The New York herald., 1873-09-15
1 8 3 7 80 i 8 5 z.
Some Recollections of Former
Monetary Crises.
OUR PRESENT CONDITION.
Events Of the Week-The Bank Statement
and Markets Generally.
TIE FLUCTUATloM I'm sToCKs.

WALL STREET,
SUNDAY, Sept. IA, 1873.
The financial lessons OF the past should not be
without interest at the present iuncture. Wepro-
pose 70 recite bit of history. The first real i'm
pulse to speculation IN this country followed the
war Of 1872 when government issued $18 600 900 OF
Treasury notes, and placed loans amounting to
$lO9 100000. in 1916 there were 2OS banks with
capital of $s2 600 00o When the peace OF Utrecht
was declared these began to fail, and In a few
months S4O,o0o.000 was swept out OF existence.
The
NEW YORK STOCK EXCHANGE
was created In 1877 and in 1926 the country wit
messed the first mad fever Of speculation. People
began to do business 'margins" even
then, aud the temptation to purchase GER
tincates OF shares with but small pay.
ment only intensified the disease. Water
Works Company, for instance, was authorized to
hold $2,Oo0,o00 of capital; $10,OOO,o0O were sub.
scribed. The Morris Canal and Banking Company,
whose capital was fixed a: $1,000, 900, had
$2oooo,OOO of subscriptions There were e24 new
joint stock companies trsaniZed in Great Britain
between 1924 and 1925. They distributed
IMMENSE DIvIDENDs
and thus stimulated speculation on our side of the
Atlantic. Corporations in New York and Phiadel-
phia followed suit. paying 5, 10 and Is per cent
Semi-annually. Then the railroad movement
began, and was helped OH by States until 'securi-
fies' were counted by millions In the year 1898
there were of bonds 500 1000, 900 for banks,
100000 600 for railroads, $50 900 Tor canals and
$4,000, 600 representing miscellaneous and more
local projects. These bonds chiefly concen trated
In the New York Stock Exchange. True, New York
to-day does
TWO HUNDRED TINES
more business than was done then, but country
and capital have increased in proportion. Reac-
tion set in as early as 1884. The market became
stringent during that year and bank loans rose
from iorty-seven to sixty millions Of dollars.
Money continued to harden. Banks and brokers
failed right and left. Deiacations came to sudden
light anu sleepy directors were not unfrequenty.
then as now amazed at the discovery of
FALSE ENTRIES
on their books. Speculate however, continued
TO run riot all over the country. Monster swim.
dies showed their heads everywhere. Government
agents sold $4o,OoO,o0o of public lands IN
about year, deposited the proceeds in
local banks and these were loaned out
10 fresh buyers until the imitation OF
credit was for those times something fearful.
Finally the crash came The harvest of 1896
failed. The producer could not pay the retailer
The retailer could not settle with the jobber; the
tobber was unable to meet his obligations with the
importer, and every link IN the
was broken and out of place. The real estate
bubble dissolved in thin air, and few months saw
the West insolvent. The losses amounted to hun.
dreds Of millions OF dollars. The consequences eX.
tended everywhere. Sixty banks dropped out OF
existence, sinking as they went down 1892 o0o O00
and the creditors realized in their settlements
about one cent on the dollar. Stay laws followed,
and then the era Of paper currency and new
State securities. The resumption Of specie pay
ments by the New York banks through
LOAN OF FIVE MILLION DOLLARS
made by the Bank OF England two years later, and
the process of recovery are phases of the history
with which We have not now to DEAL We have
simply recalled some Of the incidents that led up
10 the panic of 1897 in order that the public may
compare that period with the present. The events
which eliminated in
THE NsFORTUNEs OF 1857
began their influence as early 1853 and 1854 and
chiefly belong to the history Of the railroad specu.
iaton. The country was rich. Trade was lively
and there was q surfeit Of gold and currency. No
better opportunity ever offered for successful ven.
lures. The New York Stock Exchange was q
power in the land The credit OF brokers was
great. They could draw checks on accommodating
banks for ten times the amount Of their deposits
which were promptly certified BY paying tellers
Banks relaxed their
SCRUTINY OF SECURITIES
An their eagerness for call loans, and the weekly
average Of loans ON promissory notes and stocks
was from nnety-1ve to q hundred millions. The
journals OF the day sang haeluahs over the credit
OF the country and its unbounded prosperity, and
not cloud could be deserted. Five and six per
cent was current interest in this city while In
London capital could not command more than one
and hall or two per cent per annum. Hence
ENGLAND
again became purchaser OF American securities
Her capitalists bought largely OF railroad bonds,
waxing the best. Hundreds OF houses at home,
hkSwise, had their capital In bonds In short
everybody invested in bonds, because they were
paying large Interest Finally, however, there
was sudden check TO all this mania,
Ahere were rumors OF war on the Cont.
nent. Ihe English capitalists became tirnid and
returned their securities for realization. Bread.
s'uns advanced. Deposits decreased. Heavy i'm.
portatons became due, and o little later the banks
were absolutely forced to the calling in of loans
e'oeAs no~ 'eli rapidly. To stem the wave was
Impossible, and the money institutions were LETT
with
GREAT LOAD OF STOCKS
and bonds that were daily diminishing in value
The year 1854 offered anything but a prosnect NJ
relief Great issues OF fraudulent stocks were d,s
covered; 10000 illegal shares OF great railroad
running out Of New York had been sold AZ mar hv
one OF its principal ofneIals; 100000 worth Of
forged stock Of another company was on the street.
there were minor breaches OF trust by the score
and suspicion filed the air. Several Western banks
and few In this neighborhoOd suspended
THE DEPRESSION OP PRICES
was enormous. Reaction followed in 1856. Those
who dared to buy at the low prices of 1854 made
fortunes. Crops were good, the older railroads
pad handsome dividends and the bulls were jubl.
liant. New and competing lines now came into the
picture Their bonds sold for anything they would
fetch. and thousands both sides of the Allan tic
came forward as buyers. The banks loaned money
on these securities In little more than six months
10 the amount OF over
TWENTY MILLION DOLLARS.
o'ooks moved gradually downward. but manic