The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1881-08-18
The lemncrat.
TIE COMING PANIC,

TIE COMING PANIC
Another financial panic is talked Of
much in financial circles. Almost every
one regards it as inevitable, being only
a question Of time.
At the Bankers convention at Niagara
old John Thompson, noted banker of
New York, and man of ideas as well
as money, read paper on the approach
ing blizzard. The signs are numerous,
he said, but very delicate as yet. Panics
occur every decade; it takes about five
years after revulsion to pay up com
promise or wipe out Indebtedness; then
follows five years of prosperity, expan-
sion, confidence in credits--in fact a
boom, then smash-up.
The danger signals now evident to Mr.
Thompson are first our trade balances
with foreign nations, and the heavy im>
portations of gold which has induced
over prosperity. When the flow of the
precious metals is from us, distruSt will
inspire contraction, and contraction will
lead directly to inability to pay. There
is an inadequate amount of real money
10 do business on, and Mr.. Thompson
asserts o5 per cent OF our business and
the business of England is done in pa
per tokens, checks, drafts notes, letters
of credit, ETC., which, so long IS conf
dence is good, are a perfect substitute
for money, but, like young partridGes,
disappear ON CALL not allowing three
days grace. Discounts are declined de-
posts drawn and boarded. Thus not
only the credit system and money token
power is destroyed, but the real money
itself disappears, not to be again visible
until induced out by an enormous de-
preston in prices.
The one alarming indication empha-
sized by Mr.. Thompson will readily oc-
cur to the reader. 1t is the number and
magnitude of new enterprises, involving
the issue of millions and millions Of OBJ.
legations. For two years prior to the
panic of 1873 the same sign of coming
trouble was apparent, but to fractional
extent as compared with the present.
The issue Of stocks and bonds are four
fold now what they were in 1873 He
therefore advises the banks to the greats
est caution and conservation in using
their deposits. We make single eX-
tract from Mr.. Thompsons briet and
trenchant address:
We are positively going too fast, and it
g Io IS Sf ,,,trI1v,, opI rNpra1Nfa ~
to be our duty, to put on the brakes,
that the wreck, when it does come, may
be less disastrous. l instance an item
of the panic Of 1873. Early one morn~
ing the active managers Of three New
York city banks were invited into the
office of Jay Cooke & Co. We were in
formed hat 81 100000 were necessary
by 10 o'c ock to save that house from
protest. What security do you offer?
was asked. Answer-None; our securi-
ties are all used. 1t is needless to say
the million was not forthcoming. We
left. In fifteen minutes Wall street was
in a panic; and this is only a duplicate
of what transpired in 1857, when the
Ohio Insurance and Trust company sus-
pended.
will not elaborate the progress and
results of those panics, for you are all
conversant with what transpired in and
following 1873. Sufficient to say that
houses of undoubted standing were un
able to meet their engagements, and the
New York city banks, after one startling
failure-(the Commonwealth were sa.
we'd from suspension of even currency
payments, by lodging with a clearing
house committee securities, and taking
certificates that were good only at the
clearing house for debtor balances. The
banks then to great extent declined
cash or currency payments, but certified
checks and drafts good through the
clearing house. This was certainly
unique financial measure, but it saved
the banks from an out and out suspen-
sion of even currency payments. Spe-
Gle was then out Of the category of mon~
ey. l refer to these historical events to
show that panics do burst upon us with.
out warning, and panics eliminate in
revulsions Of five years duration.