FINANCIAL REVIEW OF 1889. This year was remarkable for disastrous floods and fires and for unusual meteorological conditions. First in importance was the inundation in the Conemaugh valley, May 30, involving the destruction of Johnstown, Pa., the loss of 3,500 lives, and incalculable damages to railroads and other property. Then followed the burning of half the town of Livingston, Ala.; the fire in Seattle, Washington Territory; important conflagrations in Lynn and in Boston, Mass.; disastrous floods in Japan Aug. 19 and Sept. 11; destructive tides at Coney Island and at Long Branch Sept. 14; and a blizzard in New Mexico in November. The rainfall of the year was almost unparalleled, especially in the Eastern States, and the temperature in the summer below and in the winter above the normal. One feature during the year was the investment of large amounts of foreign capital in American industrial enterprises, particularly breweries. Business was prosperous in almost every branch of trade, more particularly in that of iron and steel, but wool and woolen manufactures were depressed. The most important financial events abroad during the year were the conversion of the £32,000,000 out of about £42,500,000 English 3-percent. consols into 24 per cents., and the panic in Paris early in March, which was precipitated by the suicide of M. Rochereau, managing director of the Comptoir d'Escompte, an institution with a capital of 80,000,000 francs, and next in importance to the Bank of France. The shock resulting from this panic was felt in all the capitals of Europe, in China, where the bank had branches, and in New York; and more or less influenced the European money markets for a long time. The indirect cause of this panic was the speculation in copper, carried on by a combination of capitalists headed by the Société des Metaux. This combination began its operations in the autumn of 1887, buying up all the copper that could be obtained, and making contracts with copper-producing companies, agreeing to take for three years their entire production. The capital of the Société was increased from 25,000,000 francs to an amount which it was thought would be sufficient for the purposes of the combination, but when the mines demanded a guarantee for the engagements entered into by M. Secretan, the director, he applied to M. Rochereau, who was a member of the board, for advances. The first contribution by the comptoir, through M. Rochereau, was made in December, 1887, and this was followed by others in January and in March, 1888; then a syndicate was formed, who agreed to contribute 70,000,000 francs. Three members withdrew before February, leaving the capital of the syndicate 55,250,000 francs. In March, five foreign firms joined the syndicate, and the total of the advances to be made was raised to 62,625,000 francs. The Société also increased its capital and the managing director of the comptoir was authorized to guarantee two new contracts with American mines. The embarrassments of the institution had then already commenced for, besides the copper purchases, previous speculations in tin by the Société had not been liquidated, and the comptoir was exposed to a loss of 22.000,000 francs under that head. Notwithstanding this,

however, the bank guaranteed 78,000,000 francs under a contract with the Rio Tinto. At the end of May the advances by the comptoir were 138,850,000 francs, of which 28,100,000 were unsecured. New contracts were from time to time reluctantly guaranteed by the comptoir, and at the end of December the total advances were 172,000,000 francs. In January, this year, the comptoir borrowed 21,000,000 francs to conduct the business of the Société, and on Feb. 5 it parted with warrants representing 38,000,000 francs, to enable the Société to raise a loan of 25,000,000 francs. Then M. Secretan organized the Société Auxilliare des Metaux, which was to take 75,000 tons of copper at 1,750 francs per ton, and pay over the value to the comptoir, but this contract was only partially carried out. At the end of January the syndicate is said to have held 130,000 tons of copper. The visible supply of the metal had increased during the operations of the combination, due to decreased consumption and augmented output, and early in February the syndicate ceased to buy copper for future delivery, and at the beginning of March they stopped buying for immediate delivery. It then became evident that the combination had reached the limit of its resources, and that without assistance the syndicate would fail. This condition of affairs was, of course, known to M. Rochereau, and it is therefore not surprising that he was driven to suicide, this event occurring March 5, and precipitating a run upon the comptoir. When the fact became public that large advances had been made by the bank, the excitement was intensified, there was a rapid fall in copper stocks and in shares of the comptoir, and a wild panic ensued. With a view of allaying the excitement the Bank of France advanced 100,000,000 francs to the comptoir, and subsequently agreed with the Rothschilds and other bankers to advance 40,000,000 more, on condition of the transfer of the entire paid-up capital of the comptoir. But it was subsequently ascertained that the capital and reserve were lost, and the assets of the bank were taken as security for advances by the Bank of France and bankers. The failure of the copper syndicate was followed by efforts to induce producers to relinquish their claims, and a compromise was made, but the price of copper gradually reached its normal level. The comptoir was reorganized during the summer, and the old directors were ordered by the Paris Tribunal of Commerce to deposit 19,000,000 francs as a guarantee for the payment of any damages to which they might subsequently be condemned. The most culpable were those six directors who were also in the direction of the Société des Metaux. At the end of August 53,000,000 of the 140,000,000 francs, advanced by the Bank of France, had been paid off. Toward the close of November it was announced that the assets given in pledge to the Bank of France and the Bank of Paris, representing a nominal value of 203,000,000 francs, would realize enough to pay the secured advances, without any call for the guarantee, and leave a balance for liquidation. The revival of the speculation in copper had, at that time, carried the price up to 1.200 francs from 950 francs per ton in April, and this would enable the Bank of France to sell advantageously the copper warrants it held.

The old board of the comptoir then made an offer to increase the indemnity, fixed provisionally by the Tribunal of Commerce, from 19,000,000 francs to 24,000,000, and in addition M. Edouard Heutsch, formerly chairman of the board offered to abandon to the liquidators all his fortune, amounting to 1,500,000 francs. By the reorganization of the comptoir the guarantees to the mining companies were canceled, and the liquidator was placed in a position to make terms of settlement, but it is probable that the affairs of the comptoir will not be finally liquidated in less than two or three years. It was feared in London during the panic in Paris that gold would be drawn from that center, but none was taken at that time. A Russian conversion loan of 700,000,000 francs was brought out by the Rothschilds during March, and it was principally for this reason that this banking house assisted in restoring confidence. After prices of securities had partially reacted, holders commenced to sell, and London bought so freely as to turn exchange in favor of Paris. The first gold taken was toward the end of May, and on June 8 the Bank of England sought to check the movement by advancing the price of the French coins held by that institution. The Paris Exposition was opened in May and while this was open tourists from all parts of the world visited the French capital, thus aiding in attracting thither large amounts of gold. The agents of the bank, with a view further to augment its holdings, ordered gold out from New York, paying a premium therefor, and between the early part of May and the middle of September it had accumulated about 300,000,000 francs of this metal, principally from the United States.

In the autumn there was a sustained advance in the price of silver in London, caused by purchases by the British mint for the coinage of pieces to take the place of half-sovereigns issued prior to the present reign. The rise was further stimulated by reports of a scarcity of the metal in the European markets, and also by the expectation that the Secretary of the United States Treasury would increase his purchases of silver under the act of 1878, to the maximum of $4,000,000 per month. The Secretary purchased liberally during October and November, taking the product of all the American mines, and gradually, under the combined influence of American and English buying, the price moved up by the end of November to 44 pence per ounce in London, equal to 974 cents for fine bars in New York. Upon the announcement of the Treasury policy, to issue certificates against bull

PRICES OF LEADING STAPLES.

Cotton, middling uplands, per pound. Wool, American XX, per pound.

minimum rate of discount at the bank was 24 per cent., having fallen from 4 Jan. 9. Under the influence of withdrawals for Paris and the Argentine Republic, the stock of bullion was reduced to £19,519,657 Oct. 9, and then the bank minimum was 5 per cent. At the end of December the amount of bullion was about £17,800,000, and the bank rate was 6 per cent. At the beginning of the year the gold in the Bank of France amounted to £40,204,870, and the rate of discount was 4 per cent. There was a reduction in the stock of gold to £39,936,914 Jan. 17, when the bank rate was reduced to 4 per cent., and by the end of January the rate was 3 per cent. Gradually the amount of gold increased, without any material diminution being caused by the March panic, until it reached £53,313,188 Sept. 19. On Jan. 7 the Bank of Germany held an estimated amount of £28.677,334 gold, which gradually increased to £32,100,664 by May 23. Thereafter there was a gradual decrease to £25,164,000 by Oct. 7, and then the bank rate was 5 per cent. At the end of the year the amount of gold bullion held by the Bank of England was £17,782,799; by the Bank of France, £50,465,026; and by the Bank of Germany (estimated), £25,870,000.

The following tabular survey of the economical conditions and results of 1889, contrasted with those of the preceding year, is from the "Commercial and Financial Chronicle":

Iron, American pig No. 1. per ton.

Steel rails at mills, per ton.

Wheat, No. 2 red winter, per bushel.. Corn. Western mixed No. 2, per bushel. Pork, mess, per barrel.

ion, the price fell off in London to 434 pence, subsequently reacting to 444, and at the close of the year it stood at 431 pence an ounce.

The bullion in the Bank of England was at the highest point, £23,936,573, June 5, and the

101 87 $19 50 to $20 50

The Money Market.-The range for money on call, represented by bankers' balances, was from 45 to 1 per cent. during the year. The highest rate was recorded Dec. 30, and it was largely the result of manipulation, bear traders

in stocks taking advantage of a calling in of loans by the banks for the January payments, and forcing the rate to high figures, but very little money was loaned above 25 per cent. At the opening of January, loans were made at 8 per cent. on call, but the rate fell to 14@2 by the close and the average was 24 @2 after the middle of the month. Time loans on first-class collateral were 4 per cent. for 30 to 60 days at the beginning of January, and 24 after the middle of the month, when money was in abundant supply. The demand for short double-name commercial paper was so urgent that the rate fell from 54 per cent. during the first week to 4. Call money was in good supply during February, and lenders on time offered special inducements to those who could offer satisfactory collateral. The rate for bankers' balances early in the month was 4 per cent. Then came a fall to an average of 2, with some loans at 1, and the range was between 1 and 2 for the remainder of the month. Time loans were 3 per cent. for sixty and 33@4 for ninety days, and 44@ 5 for four, five, and six months until the close, when they were offered at 3 for sixty to ninety days, 31 for four months, and 4 for five and six months. Commercial paper was in good request, and rates were 4 per cent. for short double names, 44 @5 for four months acceptances, and 5 @ 6 for good four to six months single names. Early in March money on call was easy at an average of about 24 per cent., but it grew more active toward the close, when it moved up to 6 with 3 as the average. Time loans on first-class stock collateral were 3 per cent. early in the month and 4 by the close for thirty days; 4 for four months, and 4 for five and six months at the opening, gradually nearing up to 4@5 for from four to seven months at the end. Prime double-name short commercial paper was 4 @ 5 at the beginning, and 45 at the close of the month. The rates for four months acceptances were 4 @54, and for four to six months good single names 5 @ 6 per cent. The shipment of $2,250,000 gold to Paris on special order had some effect upon the money market during the latter part of the month. Loanable funds on call were active early in April, and 11 per cent. was recorded on the 1st, but, under the influence of a better supply resulting from bond purchases by the Secretary of the Treasury, the rate fell to 14, reacted to 6, and declined to 2 @ 3 by the end of the month. The bonds bought were about $11,500,000, at 108 for 44s and 129 for 4s. Time loans were in good demand, especially early in the month, and the inquiry was chiefly for short dates. The thirty-day rate was 3; sixty to ninety days, 33@4; and from five to eight months, 4@5. After the middle of the month the demand for short dates grew less urgent, and toward the close, influenced by more liberal offerings, chiefly from foreign bankers, thirty to ninety day contracts were 24 @ 3, and from four to nine months 24 @ 34 per cent. Commercial paper was steady at 415 per cent. for short double names until the 15th, and after that 4 @ 4 to the close. Four months acceptances were then 4 @ 44, and good single names 4 @5 per cent. The supply was only fair while the inquiry was good from every quarter. In May call loans ranged between 4 and 14 per cent.,

averaging 2 early in the month, and 2 toward the close. Time loans were 24 per cent. for sixty to ninety days; 3@3 for four to six months, and 34 @ 4 to the end of the year. Commercial paper of short date fell from 34 @ 44 to 3 @ 3} ; four months acceptances from 4@ 4 to 34 @ 41, and good four to six months single names from 44 @5 to 4 @5 per cent. Över $9,000,000 gold was shipped to Europe during the month, and the bond purchases amounted to about $6,000,000. In June money on call averaged 24@ 24 per cent. until toward the close when, under the influence of a drain of nearly $20,250,000 gold to Europe, there was an advance to an average of 3, with 6 as the highest rate. Time loans during the month were 24@ 3 per cent. for sixty to ninety days; 3 for four months, and 3 @4 for five months to the end of the year. Commercial paper was in good supply, and rates were 3@4 per cent. for sixty to ninety day indorsed bills receivable; 34 @ 5 for four months acceptances, and 44 @5 for good four to six months single names. Early in July money on call was active at 6 per cent., but before the close it fell to 4, influenced by the check to gold exports, and the shipments for the month were only $4,600,000. Time loans were in good request at 4 per cent. for ninety days; 4 for four months and 4@5 for five to six months. City lenders absolutely refused to accept trust stocks as collateral, and dealers in these properties were obliged to make special arrangements with outof-town houses who carried them at 6 per cent. for six months. Commercial paper was about 4+ @5 per cent. for short double names; 44 @ 53 for four months acceptances, and 5 @ 64 for good four to six months single names. Money on call loaned in August at 2 and at 6 per cent. The lower rate was recorded early in the month. By the second week the drain of currency to the interior for crop purposes became so great that the bank reserves were reduced and confidence was to some extent unsettled by mercantile failures, so that money advanced to the higher figure named. The Secretary of the Treasury refused to pay more than 128 for the 4-per-cent. bonds, and holders of about $10,000,000 of these securities therefore decided to sell. Those purchases were made during the last week; they promptly affected the market, and the call-loan rate fell to 2 per cent. Time money on stock collateral was 4 per cent. for thirty to sixty days; 4 for four months and 5 for five to six months early in the month, but the rate rose to 6 for all dates before the end, and then it dropped to 54. Commercial paper was almost unsalable. Short double name rose from 44 @ 5 to 6 per cent.; four months acceptances from 5 @ 54 to 6 @ 64; and good single names having from four to six months to run from 53@ 63 to 63 @74. Toward the close of the month, however, rates were a little easier. Early in September money on call gradually advanced from an average of 34 per cent. during the first week to 5 with 10 as the highest rate until the last day when 30 was recorded. Time loans advanced from 4 per cent. for thirty to sixty day contracts to 6 for three to six months, and commercial paper was of slow sale. Rates at the close were 5 per cent. for short indorsed notes, 6 @ 64 for four months acceptances, and 6 @ 75 for good four to six

months single names. The shipment of $1,500,000 gold to London on special order had a disturbing effect upon the money market during the first few days in October, for it was then uncertain how much more gold would be ordered out, the requirements of the London bankers being urgent. But a reduction in exchange and news that the immediate wants of these bankers had been supplied by purchases of gold in Paris, allayed apprehensions. The bank return for the first week in the month showed a deficiency of $1,668,050 for the first time since May 31, 1884, and the market was more or less active throughout the month, loans on call being made at 20 per cent. and at 3, with very little at the extremes, and the average being about 7 to 8. Toward the close the tone grew a little easier, in consequence of an increase in bank reserves, but this was almost wholly due to a reduction in loans and not to any gain in cash. Time loans were 6 per cent. for sixty days to six months early in the month and at 6 @ 8 toward the close. Lenders who obtained more than 6 per cent. did so by discounting the loan or by charging a commission so that the law of the State, forbidding loans on time for more than 6 per cent., was evaded. None of the city banks were purchasers of commercial paper, and the buying was confined to a few out-of-town houses. Rates were 54@6 per cent. for sixty to ninety day indorsed bills receivable; 6@ 64 for four months acceptances; and @ 8 for good four to six months single names. Money on call was easier early in November at an average of 54 @ 6 per cent., but after the middle of the month it grew active and 20 per cent. was recorded during the third week, the advance being caused by a rumor that the Secretary of the Treasury contemplated calling Government funds from some of the depository banks. Lenders took advantage of the uneasy feeling produced by this report, and they forced the rate upward by calling loans and then reloaning the money at about the best figures ruling at the Stock Exchange. On the semiofficial denial of the report the rate dropped to 1 per cent. but it subsequently reacted to 12, and it moved between 4 and 8 for the remainder of the month. Lenders refused to make time-loan contracts for sixty days, and borrowers were accommodated only by taking money for five, six, or seven months at 6 @ 7 per cent. The quotations for commercial paper were only nominal. On Dec. 2 money on call loaned at 15 per cent., on the announcement by the Secretary of the Treasury that 10 per cent. of the Government deposits in the national banks would be called by Jan. 15. But when it was seen that this call would amount to only about $4,700,000 there was a better feeling in the market, and by Wednesday the rate fell to 2 per cent. Time loans on prime stock collateral were 6 per cent. for ninety days to seven months, and commercial paper was nominally 6 for short indorsed and 63 and 74 for single names, growing easier by the end of the year with a restricted inquiry. After the third week money on call became active, partly because of manipulation, but mainly in consequence of the low bank reserves and expectations of large withdrawals from the market for the January settlements, although some of the prominent commission houses had made provision with

short time loans to meet this period of stringency. On the 30th Mr. Windom directed the payment without rebate of the interest due Jan. 1, and this had an immediate moral effect after the rate had been advanced to 45 per cent. on call. On Dec. 31 the highest rate was 18 per cent.

The public debt statement shows that at the beginning of the year the amount of 44 per cents. outstanding was $181,152,300, and of 4 per cents. $681,137,600. By the end of March the 41s had been reduced to $155,147,800, indicating a purchase of $26,004,500, and the amount of the 4s was unchanged. At the close of June there were $139,639,000 44's and $676,095,350 4s, showing purchases of $5,506,800 of the former and $5,043,650 of the latter. At the end of September the outstanding 44s were $128,821,800 and 4s $655,385,050, indicating purchases, during the quarter, of $10,817,200 44s and $20,710,300 of 4s. After Oct. 1 the Secretary refused to pay more than about 1054 for the former and 127 for the latter. The purchases of both classes of bonds for the remaining quarter of the year amounted to $33,000,000. The outstanding 44's, Dec. 31, were $121,367,700, and 4's $629,795,700. This makes the total reduction of the debt by bond purchases during 1889 $111,126,500. This amount, however, represents only the par value of the bonds.

The exports of gold to Great Britain during the year amounted to about $14,000,000, and to France $27,718,805, making a total of $41,718,805. Imports of gold from Europe were about $4,000,000, so that there was a net outgo of over $37,000,000. Gold coinage for the year was $21,413,931, reducing the net loss to the circulation to $15,600,000.

The gold holdings of the associated banks were $77,032,500 at the beginning of the year. These increased to $90,536,000 by Feb. 16, and then the drain of gold for Europe carried the amount down to $77,406,300 by April 5. Disbursements for bonds purchased by the Secretary of the Treasury aided in increasing the gold to $87,771,800 by April 20, and after an irregular decrease there was a gradual reduction in the amount to $67,321,700 Oct. 5. The legal - tender holdings of the banks were $32,529,700 at the beginning of the year. There was a rise to $37,545,800 Jan. 26; a fall to $31.713,500 by April 5; a recovery to the maximum, $46,184,300 June, 15; and a fall to the minimum, $25,299,500, Dec. 7. Loans and discounts were at the lowest point, $386,318,000, Jan. 12, and at the highest, $423,405,000, July 6, when also the deposits were greatest, being $445,797,500, the lowest being $395,600,600, Dec. 14. The surplus reserve was $73,333,100 Jan. 5 and $20,014,800 Jan. 26. Then came a fall to $1,409,575 April 5, a recovery to $15,055,350 May 25, and a gradual fall thereafter. On Oct. 5 the banks showed a deficiency of $1,668,050 in reserve for the first time since May 31, 1884. For the remainder of the year the bank reserves were low.

The condition of the New York ClearingHouse banks, the rates for money, exchange, and silver, and prices for United States bonds on or about Jan. 1, 1890, compared with the preceding two years, are shown in the following summary:

Foreign Exchange. The imports of merchandise for the year ending Dec. 31 were $55,108,714 above those for 1888, and the exports of domestic and foreign merchandise were $147,652,896 more. The excess of merchandise exports over imports for the year was $56,947,716, against an excess of $33,650,321 imports over exports for the year 1888. There was an excess of $59,405,357 exports over imports of specie and bullion in 1889, against an excess of $37,538,110 exports over imports of the same in 1888. The excess of exports over imports of merchandise, coin, and bullion this year was $116,353,073, against $3,887, 789 for 1888.

Foreign exchange was firm during January and rates advanced half a cent per pound sterling to $4.87 for sixty days and $4.894 for sight. Gold to the amount of $1,000,000 was sent to Germany on the 24th, but, although rates were at the gold-exporting point, the metal was shipped on special order. Discounts were easy at the European centers, and there was a reduction in the official minimum by the Bank of England on the 9th to 4 per cent., and by the Bank of France to the same figure, and on the 24th both banks made a further reduction to 34 per cent. On the 30th the Bank of England dropped to 3. Bankers' and commercial bills were scarce throughout the month. There was a fall in sight sterling on the 1st of February to $4.89 in consequence of the offerings of some few bills against outgoing securities, and on the 6th sixty-day sterling was reduced to $4.864, but during the following week a demand for bills to remit for stocks sold for European account, and also to transfer foreign capital, caused a reaction to $4.87 for long and $4.894 for short, and on the last day of the month $500,000 gold was sent to Europe as an exchange operation for the first time since 1887. On March 7 there was a reduction in long sterling to $4.864 in consequence of liberal offerings of that class of bills, but short was firm, and

69,574,000 75,560,700

26,141,100

during the next week there was a good demand for sight sterling and cable transfers because of the disturbed condition of financial affairs at Paris, and on the 16th there came an export of $1,250,000 gold to France, but not as an exchange operation, the metal being ordered out by bankers in the French capital. On the 23d another consignment of $1,000,000 was shipped on order from London. On the 29th long sterling was advanced to $4.87. Easier discounts in London brought about a further advance in sixty-day bills to $.4874 on April 5, and the market was firm until the 18th, when a reduction in the Bank of England minimum to 24 per cent. from 3, at which it had stood since Jan. 31, caused an easier tone for short bills, but there was a recovery on the 26th, and on the following day $1,024,390 gold was sent to Europe as an exchange operation. Commercial sterling was very scarce and shippers of staples obtained good prices for their drafts. On May 2 the long rate was advanced to $4.88 and on the 4th $2,801,343 gold was exported, and on the 10th $500,000 more was sent, although the rate for actual business for short sterling did not fully justify the movement. On the 18th there was a further shipment of $1,750,000 gold, on the 25th $4,000,000 more, and on June 1, $3,396,704 additional. The impossibility of procuring round amounts of sterling caused an export of $4,000,000 gold during the week ending June 8, $4,004,857 in the following week, $5,749,423 during the week ending June 22, and $2,609,664 in the last week of June, and nearly the whole of the $29,836,381 gold sent for the previous eight weeks went to France. On the 27th the rates for sterling were reduced to $4.874 for long, and $4.89 for short. From September until this time the fluctuations in sight sterling had not exceeded 14 cent per pound, and the rate then stood within about one cent of the highest point in this period of nine months. Early in July exchange fell to $4.87