The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1873-10-22

Could the Panic have been Prevented
BY the Prompt Action Of the Cow
eminent 7 And can IL be AlleViated
now by Using Its Reservesi
Perhaps some Of our readers have heard
ola writer on political economy named
BAaEHoT, a writer spoken Of as "iamoul
the world over" although we confess our
selves unfamiliar with his reputation
One of our exchanges in referring to him
and his views on financial matters says
that II Mr.. BAeEHoT had written his book
since the commencement Of the recent
financial troubles, and had penned 1t In
this country, he could hardly have 50
worded 1t as to make its teaching more
applicable than they are to our condition.
The New York Tribune gives a sum
mary OF Mr.. BAaEHoT's theories as to
panics and the proper method Of dealing
with them in their incipient stages. We
quote as follows from this summary:
"If the evil day should suddenly come,
and financial circles are struck with
panic, Mr.. Bagehot undertakes to show
that free disbursement Is the best policy.
A panic, he affirms, Is o species OF neu-
ralgia, and according to the rules OF
science must not be starved. The hold
ers OF the cash reserve must be ready not
only to keep 1t for their own liabilities,
but 10 advance 1t freely for the liabilities
of others. They must lend to this man
and that man whenever the security Is
good. In wild periods Of alarm one fall
ure makes many. The best way to pre-
vent the deriyatiye failures is to arrest the
primary failure which causes them. A
panic at first Is only kind Of vague con:
versation. A hundred people are talked
about. 10 Smith as good as he used TO
be? Has not Brown lost money! u
Jones as firm on his feet as formerly !
Every day, as the panic grows, this hoat..
ing suspicion becomes more intense, and
spreads more widely. It attacks more
persons, and Is more Virulent than
at first. All men Of experience, there
fore, try to strengthen themselves in
the early stage Of panic. They
borrow money while they can. They
offer notes for discount which in com.
mon circumstances they would not have
offered for weeks TO come. II the mer-
chant Is o regular customer, the bank
does not like TO refuse, because II may be
said TO be In want Of money, and so may
attract the panic to itself. The panic Of
1895 was stopped by the liberal course OF
the Bank of England. we lent money
says one Of It's officers, by every possible
means, and in modes never adopted be-
fore; we took In stock on securities; we
purchased Exchequer bills; we made ad-
vances on Exchequer bills; we not only
discounted outright, but we made ad'
vances on the deposit OF bills Of exchange
TO an immense amount; In short, BY every
possible means consistent with the safety
Of the bank, and we were not on some
occasions over nice. Seeing the dreadful
state in which the public were, we rem
dered every assistance In our power.
This treatment produced the desired e.
feet. After a day or two the entire pan
ic subsidized, and the city was quite calm.
The deduction from the foregoing Is
that the Government and also the banks
should have paid out their reserves freely
at the very outset OF the panic, for in.
stance the day after the failure OF JAY
Cook 3 Co., and that such course would
have allsyed the first burst OF apprehen-
sion and in that way have avoided very
much If not all subsequent troubles.
Speaking OF the payment of Govern
ment and bank reserves at time like the
present, the Springfield Republican has a
lew words on the subject that follow sp'
propriately in connection with the views
OF Mr.. BAaRHoT as above expressed. II
says that sin panic time reserve, II 1t be
respected, is a dead weight" and further
expresses itself as follows:
"When the famine draws on, and the
king feeds the multitude from his graina.
ries, 1t is no comfort to the people to as
sure them that OF certain point, two
thirds the way down the bin, the availa'
BILE grain ceases, and all below It Is re-
serye-an inlexible reserve, fixed by law
The king might as well transmute one
third of his bounty into sand. The top
of the reserve is In that case the bottom Of
the bin. So with our infexible legal re-
serve Ito secure deposits, we mean,) In
banking; the utility Of the bank as a
money.Iender and preventer Of panics
ceases where the reserve begins. Reserve
for what? For an emergency, 10 be sure
But II 1t is fixed by law as infexible, It ID
OF no use even In emergency-mereIy q
paralysis OF 80 much per cent OF possible
utility. Plainly, therefore, the reserve tC
SECURE deposits cannot BIO fixed by law ioi
any good purpose"
We shall add one more quotation on
this subject, subject by the way that Is
Of much interest to tho public, albeit the
opportunity, If there was one, to put these
views to the test has passed away in good
part, Il not altogether.
The quotation Is from writer in the
Richmond Dispatch; a man whom the
editor Of that paper says has often been
characterized as having "level head"
He publishes letter dated October 10 to
the Secretary Of the Treasury, in the
course Of which he calls the Secretary's
attention to an act Of Congress passed at
the last session allowing the use Of the
lorty.four millions Of reserve, an act, by
the way, that we do not recollect having
seen noticed before and that we think did
not pass. .l .l-l
Be that asit may, however, the writer
argues that now Is the time to draw upon
the reserve, and we quote from his letter
rs follows: T - Es7n.
IAN act of Congress passed at the last
session provides for this case in allowing
the issue of ioFty!four millions reserve