Staunton vindicator. [volume] (Staunton, Va.) 1860-1896, 1890-03-07

whom knew personally and others by repu-
tation. They were politicians, scholars, writ
ers and one or two of them were authors of
consideral renown; but not one was there
whom recognized as being engaged in regu-
lar business pursuits. 1t was sort of pri-
vate exchange, at which the members made
themselves rich by buying and selling to each
other lands and town lots. There was at
times good deal of excitement, much like
that which is witnessed in the New York
Stock Exchange. When the meeting closed
every one felt that he was richer than when
it opened. In few brief months there was
not one of these hundred thousand dollar men
who was worth hundred thousand cents
RESULTS OF THE SPECULATIVE MANIA
The same speculative mania prevailed to
some extent all over the country. 1t origi-
mated in unwise extension of the credit sys-
tenn, which was mainly the result of the re-
moval of the government deposits from the
United States bank and the placing of them
in state banks.
When the deposits were removed there was
among conservative men great apprehension
that the effect would be severe financial
trouble. To prevent this it seemed to be the
understanding between the secretary Of the
treasury, acting under the direction of the
president and the banks-pet banks as they
were called-that as they had been favored
by the government in the use of the public
moneys, they should deal literally with their
customers. This they did, and as their CAPT.
tails were sufficient to supply the demands of
healthy business, the loans of the govern
ment deposits were made to men who were
engaged in speculative enterprises Then,
too, many of the states were engaged in
works of internal improvement, and were
IF
had obtained by sales Of their bonds in
Europe
In addition to the large volumes of cur
rency thus put into circulation bank under
the name of the Pennsylvania Bank of the
United States was chartered by Pennsylvania
as the successor to the United States bank,
with the same capital and mostly the same
managers, which not only loaned its money
in manner which savored of recklessness,
but bought large quantities of cotton on it's
own account. Never were credits SO easily
obtained nor SO unwisely used; never to the
superficial observer had the country been so
prosperous
In the meantime, however, industry was
declining and all kinds of agricultural pro-
auctions were commanding exorbitant prices.
Wheat went up from 81 to 50 bushel, and
cotton from to Is cents pound A specu-
lative fever everywhere prevailed similar in
character, and as much more disastrous in
| consequences as it was wider in extent, to the
| South Sea bubble in England. Conservative
men, strangely enough, as well as adventur-
ers, were its abettors and its victims.
Banking institutions, and especially the
| government repositories, were in a great
measure responsible for it, and not a few
were ruined.
| I call to mind one case which interested me
| greatly. In the spring of 1886 ] went to a
city in a state adjoining Indiana to make
with its leading bank exchanges of New York
and New England bank notes for its notes,
which were receivable at the government
land Offices. As I knew the president person
| ally, called upon him at the bank after
banking hours. I was kindly received, but
| noticed that he was in bad humor, which he
did not try to conceal, the cause of which he
explained. 81 have,' said he, 'for the first
time since became president of the bank
been squarely overruled in a matter of great
importance do not like" he went on to
say, "the business outlook. The people seem
to ME to have gone mad, and if I am not
greatly mistaken they will soon find out
that the prosperity of the country is unreal.
We owe the government large amount
of money, and as we have enough and some
| thing more in the banks of New York to pay
it, at the meeting OF the board this afternoon
| introduced resolution in favor of paying
| the debt and dissolving our connection with
the government. In offering the resolution
| explained as fully as l was able to do my
| reasons for doing SO. Twas listened to atten-
lively, but when the vote was taken there
was but one vote my OWN in its favor. Not
only was the resolution voted down, but
was instructed to use the money to our credit
in New York in current business at home
To my directors the idea of giving up the
use of a large amount of money on which we
pay nothing, when it might be loaned at high
rates of interest, seemed to be absurd. I
hope they are right; time will show" Time,
and short time at that, did show. In little
more than one year this great bank. which
! up to the time of it's connection with the gov
eminent had been conservatively and profit
ably managed, was ruinously, hopelessly
broken, and some of the directors who were
its borrowers went down with it,
AFTER THE PANIC OF 1887.
OF the reverses of 1887 1 made the follow
ing remarks in my report as secretary Of the
treasury in 1865:
The great expansion of 1885 and 1885, ending
with the terrible financial collapse Of 1887, from
the effects of which the country did not rally for
years. was the consequence of excessive bank cir
culatton and discounts, and abuse OF the credit
| SYSTEM stimulated in the first place by govern
| ment deposits with the state banks, and swelled
| BY currency and credits UNTIL under the wild
spirit of speculation which pervaded the country,
| labor and production decreased to such an extent
that the country which should have been the great
food producing country of the world became an
| importer of breadstuffs.
The balance of trade had been for a long time
favorable to Europe and against the United States,
| ando oil n fay of the mmerrial cities of the
| seaboard and against the interior, but a vicious
| system of credits prevented the prompt settle
ment of balances. The importers established large
| credits abroad by means of which they were ena-
bled to give favorable terms to the jobbers The
| iobberS in turn were thus, and by liberal accom-
modntons from the banks able to give their own
| time to country merchants, who in turn sold to
| their customers on indefinite credit. It then
| seemed to lie more reputable to borrow money
than to earn it, and pleasant:r and apparently
more profit able to speculate than to work. And
| SO the people ran headlong into debt, labor de-
creased, production fell off and ruin followed,
This was, Of course, a panic sharp and ter
rife, but it was of short duration. 1t was
soon followed by a lethargy under which all
the springs Of enterprise and hopefulness
were dried up. To prevent the sacrifice of
property under judicial DEGREES, stay laws
and appraisemsnt laws were enacted by many
of the states, which only aggravated the
trouble. For long weary years the lethargy
continued. There was no demand for any
thing except the necessaries of life, and all
these, except clothing, were sold for scarcely
enough, and in some cases not enough, to pay
the expenses Of taking them to market.
witnessed sale in 1889 to the keeper Of a
hotel in indianapolis Of oats at 10 cents q
bushel and fine chickens at 50 cents dozen.
The same year I saw thousands of barrels of
-four under the sheds Of Suydam: Sage &
Co. in New York which they were offering
at So. so barrel Fat cattle were selling at
so low price-s1o and SIP head--that my
brother thought that he would pack a few
barrels Of beef AT Fort Wayne fer the New
York market He did SO, and was drawn
upon by his consignees for a part of the ex-
penses of transportation not covered by the
sales. From 1887 to 1871 there was nothing
to break the stagnation but the political
campaign of 1910, in which everybody be-
came enlisted for want ~ sqmething else to
do In the fall of 1911 a reaction began to
appear. This became decided in 1912, before
the tariff of that year went into operation,