The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1873-04-08
The Panic of 1897 and the Expan.
SION Of 1873.

The Panic of 1897 and the Expan.
sion Of 1873.
Communication In the N. Y. POSt.l
The United States Bank, in Philadel-
phla THE State Bank, was ruined, with
forty millions Of dollars Of capital, much
in the same way. From September
1886, 10 about March, 1887, the rate Of
money for the best paper was from one
and half 10 two and half per cent per
month. In April following confidence in
mercantile paper was nearly all gone, as
these ruinous rates Of interest were sup.
posed to be enough TO ruin those who
paid them. AS earl as February, in
1897, confidence rapidly diminished
among merchants, until in March, they
nearly all began to talk openly Of sus'
pending ut Ouce, rather than Of being en-.
tirely eaten up with extra interest. Il
was more than suspected that much OF
the bank capital was discounted to the
directors at seven per cent, end they
ground 1t over in the street at the high
rates for their individual benefit. All
now saw that something must be done to
relieve the merchants or a general failure
would at once take place. All kinds Of
measures were suggested for relief, but
none were practical.
At last all eyes were turned upon
Nicholas Blddle for relief. as President Of
the United States Bank. Delegations
were sent on to implore Mr.. Biddle to
come to New York and save the mer-
chants. At length he consented to come.
AS he walked down Wall street, which
was filled with anxious faces, hats were
of, aud cheer after cheer followed his
every step-all felt from his presence new
courage; while the street WAS crowded
from hour to hour, all waiting to hear
what words might drop from the mouth
Of this man, who alone, 1t was believed,
had tue power 10 save them. Alter q
day or so he gave them words Of encour-
agement, and hope actually revived; and
now the farce Of "kiting" for relief began,
that eventually ruined the United States
Bank and mainly caused the New York
banks TO suspend, and ruined nearly all
the merchants.
Mr.. Biddle proposed that bis bank
should issue bonds for several millions, in
convenient sums, payable in twelve and
eighteen months, for which he would
take one.third in cash and two.thirds in
bills receiVable-paYable in about four
months. Thus, q merchant who wanted,
say thirty thousand dollars Of the bonds
would take to Mr.. Biddle's agent $4,000
in money-whlch might cost two and a.
half per cent per month-and $4,000 in
bills receivable. In this way much Of the
available money IN Now York went into
Mr.. Biddle's bank, and had not all the
bills receivable nearly all failed he would
have held Wall street in his hand. It was
In fact on the part OF Mr.. Biddle plan
by which he could, by exiting" borrow
on twelve and eighteen months several
millions Of dollars from New York mer-
chants!
Next In order came the "kiting" Of the
Western States. Illinois and Indiana Is.
sued some fifteen or twenty millions
Of dollars each in the bonds of these
States. Mr.. Biddle saw he could "kite"
again on larger scale. He took largely
OF these bonds, relying upon their sale in
Europe, with the endorsement ofhis bank,
and paid the States for them in the bonds
Of his bank payable in one and more years
in London. All now began to feel dis
trust. 1t was In vain TO point to the bank
capital Of forty millions Of dollars, and to
the wealth Of those States. All this did
not restore confidence. There was such
an air OF exiting" that men imagined
more than they could see.
The credit Of tho States became 60
Frustrated they could not pay their inter.
est, and down fell their bonds, from par,
to twenty cents on the dollar. The fail
ure Of the bills receivable and the fall oil
the State bonds shook confidence in the
bank, until the bank itself for its own
support began to flood the market with
Its own Certificates Of deposit" in various
sums Negotiable like bills receivable),
payable from three to twelve or more
months, which began selling at seven per
cent annum, and then above twelve per
cent, and 80 on till there was no sale for
them.
The credit OF the bank, of course, be.
gan TO weaken; its stock fell, almost
daily, from 100 down 10 six dollars for q
share Of one hundred dollars. Finally,
the whole concern of the bank was sold
for a song TO the paper makers, which
finished its existence, and Mr. Biddle,
who was considered the best fnanCier Of
the age, until he was seduced into Exiting"
died, and probably Of broken heart.
There Is something in the air when
large men begin to kite" that can be
felt, but cannot be well described, and
which invariably destroys confidence,
In our day we now see much of this ru.
inous policy resOrted TO. AS soon as we
hear a banker has made half a million dol.
lars in outside matters his credit weakens.
His bills are slower and slower in sale,
until, generallyf he will be driven TO "kit.
ing" and then 10 ruin. Whenever there
Is Exiting" there Is screw loose" and
ruin generally has followed TO one par
~ or the other.
But how are bankers to pay some $780,.
900 or 100000 for personal expenses un-
less they are rich enough TO have a large
income from their actual capital; or 20
into some outside speculations? No reg.
ular business can stand such personal eI.
penses.
There would be but few failures If the
example of the late Amos Lawrence, oil
Boston, should be followed, which was
not to owe moro than twice and half the
amount OF the CApital-that Is, il o mer-
chant has 100000 capital, he can safely
give out notes Tor $S50,000. His idea was
that man thus situated could generally
be carried through the most severe panic
HEADS OFF MAY 20TH.-Frequent in
qnires arc made at the Internal Revenue
] iImrnan az IN Hrhnn thu act Of Dnnnmhhr