The Cincinnati daily star. [volume] ([Cincinnati, Ohio]) 1875-1880, 1875-08-17
Tho Financial Diflculty.

The stringency whfcn had occurred In
the fall OF 1871 and 1872 was significant OF
the approaching absorption by expand
ing credit Of the legally limited amount
OF paper currency. In the summer OF
1878 the Granger agitation at the west
frightened inv vestors from railroad bonds,
and crippled the enterprises which de-
pended on the continuance of these in
YES ,ments Tor funds. The rebuilding of
Chicago and Boston had also caused
great absorption of circulating capital.
September 8 the New York Warehouse
ana Security Company tailed. followed
by one or two firms involved in railroad
construction. gsIl 4ss al.
Confluence in persons known to be
burdened in this way was impaired, and
a run on them for deposits began. Sep
TEN Der 18th Jay Cooke Il 20. succumbed
to this demand, and panic followed.
The country deposit0rs began to run on
their banks, though without panic. The
country banks called for their balances,
and The city banks called their funds In
from the brokers. On the 10Th the union
Trust Company suspended, followed by
two or three other banks ana trust
companies. The panic on The Ex-
change was 80 great that the
exchange was closed, and remained
closed for ten days. The Gold Exchange
closed on Monday, the I'D, gold at
| l13T premium.
U,l the 10th the Associated Banks
formed an alliance by which seven per
cent. certificates were issued for seven
ty-tiye per cent. Of the value of securities
deposited by any bank, which certifi
Gates were good for clearinghouse bal
ances $22, ,OO0, 900 of them were issued be-
fore tie tide turned. The President and
Secretary were in New York on the 2lst,
but refused to draw ON the $44,0O0, QUO.
The Secretary ordered bonds TO be
| bought as a measure OF relief, and VIZ
100000 were bought. This depleted the
easn ON hand, and before January l he
was Obliged to issue over W, 600 OF
| the S44, ,00O, 900 tor current expenses.
This carried the greenbacks up to $685., :
100000. The suspension of paper pay
ments by the banks lasted until Noyem-
Der %. Meanwhile the crisis was affect
| ing industry in all forms. 1t produced a
general doubt of the status and Of the
| uture. Hours Of labor and wages were
reduced and workmen discharged. The
lack OF reviving courage and enterprise
has been marked, and is due to nothing
else tnan the general feeling that there
can be no permanent cure until the
| financial problem is solved. The tail.
| ures in 1878 were 8, 1873, liabilities, $22S,-
IOO. 900; those in 1914, $3.50, liabilities,
Sl65, ,2U0, 900. The act Of January IA, 1875,
| specified January ], 1879, as the day Tor
resuming specie payments.
The people of O new country are not
likely to be very careful tinanciers. They
have no traditions TO carry down the
| warning of the past. They are not
| trained TO look back or to look forward.
| they do not look back, because the
great achievements Of yesterday only
provoke smile to-day. They do NOT
look forward, because they trust their
power TO deal with whate ver may come.
| Ne must not expect what is inconsist.
| emit with the conditions. III we look to
! tue past, there has been great progress
| Tue theories on which the colonists
| based their paper ''Danks" obtain atten.
4 { on from no sober men to-day. ,.s.s..
| The banks, whatever their faults, are
are not ike those of l8A6, nor yet not
| like those OF 1886. NOn tine otherlhand we
| are still struggling with the problem OF
currency and taxation and debt. A stu
dent of our past history can hardly ex.
pect that these will be solved by he,
roic effort, but by q long and painful
growth up to the condition that financial
| make-shilts do not pay, and that the
1 first condition OF dealing successfully
with financial difficulty is to get free
| exercise Of the national productive pow
| ers.-Professor w. G.. Sumner, in Har.
per's Magazine for September. 0