A Talk About Finance

Special. New York, Jan. 23, 1897. During the past week Wall street lias more than retained the marked improvement in tone noted in these advices for the two last weeks. There lias been an increase in the volume of transactions, and a further moderate advance in prices, with little disposition to realize upon the higher range of values now established. The buying of bonds for investment has been a conspicuous feature ; and there has been a still larger increase in speculative transactions in stocks, extending generally throughont the list. While the business among room traders has become more active, there has been a notable access of outside buyers. The gradual return towards ease in the European money markets lias induced a more active movement in securities aeross the Atlantic, which sympathetically affects business in our own market favorably. In London this change has developed a return of speculation in American stocks, and during the weck the purchases liere for tliat market have been larger tlian lor inany months, indicating sume restoration of confidence in our investments. The remarkable financia! strengtb iecently developed at th8 centre, and so Strikingly expressed in our ability to lend to Europe through holding back of export bilis, (now estimated at near ly 50 millions, j is naturally having a good effect upon the status of our credit abroad. , Our large accumuhttioa ol loanable capital and the consequent low rates of interest here are construed abroad as inevitably tending towards a more active rhóveinent on uur stock exchange and a higher range of prices ; and, with this in view, London shows a disposition to avail itseli ot' the chances of a higher market. The official statement of our foreign trade for 1896 has taken Wall street by surprise. The merchandise movement shows an excess of export over imports amountins to $375,800,000, - a movement unparalleled in the history of our commerce. As an offset against this balance, the statisticians figure that we must reckon net imports of gold amounting to 46 millions ; securities returned after the election 20 millions ; and 150 millions for interest payments and travelers' credits, etc. ; making a total of 216 millions ; which still leaves a creditor balance of 159 millions. Against this, must be offset 50 millions of export bilis held in this city for future collections ; and the remainder of 100 millions is to be regarded as covered by our liquidating various non-permanent Joans and advances in the course of the year of excitement and distrust. The currency question is receiving more attentiou as a practical issue. Among other changes deserving attentiou, the National Bank Act certainly requires ainending to provide for the changed conditions sinee its enactment. Oue important amendment should be to admit of the issue of notes up to the par value of the Umted 8tates bonds given as security therefor. This would increase the national currency about $20,000,000, and would induce the bauks to take out at least $20,000,000 additional notes, as well as encourage the creation of new banks in localities where they would be serviceable in popularizing the system. The agitation agaiust the greenbacks is ill-advised in connection with the feature proposed - to issue bonds in their stead. Th at would be to convert a non-interest bearing obligation of the Government into one that would tax the people about $10,500,000 annually for au iudeflnite period. That to say the least, is entirely unnecessary ; for, wheu the Government comes to retire the notes, a large portion of its gold reserve could be devoted to the liquidations ; and bevond that the treasury could lawfully use its contribution to the debt sinking fuud to the extent of about forty mil-' lious a year, when the reverme was restored to its former basis of surplus income. The process of retiring the notes must be a slow one; and the amount of notes which could, from this sou ree, be gradually retired would therefore be quite important and miglit amouut to $200,000,000 within say five years. This, with the treasury gold to be used in the redemptions, might easily dispose of three-fourths of the greenbacks without the issue of a dollar in bonds. Out of the remainiug silm to be disposed of, it is estimated that $20,000,000 should be deducted for notes lost and destroyed in various ways. It is thus seen that the amount of bonds needed to retire the notes could be made, at most, but nominal. Instead of liquidating the greenbacks through issuing bonds in the way that has been proposed, the first step taken should be for the government to do what is possible to improve the notes in public estimation. This could be done by increasing the government revenue so as to insure a surplus instead of a deficit, as it is this un fortúnate condition which has inspired the feeling with many that "greenbacks must be got rid of at any cost." If congress will provide ampie revenuo for the government and pass an act delmrriii{jc the reissue of greenbacks, after they have once been presented at the treasury and gold demanded„therefor, excepting in exchange fr gold, greenbacks would Uien be reganJed all 'over the world a.s beiiig good :i gold. The notes the government should first take up are those issued under the Shermau law, replacing thetn by silver coin as fast as the country can safely absorb the silver. Tlns should be limited to about $2ö,000,000 per annum ; and the Bland notes should later on be treated in a similar way, but on a little larger scale. If the greenbacks are to be retired by their conversión into bonds, as proposed, what will the national banks have to hold as their reserves, and for the redemption of their notes? It is better not to be prpcipitate in dealing with the greenbückf!, excepting in some such way as I have above suggested. After so many drastic object lesson as we have had daring the last four years, the country wants freedom from erratic eruptiöns. To suddenly substitute bonds for greenbacks might cause as many panics during McKinley's administration as we have had durinj? Cleveland's. What we need is a policy that will avoid issues of bonds and gradnally bnng out a sufficient increase in the notes of national banks to compénsate for any ivithdrawals of green backs that may be í..und possible and convenient.