The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1890-11-27
OTHER PEOPLES MONEY.

The news from the East is not reassuring !;
indeed, it is quite the reverse. The tele-
graphic reporters tell us day after day that
The skies are Frightening and that "a better
feeling prevails; but they go on to give 4
list of failures in almost every branch of
trade and the reader is driven to the con-
cluSion that there must be some spots in
which the feeling would stand little more
lettering. Now it is the Oregon Improve
ment Company which is thrown into the
hands of a receiver, with all its vast prop
critics ailoat and ashore; now it is Edward
Brandon, one of the Oldest members of the
New \ DIRK Stock Exchange, and the Chair
man from time immemorial of the Commit
tee on Securities, who fails with immense
Liabilities and no announcement Of assets :;
now it is the Rolling Stock Company Of
Chicago. corporation esteemed to be enor-
m0usly wealthy, which goes to the wall :;
and now 1t is the banking-house of Allen &
Co. of New York and Memphis, which stood
very high indeed, but is compelled to make
an assignment. 1t looks as though the
liquidation which started with the failure
of the Earrings has net reached its end yet.
Crises of this character are periodical in
commercial countries, where business is
conducted on credit as well as cash. If all
business was conducted on cash basis there
would be few failures. When the cash
drawer was empty its owners purchasing
power would stop; he would sit still till it
was replenshed by sales of goods, and in
| the meantime, owing nothing. lie could not
fail. 1t is when business men supplement
their own capital by borrowing other peo-
pies money that commercial IeyulsionS be-
come inevitable whenever confidence is dis
turbed. If the disturbance is prolonged the
other people. be they individuals or be they
banks, want their money, and if it is not
forthcoming he who owes it must break.
And as no merchant can make money un-
less he keeps on hand a stock of goods,
which is unavailable for the payment of
money debts. imperative calls ON him for
repayment of loans leave him no alternative
| but to suspend, whenever confidence is
shaken and remains shaken for any consid-
cradle period Of time.
TIE progress Of commercial crisis is as
we'll marked as that OF a case Of scarlet
fever. Each symptom follows in order and
can be safely predicted In the first place,
the general commercial condition must fit
that is to say, trade must be brisk, goods
must be moving in a lively manner, the line
Of discounts at bank must be fairly well eX-
pended Then some accident, like the sus-
pension of an old. wealthy aud highly re-
spected house, in a large way CT business,
must Occur. This sets people who have
| N oney in bank or leaned out on securities
| to thinking. The cogitation leads to the
| calling of loans. That puts up the price of
money. a furry erSues. Banks. which
are naturally timd, being the weakest men,
| bers of the Commercial fraternity proceed
| to strengthen themselves by refusing dis
counts and calling loans. Debtors are al
their wits end to find money. One by one
the heaviest debtors throw up the sponge
and lie down. Their suspension pulls down
| others, and the example being contagious,
the tendency to abandon tie struggle be-
comes general. Then liquidation follows.
| People who owe money realize ON their as
| sets and pay as far as their means will 90.
When this process has gone on long enough
| the demand for money becomes less press
| ing ard the stress is relieved. Confidence
gradually RECEIVERS; ca pitalists gain courage
to pick up bargains, and, after a iime bust
ness goes on, not as before, but slowly and
cautiously.
That has been the course of every finan-
cial crisis we have ever had in this country.
The prompter and more thorough the liqui-
dation, the sooner eonvaleScence sets in.
But every crisis is followed by period of
dizziness. In the battle that has been fought
some Of the most enteTprSiDg and energetic
soldiers of the commercial army have fallen.
1t takes time to fill their pi aces.