Stock Exchange [excerpt]

THE POSITION.

THE 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-day’s 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.

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     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 In times past alarm as to the position in the States would have caused foreign capital to be withdrawn from the country; now it means that America may cease to invest abroad, and that instead of gold exports from the States there may be gold imports.

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     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.

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     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.