period.
The country is now prosperous by reason of the economies of its
people and of its enormous output of agricultural, mineral, and
manufactured products. In times past, when uneasiness has arisen,
it has meant the stoppage of the inflow of European capital into
the country; now it means merely that America may refrain for a
time from purchasing its own securities or investing in other securities
abroad to the extent that it has done in the past three or four
years. In times past alarm as to the position in the States would
have caused foreign capital to be withdrawn from the country; now
it means that America may cease to invest abroad, and that instead
of gold exports from the States there may be gold imports.
Fortunately London, Paris, and Berlin
are very well supplied with cash, and are in a position to spare
any reasonable sum which New York may require to meet the drain
of cash to the interior. Moreover, the American Treasury is unusually
supplied with free cash, and is controlled by an expert banker who
has given repeated evidence of his desire to assist the Money markets
as far as possible. At the end of August the cash balance of the
Treasury amounted to $330,000,000, and if we deduct the $150,000,000
held in the reserve fund, the balance would still amount to $180,000,000,
of which $96,000,000 was on deposit with the National banks. Mr.
Gage consequently still has a balance of $84,000,000, most of which
he could disburse were it really needed and were bonds available.
Of course nothing like this sum will be required. It is probable,
however, that more than the $30,000,000 which Mr. Gage has offered
to set free, chiefly in exchange for bonds, will be needed, and
in view of the easy condition of the European Money markets it is
probable that a portion of the balance will be secured from this
side.
An advance in the value of money
in London would of course tend to depress the values of high-class
securities. But inasmuch as the Bank of England is in a very strong
position and can afford to part with two or three millions of gold
to the States, there is no danger of stringency here. For those
who are prepared to take advantage of less easy money conditions
the opportunity for purchasing securities during the next two or
three months should not be neglected. Next year we may hope that
the Transvaal mines will again be in working order, and that the
gold output of the world will amount to an unprecedented total.
Hence it is probable that next year money will again become cheaper
throughout the world than it has been for several years, and that
prices of investment stocks will recover to a much higher level.
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