The New York herald., 1873-11-30
THE PANIC OF 1873.
Important Rep',rt of the Comptroller
OF the Currency.

The monetary crisis OF 1873 yny,y be said to hive
sad its beginning III New York city on Septeylber
by the failure Of the Warehouse Security Com
heir regular business to- embark in enter
prlses foreign thereto which were followed on
18th By the failure ths s;n 9 large r% Of Of
the largest banking houses in the city, well known
throughout the country, which were interested in
curities also failed, ami on the 2oth OF the same
month the failures al the Union Trust Company,
the National Trust Company the National Bank OF
the Commonwealth and three other wellknown
banking houses were announced.
On the same day
THE NEW YORK STOCK EXCHANGE,
for the first time IN its experience, closed its
doors, and they were not again opened lor period
o. 10 days during which time legal tender notes ss
from onC-iourth oil one per cent TO three per cent
An active demand for deposits commenced on the
18TH, nd increased rapidly during the lsth ana
10th, chiefly from country correspondents OF the
banks, and their drafts continued TO such an ex-
tent :aing pack their deposits III meuihn hs
before received, that the reserves OF the Dahks
were 'alarmingiy reduced.
TIE CALL LOANS,
amounting TO more tnan S60,uOO,OOu, upon MmCh
Ine banks relied TO place themselves III lunus IL
such an emergency, were entrey unaN aNaila.
bic. because the means OF the borrowers
Wssre, to great extent, pledged with the
hSnks, upon the sale of which they relied to
replenish their funds THESE c1aters s 81 ~ th oru n
mer no market could be found, except ut ruinous
sacrifices. Had there been market the payments
WOTld have been made IN checks upon the asso-
ciased banks, which would not have added to the
general supply q cash.
"A meeting OF the
CLEARING HOUSE ASSOCIATION
was called, and on Saturday evening" September
90, a plan for facilitating the settlement OF bal
ances at the Clearing House was unanimously
THE SUSPENSION OF CURRENCY PAYMENTS
followed and was at first confined TO banks OF New
York city, but afterwards extended to other large
cities, because the New York banks could not re-
spond to demands OF their correspondents IN those
demands OF their correspondents. the eX-
change on New York, which would otherwise
at discount and to a considerable
extent unavailable. The suspension OF the banks
in other leading cities, almost without exception,
therefore followed and their partial or entire sus
pension continued for 40 days, until confidence
was IN measure restored by
THE RESUMPTION OF THE NI~N. YORK CITY BANKS
on the lst day OF November. Although predictions
had been made OF the approach OF a financial
CRISIS there were no apprehenslons OF Its lmmedl-
ate occurrence; on the contrary there were, in al
Most every direction evidences of prosperity. The
harvest was nearly or quite complete, and the bins
and granaries were iuli to overnowing. The manu-
featuring and mining interests had also been pros
porous during the year, aud there was good
wOuld be as large as during previous years.
THE VALUE OF THE CEREALS.
potatoes, tobacco and hay for 1872 Is estimated by
the Department OF Agriculture AT s1.524, $1,000.
1t Is supposed that the value OF these products for
this time ready for sale @ and awaiting Snip
ment TO market, Will not vary materially
from the above estimate OF last year.
year. An estimate, based upon the census returns
OF 1862 gives the probable aggregate value OF
marketable products OF industry for that year AS
81, ,o36, O00 600, and similar estimate, upon the
same basis and upon the returns to the Agr-
cultural Department, gives an increase Of
81, 7Ss 000 GOO Tor 1873 over the amount or 1865
LOGIC OF FACTS.
II is not the province OF the Comptroller TO ex-
plain the causes which led to this suspension. In
order to enter upon such an explanation II would
be necessary to obtain comparative data for
series OF years in reference TO the imports snd
ports The products OF Industry, the issue OF cur
rency and Oh other evidences OF debt and,
an fact general discussion OF the
political economy oil the country. The immediate
oil the crisis is, however, more apparent The
money market had become overloaded with debt
the cost OF railroad construction lor the five years
past being estimated TO have been ST. 100000 0Oo or
$340 0O0, 600 annually, while debt, based upon about
almost every species OF property-state CITY,
town, manufacturing corporations and mining com-
panies-had been sold IN the market. Such bonds
and stock had been disposed OF to a considerable
extent IN foreign markets and as long as this con-
tinued the safe OF similar securities was stimulated
and additional amounts offered. Wlen the sales OF
such securities could no longer be effected abroad
the bonds OF railroad and other enterprises OF ike
nature which were in process OF construction were
Thus forced upon the home market until their
negotiation became almost impossible. The bank
ers OF the city of New York who were burdened
with the load could not respond to the demands OF
their creditors. The numerous holders OF similar
securities became alarmed, and the panic soon ex-
tended throughout the country.
CAUSE AND CONSEQUENCES.
The present financial crisis may in great de-
gree be attributed 10 the intimate relations
OF the banks in the city OF New YORK
more than one-fourth, and IN many cases
neariy One-tnlrd, ol 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 unsettle, instead OF facilitating,
country. Previous the war the STOCK
Board is said to have consisted OF only $50
WAS
and conservative constitution and bylaws. The
close OF the war found the membership OF the Stock
Board increased TO 100, and composed OF men
from all parts OF the country, many OF whom
had congregated in Wall street, adopting
for their rule OF business the apt motto
OF horace MAKE money. Make IL honestly
u you can Al all events, make money" The
tanned on the statute book since 1913, restricting
the operations OF the stock Board, had. unfor-
tunately been repealed in 1858, That its mem
bers and manipulators were enabled TO increase
operations to a gigantic scale.
The quotations OF the Stock Board are known
10 DC frequently 1cuons OF speculation aud vet
these nctions control the business and commerce
Of great country, and their influence is not con-
nned to tins country, but extends to other coun-
Ires ana seriously inpars our credit with
foreign nations.
THE FICTITIOUS DIETS or RAILROADS
and other corporations which they have bolstered
mp, and which have obtained quotations in London
and other markets OF the world, have been re-
duced to a more proper valuation or stricken from
States or the Legislature of the state OF New York
may not re-enact law reviving similar restrc-
csts of AL parties is respectfully submitted
CURE.
Many measures Of reform proposed IN order
that the lessons OF the crisis may not be and
Others be led thereafter TO commit similar errors.
Unity OF action among the leading banks OF the
great cities Will do more TO aouses than any
Congressional enactment, for unless such corpora
lions srail unite and insist upon legitimate methods
of conducting business the laws or Congress IN
reference thereto Will be likely to become in
operative, such enactmenfs be observed in their
true spirit by the few, while the many evade them
anu thus invite repetition OF similar diasters
-, however, the banks arc dsinclned to
hhlte lot such purpose, the legislation
required OF Congress will be such az will induce
assoclationh outside OF the city of New York TO re-
tain In theH vaults such funds as are not needed
ny .ne commercial centre Tor purposes Of legitI-
BANK RETURNS,
Inc comptroller, In order TO obtain statistics of
the condltioh OF the banks during the late panic
~ well as Just previous to ITS mmeDcewent Is
sued circular calling upon all the national banks
Tor reports on October ls, the day on which the
banks Of the city Of New York had the sm alieet
amount OF legal tender notes during the