Savannah morning news. [volume] (Savannah) 1868-1887, 1884-06-15
PANICs OF THE PAST.
4 History Of the Financial Commissions
Of 1857 and 1878.

The panic OF l-5t, says the Boston
Herald. was phenomenal in the circum-
stance that It is the only one which ever
materially affected foreign European
markets. II was phenomenal also in its
suddenness, and i'm finding the business Of
the country totally unprepared for il. 1t
appears that up 20 August Of that year
our commercial affairs were generally
prosperous. The local journals through
out the country represented business as
I'm healthy condition. High prices were
said 10 have enriched the farmer, the
stock-raiser and the planter. Trade and
mechanical industry fi0urished with cor
responding success.
sIn estimating probabilities for the iu-
ture." says J. :. Gibbons i'm his account
of that event. sEreat stress was laid on
the fact that the madness OF railroad
building was arrested. The bond market,
and with 60 Improvement securities gem
erallv. lad fallen into disrepute. Stock
companies could no longer send an agent
t0 Europe with nye millions Of credit
tokens and receive the money for them
within sixty DAYS from the engrayer's
press. Heavy financial negotiations IN
this direction were suspended, and al
though She country had several hundred
millions of foreign capital to use, there
was 10 danger Of any considerable pOr-
ton az it being recalled since our home
market would reject the bonds which
represented it, at half the par cost. We
might therefore continue TO enjoy the use
of this large capital and avoid the disaster
consequent on "a further accumulation Of
foreign debt. The common sentiment was
that we had passed the dangerous point
iu railway credits, and with the immense
productions Of the year at our doors, there
was little probability OF serious financial
disturbance. The most sagaciOus Of our
city bank officers saw no indications of
auuuusual storm in the commercial skies.
When the loans reached the unprecedented
height nj 1922, 100000 on the Sth OF August,
they pointed % the annual reduction Of
$4,000 900 or St2.0OU,Ou0 in the autumn
months, as one Of the regular GIBBS to
which The market was subject; but they
had no foresight of extraordinary pressure
and no dreams Of panic. Credit was eX-
tended. but the country never was as
rich"
But the storm was coming. ON the Sth
OF August the banks began to contract
their loans. and. as a consequence, secu-
rites Immediately began TO fall in price
at the New York Stock Board. The failure
of a heavy produce house was explained
by the depression of that peculiar interest
Ina the market. a report Of dishonest Job
bling and the misuse of funds by leading
railway company caused partial excite
ment, but did not seriously disturb cOnti-
dence in mercantile credit. The imme-
diate cause Of the panic, however, was
the suspension Of the Ohio Life Insurance
and Trust Company on August a. It
came like lightning stroke from an
almost clear sky. An intense excitement
was manifested in all financial circles, in
which bank officers, says Gibbons, parti-
Cipated with unusual sensIuveness and
want of selfpOssessiOn. Flying rumOrs
were exaggerated at every corner. The
holders of stock and Of commercial paper
hurried 70 the broker and were eager to
make what a week before they would
have stunned as a rulnOus sacrifice.
Several stock and money brokers failed,
and the daily meetings of the New York
and Boston Brokers' BOarls-the former
specially-Were characterized by intense
excitement. Every individual misfortune
was announced on the news bulletins in
large letters and attracted curious crowds,
which were fed from the passing thrOngs.
The New York Clearing House report for
the 2slh OF Augustine first after the
suspension of the Ohio Life Insurance
and Trust COmp1ny-shOWed reduction
of S4UU0,O0) in the bank loans during the
previous week. The most substantial
securities Of the market fell rapidly in
price al public sale. The safety Of bank
notes In circulation was suspected or
denied. The publishers Of counterfeit de-
tectOrs spread alarm among the shop
keepers and wOrkiugmen By selling hand
bills with lists Of broken banks, which
were cried in the streets by boys at "a
penny apiece"
one Of the New York associated banks
fell into default at the end of August and
a fraud Of $4,000 by the paying-teller
reused suspicion of similar misconduct
i'm other Institutions. The regular dis
count of bills by the banks had mostly
been suspended, and the street rates for
money, even on UnquestiOnable securi-
ties. rose TO g, 4 and per cent. a month.
ON the ordinary securities of merchants
such as pr0missOry notes and bills of eX-
change-mOney was not TO be had at any
rate. House after house of high COM
mercial repUtC sUccumbed to the panic,
and several heavy banking firms were
added to the list of failures.
The settlements of the clearing house
i'm New York were watched with the eX-
pect3ti0l of new defaults, and their sue
CeSstUl accomplishment, each day, was a
subject OF mutual cOngratulatiOn among
bank officers. The statement of the New
y ork city banks for the week ending Sep
tember showed a further reduction in
loans Of more than 100000. CONNER
Cial em0arrasSments and suspentiOns be-
came the chief staple of news in all the
papers Of town and country. The pur-
chase and transportation OfprOduce almost
entirely ceased.
From this period there was nothing
lacking 20 aggrayate common distress for
money. The failure of the Bank of Penn
sylvania, in Philadelphia. was followed
by that Of the other banks of that city,
and by those Of Baltimore and of the
Southern Atlantic States generally. Com
mercial business everywhere was sus-
pended. The avalanche of discredit swept
down merchants, bankers, mOneyed cor
pOratiOns aEd manufacturing companies
without distinction. Old houses of accu-
INFLATED capital which had withstOOd the
violence Of all former panics, were pros
trated in day, and when they believed
themselves to be perfectly safe against
misfortune. The suspension Of the New
York banks and the banks in Boston and
throughout New England, which occurred
in the midst of October, was the climax
Of this commercial hurricane.
Early in September, 1873, damaging ru-
mors began 10 be circulated in Wall street
concerning firms Of special prominence,
and on the morning Of the 18th il was
whispered that strange happenings would
take place before nightfall. The stock
market had opened weak, operators were
not treasured by the flying reports, and
though the Vanderbilt party did their
best to ward of the desperate blows
which the bears We're dealing at the
market, their strength weakened every
moment. and at IL o'clock the exchange
was seized by a wild panic. Stocks tum-
bled 3 and 4 per cent. with surprising
rapidity. and Western Union fell of 10
per cent. in as many moments. At 1910
O'Clock the crier of the Exchange raped
for attention, and. while the crowd lis
tened intently, he read in a calm and de-
Hberate voice a brief announcement that
the firm Of JAY Cooke & Co. had sus-
pended. For the instant there was intense
stiffness, and then the crowd broke madly
for the street to learn the particulars of
the failure. The news spread like wild
fire; within a few moments a mob sur
rounded the Office Of Cooke & Co., on the
corner Of Wall and Nassau streets, and
squad Of police was called to clear the
thOrOughfare.
For some time past the Philadelphia
house Of Jay Cooke Il Co. had been adj
yancing large sums to the Northern Pa
cine and the Texas and Pacific Railroads,
OF which they were financial agents.
During the last three months the bonds Of
the roads had been a drug on the market.