The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1896-12-22
A ROTTEN SPOT.

tremendous sensation in commercial
and banking circles, the collapse has
really nothing to do with the general
industrial condition of the country 1t
is not mark of slack trade or unprof-
liable business, but simply a disclosure
Of what has. been common knowledge
for long time to those on the inside
of the condition of things in the city Of
Chicago. The wonder is that there are
any solvent institutions in that town.
which is loaded down with millions
upon millions of worthless paper once
f1oated at its face for several times
its face and now unstable on any
terms. Chicago has been the principal
center for speculation in what are
called the "industrials This is
term covering many things, but used
especially to designate trust certifi-
Gates. The gas trust, the sugar trust,
the electric railway trust, the Diamond
Match and a host of others were
doomed in Chicago to unheard-of fig
ures, and were accepted by some banks
in enormous amounts as collateral on
loans. The bottom has gone out of
nearly all Of their speculations except
where they are still buttressed by some
legislative favoritism Even the best
of them have shrunk to such trifing
proportions that open dealing in them
on the exchange was stopped some time
ago in Chicago, lest the knowledge of
this shrinkage should precipitate a
panic. Of the Diamond Match secur-
tiles alone it is said that there are
$6,000,O00 or more distributed among the
Chicago banks and trust companies.
The National Bank of Illinois is said to
have 100000 worth of Calumet Elec
trio on it's hands
No such building on sand as this
can go on anywhere without a terrific
catastrophe when the winds rise and
the waves beat. 1t was because so
many banks in the country had ac-
cepted wild cat securities that the panic
of 1898 fell upon them with such sever
ity. In all the other great centers the
chaff has been winnowed out since
that disastrous time, and banking
business is built upon a sound founda-
ton. But Chicago has gone booming
along at the old rate and in the old
way. Speculation has been more gem
eral and reckless in that city than it
has been anVwhara cleo in +I,o oo,,,+-r-
for ten years past. Nobody knows how
many millions of stocks that were
blown up like bubbles, sometimes to
twice their par value, and that are now
quoted at a few cents on the dollar
and unstable even then, are held by
the financial institutions of that over
grown city. Wherever this sort
of thing happens the day of
reckoning cannot be postponed.
Debts must be paid. The payer, who
has lost everything in the fall of paper
that he held defaults. The lenders
only recourse is his collateral secur-
ity. If that is worthless, the debt is
wiped out and the money is irrevo-
cably lost. No institution can stand
such a strain.
Bearing these facts in mind, together
with individual bad management. it is
easy to account for this big failure
and for others that may follow it in
the city of Chicago. They should not
bring the slightest uneasiness to any
other community, because they spring
from causes that are open to the eve
and that are strictly local to Chicago.
That city is paying the penalty that
always follows reckless specultion and
the imitation Of prices without real
value behind them The terrible con-
sequences Of the failure Of a bank
having $12,0O0,000 of deposits can scarce
ly be exaggerated It will be a hard
blow to Chicago, but 1t reflects nothing
except the folly of Chicago's people;
and that it was measured accurately by
the public is seen in the fact that
the markets yesterday were strong and
grew better, even after this big piece
Of news was announced, than they were
before. Chicago must suffer, but the
event has no terror for the rest of
the country