The Somerset herald. [volume] (Somerset, Pa.) 1870-1936, 1878-09-18
HISTORY or OUR PANICS.
THREE GREAT FINANCIAL
DISASTERS.

a review of the various financial pan
les which have occurred in our histo-
tory, and, after reciting, briefly, the
history of the United States Bank up
to the year 1919, thus tells the story
OF the disaster that befel our trade in
that year:
Fortunes were wiped ont in a day,
speculative companies that stood ev-
erywhere thick as shocks in a wheat
field, vanished ~magically, and share.
holders were aghast suburban lands
and city lots that we're to return q
h~undredfold dropped to almost worth
l~essness. As an example of the Of
feet of the panic on real estate here,
an old citizen says that land on BoyG's
Hill held at $4,000 an acrs dropped
to 500; lots on Fourth avenue held
at $4,000 fell to S100; property in
the region of Market street, on which
were good brick houses, only partly
paid for, were wholly abandoned, as
property quite as good could be
bought for less than the sums due on
these. But the United States Bank
with iti capital Of $50, 600 weathered
the storm, and by furnishing the coun-
try again with q stable currency of
uniform value, won back coy conf
denee, and again compelled the State
banks to 60 into liquidation, or to
raise the value Of the notes to the
standard of the national bank notes.
This. together with the temporary
settlement of the slavery agitation by
the compromise of 1920, and especial
ly with the impetus given to home
manufacturers bv the tariff OF 1924,
and the work of internal improvements
set the country upon It's feet nee
more.
at is not in man, however, 10 let
well enough alone, above all when il
stands in the way Of bis political the
DRY. The second charter of the bank
was 20 expire in 1886. Whensibe
Thirty third Congress assembled on
the % Of December in that year,
President Jackson said in his Mes
sage that in the interim his Secretary
of the Treasury had ordered the re-
moval Of the Government deposits
from the United States to the State
banks, and he gave as his principal
reason for this that the bank had
used these deposits f,r partisan pur-
poses. The parliamentary warfare
that followed this action VAS uDpar-
allelled for vindictiyeness, and is too
long 10 be narrated here even il ger
name to the subject The constitu-
tional point Involved was the old one
that Jefferson had ~contended fer, viz
the power to charter banks is a right
reserved to the States they alone
could supply a constitutional paper
currency. The State rights question
had come bounding to the surface
agaio. The authoritative recogni-
ton Of the value and usefulness of
State banks, and the importance at.
tached to them as Government depos-
tories, stimulated their organization
to an extraordinary degree. Many
were chartered TO take the place of
the United States bank, :he closing
of which was expected. The State
banks increased from 2S2 in 1880, to
632 in 1881. During the same per-
iod their capital rose from S145, 000,-
900 to $3.50, 600, 600 their circulation
from SCI, 900. 900 o Sl49, 600, 900; their
loans and discounts from 5000, coo, 600
to S4S5, 000, 600; their deposits from
$55, 000. 900 10 Sl27, 600, 600. Thus
during these seven years the banking
facilities of the country had been con-
siderably more than doubled, while
the increase in the capital Of the coun-
try was small, and there was no man
ifest need of the addition of q dollar
to the currency. The result of the
increase of the currency was an unex-
ampled delirium of extravaganza and
speculation, in the midst of which
came the destructive collapse Of 1887.
Ruin reigned on every hand almost
every business man and business
house 10 the land was Involved in
the common wreck. Collections were
next to impossible, and in some States,
as notably Mississippi, wholly so.
Credit everywhere was destroyed.
There was u general suspension of
banks at the FIRST blast of the storm
of 1887. Ia 1888 they made o heroic
%endeavor, and resumed payment, but
the year following those of Philadel-
phia and the regions of the South and
West again bent before the storm.
The distress was pitiful, and during
the first two years of the panic it
was necessary 10 import large quon.
titles Of food from Europe. The
country that q short time before
abounded in what is called wealth,
and boasted loudly of its many re-
sources, could not furnish bread to
the hungry. The failure of the banks
holding the deposits Of tie Govern
meut left it without a penny. Con-
gTess was hastily Summoned, and
Treasury notes we're Issued 70 keep
the department going until the Sber-
III Could sell out the share holders of
the defdnct banks and recover the de-
posts. Finally the Government d.
vorced lis monetary affairs from those
of trade and commerce, and cstab-
listed the Independent Treasury.
The disaster was so complete that one
cannot point TO any exact date when
the hard times ceased. The recovery
vas in fact in the gradual recreation
Of the ruined industries
Until 1858 the volume e paper
money increased slowly, and only ac-
cording to the actual waCts Of expand
ing trade, but at that period specie
began to gaia largely on the volume
Of paper, and the people, learniug no.
thing from the painful lessons OF the
past, enlarged the volume Of paper in
proportion 10 the ;ntdx of gold from
California, until, ia 1857, the c~ircula-
ton reached $2l4,0 600, 900, which vas
far beyond legitimate need, and then
zane the third great Commercial cris-
is OF cur his,ory-,he panic 4 1857
According 10 Treasury statistics, the
actual bank circulation of tha: wear
was $2l4,1IS,S92, and Inside Of u