Lexington weekly intelligencer. (Lexington, Mo.) 1871-1887, 1873-10-15
y. Financial Lessons .,.4s
The History of Money Panics In
. ...... America.
IFrani the New York n,ra'd.l

"Ut
Tue imancIul lessons vt lne past
sl,uuid not ue y ittlout Interest VI lhc
present Junclurc. We propose 10 r,-
cite u bltYIs history. he hfsl rcsi
I'M. uisc 10 Speculate III this countr!
followed the war Of lSl2 hen tht'
government issued St6,ccu,OUO Of
treasury Hotes, aud l,iactu loans
to $40, ,vtO. III 1915
here were two hundicI aud eight
banks, With n cupIt..I oi 49,, ,uoo,uJO.
w iicu Tie peace vi Utrecht was ar-
clared, tiiese begun 10 i..ii, and IN !,
lew iilolllis $l0.cu0,G wv " as sMspt 9u1 y
vi SXistelIce. .-. j.,
irls Now york. stock cxchtnse
was created in 1917. and III 1870 IN.
country Witnessed lie first ,i'lu fever
oi speculation. People besah 70 u
Uc s.ile,s on ..margins even thcn,
anu the temptation, 10 purchase err
uiicatcs of shares with oat small
. pay tH.ent only intensified tl'e ulsvase.
A Water-works compaI!, lor in
s,a'.cc, was autliorIz, u to hold
s., ,V9yo. 600 Of capital; $40, ,U0u,oOO We're
eu useribed. The Morris Canal and
Banking Company, whose capital wa
dNcu- at 81. .eOO, 900, had $1,000 ,00O oi
su Dscl iD;ions. There We're SIX hun
drcd ard twenty-four new joint COM
panies organiZcd III Great Britain
between 1924 and 1926. They dis
tributcd immense dividends, anu
thus stimulated speculation on oui
side of the Atlantic Corporation,
in New York and Philadelphia fo
lowed suit, paying five, len and
fifteen per cent. sem;-anuually.. Thu
tie railroad movement begin, amt
W As helped on by states until ''secu
| rities'' were counted by millions. IL
the year 1888 there were of bonds
S6u ,OU0, 100 for banks, $40 ,0oO,0 600 !ol
railroads, $50, ,OG0, 900 for canals, ant
So, ,0U0 600 representing m!scclian'
ous and more local projects. Thcs
bonds chiefly concentrated i'll th
New York stock exUhanyc.- True
New York to-day does two hundre,
times more business than was don
then, but country AMI capital have III
creased in proportion. Reaction st
in as early AS 1884. Fhc market b.
came stringent during that year, an
bank loans rose from iOrtv-scFcn I
sixty millions of dollars. Mono
cu,,tinucd to harden. Banks an
: brokers failed right u.id LETT. Def.
e cations came TO sudden tight, all
sleepy directors wcrutiot unirequeu
lY, then as NOW, amazed at the til
cuvcry of false entries on their bonhi
Sptcula!ion, however, confined t
!, run riot ali over the country. Moi
sIer swindies showed their heat
! every where. Government ageu
sold $40, 100000 of public lands
about IL year, deposited the proceed
:, in local banks, and these were luaile
out to fresh buy ers until the iTflltit
= Ut credit was for those times som
lthiny fearful. Finally the crat
came. The harvest OF 1856 failc
= The producer could not pay tne L
taller; tho retailer could not scti
> will, the jobber; the jubber was III,
ble 10 meet his oblis cations with Il
Importer, and every link in the cha
of trade was broken aud out
place. The real estate bubble di
<, solved in thin air. and te
months saw the west insolveht. III
losses amounted 10 hundreds of hi
. lions Of dollars. The consequence
extended everyw here. Sixteen ban
dropped out of existence, sinking
IS they went GOWN 1892 ,G60, 600, and {
Ii Ii creditors realized i'll their scttlene
about uuc cent on the do,,ar. ST
laws followed, and The era of pap
currency and new slate securiiis
The resumption of specie pay men
a bv the New York banks through
:" ioau ot five miiilUn dollars made
at .i the bank of England two years lai'
v AID lie process Of recovery, a
IN phases of the history with viii
i we have not now to deal.
We hsvc simply recalled some OF I
n. incidents that led up to the panic
1897, in order that the public IN
- compare that period with the pr,
TO ent. The events which culIn!uat
J, in the misfortune of 1857 began th,
re influences as eariv as 1858 and 1S
=. and chiefly baong 10 the history
=, railrond speculation. The count
er was itch. Trade WAS lively and lh.
was .urfcit of gold and ctrrcnt
- No better opportunity Offered
successful ventures. The Nrw Iu
ed stock exchange was Il power i'll
he land. The credit of brokers "
m m great. They could draw checks
m accommodating banks for ten tin
IN the amount Of th 'ir deposits, win
s ry were promptly certified by payi
teIlcrs. Banks relaxed their scruti
. of securities in their eagerness
call loans and the weekly average
NJ, loans Oh promissory notes and sto'
ah was from niuety-five to u hundl
.,I .sI millions. The Journals at the {
ihs sang hulleiujahs over the credit
an an the country and ita unbount
]. prospcrity. aud not a cloud could
. ,iescrird. Five and six per cent. ,
current interest in this riiv, while
,r London capital cnuld not comm;
10 more than "ite and a half or two
y; "; eent. per annam. Hence Engi;
~. nM again became purchaser of An-ri
W. securities. Her capitalists bau
nay largely of railroad bonds, taking
81: hest. Hundreds of houses at ho
!. likewise had their capital in bo,
In short everybody Invested in no
because they were paying large iu
LIE est. Finally, however, there Wa
e., 81, sudden check TO all iliis ma
- ,rbcrn were rtItnorS of wnr on