Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1884-05-15
THE WALL STREET PANIC.

wall street was III a COnulblOu vi 'aHie
from o'clock yesterday morning until long
after business hours. Values at the Stock
Exchange were entirely demoralized; the
METROPOLITAN Bank, Of New York, and the
Atlantic Bank, Of Brooklyn, were forced to
close their doors, and on the Stock Ex-
change were announced the failures of the
following banking and brokerage houses ::
Hatch & Foote, Hotchkiss, Burnham & Co.,
Donnell, Lawson & Simpson, Nelson, Rob-
inson & Co., @. NJ. Bogart & Co., J. c. Will
liams and Gof & Randall. The clearing
house association in the afternoon decided
that the bankers would work together for
general support, as in 1873; and the Secre-
tary Of the Treasury ordered the prepay
ment without rebate of Sl0O0O,0OO per
cent bonds called for June Goth. These ac
tons tended greatly to allay the feeling OF
alarm, and there was an easier feeling at
the close. Money loaned at as high rate
as 3 per cent per diem bonus in addition
to legal interest. The decline in the stock
market was from to y per cent.
The committee appointed by the clearing
house reported decision to sustain the
Metropolitan Bank. The bank will resume
business to- day.
The trouble with some Of the banks is
that they have not been doing strictly
conservative business for some months. IN
order to earn dividends which could not be
gained by loanjng money at the low rate OF
interest prevailing in strictly tirst-class Sc
curites, they have taken questionable Sc
curitcs as cVIlaterals on which higher in
terest conii he charged. The fall in the
stock market has forced the banks to carry
firms to whom they have made loans in Or
der to get the money which they lrst ad-
vanced back, and now in some instances
they find themselves loaded up with UNI
marketable securities.
The immediate cause of the panic among
the stock brokers and the alarm of the banks
was caused by the Marine Bank failure
They commenced to call in their loans :
brokers took them as fast as possible, ex
pectiug to get ioauS elsewhere. They found
this impossible, and there was nothing to
do but to sell gradually. This broke down
the market, making matters worse with
each fractional appreciation in values until
the banks practically threw out all but gilt
edged securities. The final blow came in
three ways. The defalcalion in the Second
National Bank destroyed all confidence.
The refusal Of the banks to certify checks
in advance of deposits, as is their usual Gus
tom for brokers' business. Heretofore it
has been The practice Of brokers who desired
to draw beyond their deposits to deposit
securities TO protect the temporary loan
represented by their own draft checks. Yes
terday the banks shut down on this kind OF
business. They demand money, not secur.
tiles. The consequence was that when
business opened that morning the brokers
had nothing to do but TO sell for cash.
Those who held plenty of securities but DO
cash. and could not sell what they had, had
nothing to do but to suspend. This is the
real cause which precipitated the panic
which began with the opening of the Stock
Exchange.
AS soon as the exchange opened several Of
the trust companies and two large life insur-
ance companies sent ont notices calling in
their loans. Jay Gould, it is said, found dit.
ficulty in securing some renewals. He was
seen coming out of the United States Trust
Company with a carpet bag, which, it is
said, was full of securities, and which he at
wards succeeded in placing. He has been
largely short ofstocks, and to-day steadied
the market by purchasing some fifty thou
sand shares OF stock to cover his short con-
tracts. Other bears followed his example,
and thus steadied the market and prevented
any such serious decline rs that which fol-
lowed the failure Of Jay Cooke in 1878
The panic began soon after the business
of the street opened.
The brokers and spectators were at first
unwilling to believe the report ofthe failure
of the Metropolitan Bank. They rushed
from the Stock Exchange TO the bank, and
then hurried back to the Stock Exchange.
When they learned that the story was true,
they were prepared for any news. Rumors
were soon afloat that other banks had closed
their doors, and that several other firms of
brokers had suspended. Those rumors soon
proved to be without foundation, and about
two o'clock the action of the Clearing House
Association became generally known, then
a better feeling prevailed until the failure OF
Hatch 4 Foote and Hotchkiss, Durham &
Co., was announced. When business closed
at P NJ, the feeling prevailed that the
panic had about spent itself