The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1892-10-30

threatened, and thus stop the panic."
said one of the members.
II so happened that some banks had Sc
curities. which in ordinary times were re-
garded as sound enough, but which in
time of panic would be difficult TO turn
into money. The clearing house voted to
say to all threatened banks that if they
would turn over their securities to the
clearing house then the clearing house
would issue its certificates for the obli-
cations of those banks, and each bank in
the association would receive these GER
tifcates in place of cash for the settlement
of balances. That was all that was
needed. The Metropolitan bank had to
go by the board, but when Wall street and
the financial world in fact knew that the
association banks of New York stood be-
hind some of its weaker members, then il
was known that the danger was over.
The panic was ended and when confidence
was restored il was easy for these weaker
banks to market their securities and in
that way redeem the certificates which the
clearing house had issued.
The general community did not know
at that time. although bankers knew il,
that il was the action of the New York
clearing house which prevented panic
that might have been as disastrous as that
of 1857 or 1873.
Another illustration has to do with
more recent times. Nearly two years ago
port that the great house of Barring Bros.
had suspended payments. A crisis was
imminent. Two or three great firms of
brokers and bankers in New York CITY
were unable TO meet their obligations be-
cause the prices of stocks and bonds had
fallen so greatly that their capital and
their resocrces were of sudden shrunk
to figure far below their Liabilities.
Then one or two banks began TO totter
and the market price of securities went
still lower. and then two of the great
banks appealed to the clearing house.
Again this mighty institution saw that
the time had come to make use of its
enormous power. The association met
The president of one of the great banks
which was III trouble was asked TO make
statement. He said in effect: I'VE have
SO many millions OF such and such securi-
ties. They were worth par when We took
them. They have fallen all the way from
20 to 80 points. We cannot realize upon
them, for nobody is willing TO loan US
money on them. yet we believe these Sc.
curlties are as good as they were when We
took them"
The great bankers took this list and
scanned 1t carefully. They made a quick
estimate of what the securities ought to be
worth il there was no panic. and matching
this estimate with the liabilities OF the
bank they saw that IL was perfectly solvent
If il was not crowded to the wall So they
said TO this president: Bring all your
securities here, put them in the keeping of
our committee and we will issue our GER
titicates for any balances you may have to
pay TO the clearing house and each bank
Will take the certificates in payment OF any
debts il might have against your bank u
That was done in the cases of two or threa
other banks and thus this mighty engine
with its colossal power was able to stav
panic and prevent yreckage. In the course
OF month or two, confidence being TINS
restored, the securities recovered and thew
were then returned to the banks which had
deposited them and which had no diff
Guilty IN raising such money as they needed
upon them and the certificates were then
paid.
1t has been felt by some financiers that
this mighty power could be used to bring
about colossa misfortune on which thu
bankers would reap their profits, And
that Is true, out before it could be thus
used the majority of the bankers commas
ing the association would have TO change
their nature and become cold-blooded vii
lains.
The association has Just elected "a ;ts
chairman George G.. Williams. whose
name, while not known to the general
public, IS familiar to every banker in the
United States, 10 the Rothchiids and IN
others OF the greater bankers of Europe.
Mr.. Williams IS natural born banker.
The only training he ever had was in a
bank, and he began at the bottom. The
other day few shares of the bank of
which he ID now president we're sold. The
par value OF these shares was 500, vet
they fetched AZ auction nearly 81. 500 an
appreciation over the par value Of the
snare probably unprecedented in the