Press enter after choosing selection

The Business Outlook

The Business Outlook image
Parent Issue
Day
23
Month
January
Year
1874
Copyright
Public Domain
OCR Text

The bank returns of Saturday show that the average of deposita last week, as compared with the average for the week ending December 29, 1873, was larger by more than thirty-six millions of dollars. This is an enormous increase, and betrays a flow of money into this city which is by far the most important tact in the financial situation. It is not necessary to inquire in detail whence this money comes We may say, however, that it is oniy partly the result of collections, of just maturet obligations, or of extensions accorded by city creditors to their debtors last fall and that niuch of it comes from country banks. In connection with the accummulation of money at this point there has been a reaction from the low pric9s of a few months since, and this is traceable pcrhaps, not so much to actual curren' demand as to a disposition to discount i demand anticipated in the spring. No ono who knew this country only from observations made, say between the middle of September and the middlo o October last, would believo it possible that within three months from tho latter date the characteristic of the money-market Bhould bo a f uil supply, not to say an oversupply, of money, seeking almost in vain for profitable ihvestment. Yet tha1 this is now the case no one will doubt. - There is not the slightestquestion among business men that tho accumulation o meney so rapidly and in such large amounts is reviving the spirit of specula tion, is getting a great inauy shaky en terprises on their legs again, is making dealers venturesome, and is, in short, paving the way to an expansión of operations the end of which no one can foresee We have already pointed out that the vicious mode of doing business on the Stock Kxchango which prevailed before the panic, and which was one of the things which caused the panic, has boon resum ed. We do not suppose it has lost its power for evil. It was argued then, anc still is, that if the banks could not follow up the old inethods of lending their nxon ey they could not profitably handle the immense balances which, as a consequence of our banking system, are periodically heaped up in this city. There is no denying the basis of fac: which underlies this argument. We are now seeing an extraordinary exemplification of the circumstances on which tho advocates of stock ;brokor's banking- i we may cali it so- relied for the justifica tion of their ccurse. Money has been arriving in New York for three weeks at an average rate of twelve millions a week. - The result is that it has pressed, and is pressing, into all the avenues where i' can hope to find employment at even moderate profit. Necessarily its effect is feit most on the Stock Exchange. Bu the Stock Exchange is but the kno where are gathered all the cords of enterprise that reacb every part of the country An impulse communicated to it is transmitted to the remotest parts, and wo maj be sure that the stimulus of a plethoric money market in New York will be fel from the Atlantio to the Pacific. We need not point out the cheerfu view which is taken of the condition o things by those who are brought most im mediately in contact with it. There is a very general and not an unnatural feel ing that the effects of the panic have passed away, and that now everything is to go prosperously. With money plenti ful, trade is expected to be active, new enterprises, popular, and the recoveri from old embarrassments possible. Bu there is a reverse to this picture, which must be looked upon, and whith will no escape the cautious business man. I thinga are to go qn as before, may they not also end as they did beforo, or worse ' If the country has before been stimulatcc to undertake gigautic enterprises which it oould not manage, and which swallowed the capital and credit of great houses until their fall shook the country, may not a recurrence of the stimulus produce similar imprudence, bringing about similar dangers ? Have we recovered from the effects of the panic so completely tha we can afford to forget that it ever occurred, and to disregard all the lessons we read ourselvea at that intoresting period ? Doubtlesa money has been flowing rapidly to New York, but what is the condition of the banks from which a large part of it eomea, and what is the condition of a good many of the city banks with reference to the loans on which this accumulation is forced out 'i Are tho two sets of banks any better able to stam: a sudden collapse, brought about by some such " accident" ae M r. Morton thinks produced the difficulty in September than they then were 't These are questions which prudent men will be sure to answer before accepting the present condition of things as permanent, or the promises it holds out as to be relied upon. We have no right to forget that we are in an extraordinary situation. There are many influences at work, on the effect of which no man can count. Our currency is still made up of irredeemable government notes and unredeemed bank notes, the sum of the two nearly fixed, and that by an entirely arbitrary limit. We have been passing through a period when credits were universally shaken, and from which a large part of the mercantile community emerged with an enormous load of " extended" obligations to carry, The system of banking which depleted the outlying country of its currency at the earliest possible moment, to gather it in New York for the use and abuse of speculators, ia not reformed or modified, and stands small chance of being so. The whole country through people are crying to Congresa to help them, but that body is not likely to do anything of the kind, if indeed it does not rnake matters worse. Ia it not safer, then, in all business transactions, to move cautiously ? We believe it is, and if we wern to sum up the business situatsou in a phrase, wcshould say it was one of smooth and rapid sailing in the inidst of unseen but possibly imminent dangers.

Article

Subjects
Old News
Michigan Argus