Green-Mountain freeman. [volume] (Montpelier, Vt.) 1844-1884, 1868-12-02
The Panic in New York.


We condense from the Nation an interest
ing account of the great Erie swindle, and
the trouble it has caused in the money mar
ket. At the last accounts there seemed to
be a friendly rivalry among the Judges to
see who could do most to help the fraud and
cheat the stockholders.
On the LIST day of July last the one hun
dred dollar shares of the Erie Railroad were
selling for about seventy dollars a share. The
best-informed dealers in railroad stocks and
other securities very generally believed that
the abundant crops would cause largely-in-
creased railroad earnings, that the election
Of Gen. Grant would restore a feeling of Sc
curity and confidence to business, and that
a large advance would speedily take place IN
the value of investments of every des Grip
ton. Everybody was buying stocks, and
there was no difficulty in selling almost any
amount of shares in all reasonably we'll
established railroad enterprises. At or about
this period the leading directors of the Erie
sold large amounts of the stock of the road :;
sold not only the shares which they actually
had on hand. but sold a large amount Of
shares = short as 1t is called in Wall
Street-that is to say, sold for future de-
livery shares they did not possess, but which
they expected to buy at a lower price when
ever the time came for delivering them.
Their next move, of course, was to depress
the price of their stock as low as possible,
so as to buy back the shares which they had
sold. What they had done was at least legal
and not altogether dishonorable, according
to the prevailing Wall Street code. But
from this point forward their actions entitle
them 10 the open support of the New York
courts and to the ~undisguised charge of fraud
from all honest men.
Under the bylaws and charter OF the Erie
road all powers of the Board Of Directors
vest. between the meetings OF the Board, in
the Executive Committee. At the present
time this committee consists of three of the
most noted s~tock.jobbers in Wall Street.
This Executive Committee undertook. with
out the slightest shadow of right or power.
to make and issue fresh shares of the Erie
to an amount almost doubling the capital
stock Of the company. These shares were
secretly but rapidly sold in Wall Street Tor
cash. and the proceeds, supposed to amour:
to about ten millions of dollars. were thence
forth used as additional capital To carry on
the campaign. The sale of such large amounts
Of stock naturally depressed the declining
prices still further and caused alarm among
the dealers, while the sudden appearance in
the Street of the newly Issued certificates led
to an official inquiry on the part Of the New
/ DIX NEDch ENtucD-t, WHICH, Mds iLltb On lHt
part of the president Of the company by a
brazen-faced acknowledgement of the entire
fraudulent issue, accompanied 10y o disguised
threat that still further fraudulent Issues
were in preparation. The alarm in Wall
Street was OF course great, and a further de-
cline m Erie shares was the immediate result.
The price had not yet fallen low enough.
nor was the panic sufficiently great, to en-
able this combination to buy back all the
- IL -! ~ i
the price to advance materially. They
therefore commenced y series of maneuvres
which Ut once removed their operations from
the mere Wall Street arena and gave them
q national Importance.
Their heavy sales of the fraudulent issue
of stock had depressed the price from seventy
in July, to forty at the close of October, and
had produced, it is supposed, about ten mil
lions of dollars, which, together with the
four or five millions more obtained from
other sources, the combination had deposit
ed to their credit in some of the city banks.
Checks were now drawn on these banks for
the amounts so deposited, and the checks
were presented for payment in grcenbacks,
which the banks could not refuse. and the
greenbacks so obtained were suddenly with
drawn from the bank reserve. The effect
was electrical. Every bank in the city saw
its grcenback reserve in danger; no one
could tell what TIE next step might be ;
there was q mystery about the operation that
added to the terror which It's holiness had
inspired everybody thought only o fstrength-
ening himself: the banks and private bank
ers called in a large portion of their loans !;
money became almost unobtainable, and
whoever had borrowed money on stocks
was compelled to sell to pay off his loans
Trade throughout the country was
brought to a perfect stand-stin as high as
one half Of one per cent. a day interest
was Paid for money, and even at that fig
ure it could only be obtained against the
verv choicest kind of security merchants
were entirely cut off from bank facilities,
and for one moment it seemed as though
MANY of the banks themselves would be
Obliged to succumb. 1t required the strong
arm of the Treasury to prevent the panic
from spreading all over the country. and the
Secretary, who had been misled into official
expressions sound enough in themselves
but tending at that particular moment to in
crease the excitement, fastened to assure the
community that his action, if needed, would
be calculated to bring relief. But in the
meantime the whole community had become
involved in loss the bona fde holders of
railroad and other stocks had seen their
property reduced in value by one-third or
one-fourth, and had. in many instances,
been frightened into selling ut a rulnous