New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-12-01
TILE PANIC OF 1873.

WASHINGTON, Nov. D.-Ihe report vi o"o N'
troller of the Currency has the following with rel
erence to the panic of 1878
The monetary crisis of 1873 may be said to have had Its
beginning in New-YOrk CITY Sept g. by the failure OF
the Warehouse Security Company and OF two houses
which had left their eguar business TO embark In enter
prises foreign thereto which were followed on tho iot
by the failure OF large firm OF storkorokers' oh 'no
18th and 10th OF the largest banknghonses III 'he
city well known throughout the country whch were
Interested in the negotiations ofarg amounts OF
securities also failed and the 10th OF the same montn
the failures OF the Union Trust Company the Natona
Trust Compapy the National Bank Of tho Common
wealth and three other well-known banking-honses
were announced. on tho same day the NewforK StocA
Exchange the first time In its experience coseu iS
DOORS and they not again opened FOR perioo VI
ten days during which time legal tender notes cOm'
manded premium certified checks OF from one
fourth of one per cent three per cent An active de-
maud for deposits commenced the 18Th and Increased
rapidlv during tho 10th and 2Oth chiefly from country
OF the banks and their drafts continued
to such an extent, "calng back their deposits
I'm q medium never before received" that the re-
serves OF the banks alarmingy reduced
The call loans, amounting to more than S0Oco'OO,
upon which the banks relied to place themselves III
funds, in such an emergency entirely unavailable,
because the means Of the borrowers TO great ex
tent pledged with the banks, upon the sale OF which
they relied TO replenish their funds These coateras
in ordinary times could have been Sold but at the time
no market could be found except at ruinous sacrifices
Had there been q market the payIsptS would nave
been made in checks upoh the associated banks, which
would have added to the general supply OF cash.
meeting OF the clearinghouse Association was
called, and on Saturday evening, Sept %. plan
for facilitating the settlement OF balances at the Clear
ipahouse was unanimously adopted The suspension
OF currency payments followed and was at first con-
fined to banks Of NewYOrk City, but afterward ex-
tended to other large cities because the New-forK
banks could not respond to demands OF their GOTHIC
spondents in those cities, and these IN turn could not
respond to the demands OF their correspondents The
exchange on New-York, winch would otherwise nave
commanded a slight premium at discount, and to
a considerable extent unavailable. The suspension OF
the banks in other leading cities almost without excep
ton therefore followed and their partial or entire sus
pension continued for forty days. until confidence was
in a measure restored by the resumption OF the New
York City banks the Let dav OF November
Although predictions had been made Of the approach
OF financial crisis there were no approximations OF its
immediate occurrence the contrary, there were. in
almost every direction evidences Of prosperity. The
harvest was nearly quite complete and the bins and
granares were full 10 over1owng. The manufacturing
mining interests had also been prosperous during
the year and there was good promise that the Fall
trade, which had opened, would be as large as
during previous years. The value OF the &C.
estimated oy tho Department OF Agriculture at
a 1924 OO II Is supposed that the value OF these
products for the present year. large portion Of which
was at this ready sale and awaiting shipment 20
market. will vary materially from the above est
OF last year An estimate based upon the census
returns OF 1869 gives the probable aggregate value OF
marketable products OF industry that year as 1905
O)O0DC and a similar estimate upon the same basis and
upon the to the Agricultural Department, gives
an increase OF for 1873 the amount for
1868.
1t is not the province Of the Controller TO explain the
which led to this suspension. In order to enter
upon such an explanation it would be necessary TO
obtain comparative data for series OF years in refer
enoe to the imports and exports the products OF in
dustry the OF currency aud Of other evidences OF
debt and in fact general discussion OF the political
economy Of tho country. Tho immediate cause OF the
crisis H. however, more apparent The money market
overloaded with debt, the cost OF railroad
construction for five years past being estimated
to have been s7OO.OO0.Oo0, about s3IO.OOo,OoO
annually, while debt based upon almost every
species OF property. State, city, town, manu-
featuring corporations. and mining companies had
been sold in the market. Such bonds and stock had
been disposed OF TO considerable extent In foreign
markets. and long this continued the sale OF smI
lar securities was stimulated and additional amounts
offered. When the sales OF such securities could
longer be effected abroad the bonds OF railroads and
OF construction, thus forced upon the home
ket. until their negotiation became almost impossible
The bankers Of the CITY of New.York who were bur
dened with the load could not respond to the demands
OF their creditors The numerous holders Of similar
curtes became alarmed, and the panic extended
throughout the country.
The prese mt financial crisis may. great degree be
attributed to the intimate relations OF in the
City Of NewYork with the transactions Of the Stock
Board. More than Onefourth, and IN many instances
nearly one-third, OF the bills receivable OF the banks
since the late civil war, having consisted OF demand
loans to brokers and members OF the Stock Board which
transactions have tendency to impede and unsette
instead OF facilitating the legitimate business interest
OF tho whole country. Previous to the the Stock
Board Is said to have consisted OF only members
and its organic business was strictly commission
business, under stringent and conservative con-
sitution and bylaws. The close Of the war found
the membership Of the Stock Board increased to LOO
and composed or men from all parts o, the country
many OF whom had congregated in Wall-st, adopting
for their rule Of business the apt motto OF Horace
" Make money Make 1t honestly II you can. At all
events make money" The law OF the State OF New
York. which had been retained the statute since
1915 restricting the operations OF the stock Board had
unfortunately been repealed in 1858, that
bers and manpulators enabled increase opera
Board are known 20 be frequently ctions OF specua
ton, and yet these fctons control the business and
commerce or great country and their influence Is nit
confined 10 this country but extends other countries
ana seriously mpars our credit with foreign nations
The fictitious debts OF railroads and other corpora
tons which they have bOlstered up and which have
obtained quotations In London and other markets of the
world have now been reduced TO proper yalua-
ton stricken from the list Whether the Congress OF
the United States the Legislature OF the State Of
New-fOrk NAV not reenact u law reyiving similar
restrictions with great benefit to the true business
Interests OF all parties Is respectfully submitted
Many measures OF reform proposed in order that
the lessons OF the crisis may not DE lost and Others be
led hereafter To commit similar Unity OF action
among the leading banks Of the great cities VIII do
10 reform abuses than Congressional enactment,
for unless such corporations snail unite and insist upon
legitimate methods OF conducting business. the laws
Of Congress reference thereto will he likely
become imperative. such enactmens being observed in
their true spirit by the few while the many evade them
and thus invite repetition OF similar disasters. H.
however. the banks disncned 20 unto such q