The sun. [volume] (New York [N.Y.]) 1833-1916, 1897-11-15
&c g1NANoI11 oatsIa - 1sas.

DO summed up In the single remark that prices,
during the week, have been put up and down
almost entirely by rumors made one day and
oontradictod the next, and that facts have had
very little influence upon thom. Buyers have
bought one day. and sellers have sold, not with
reference to tho merits of the securities they
dealt in, but upon their gucsscs rs to whether
they could the next day soil whit they boughtor
buy back what they sold. at a profit. This must,
necessarily, always DO the case, except In special
and rarely occurring epochs. Rises and falls
produced by great and general financial causes
are infroquent compared with tho slight but
rapid fluctuations which attend ordinary deal.
ings. and the operator who did business with
reference TO them exclusively, would BIO idle
most of the time.
Nevertheless, great financial crises differ from
the little eddies in the usual current of trans.
actions only In their magnitude and in the time
required for their development, just as a tor.
uado results from the same forces that cause a
summer thunder storm, and moves in obedience
TO the same physical laws. Buyers and sellers
are alike inspired by differences of judgment as
TO the future, and when they are evenly balanced
tho temporary preponderanco of either read.
lily gives way to a proponderance Of the other. II,
however, the buyers predominant for any length
Of time, they carry prices up to n height from
which. in turn. the sellers are able, upon tho
nrst change In public sentiment. to hurl them
down, and the resulting crash varies according
20 tho height prices have attained and the mass
Of the commodities involved In the catastrophe.
Those among us who witnessed the financial
crisis of 1887 are few and far advanced in years.
More can remember that OF 1857; of that of 1873
the survivors are numerous. while that OF 1893
10 fresh in the recollection of nearly everybody.
Another crisis, which occurred at an earlier
period, namely. at the close of the year 1925.
hna lonU ham m pnatfer of raCord only md yyhan
II 10 called to mind. as II has been, lately, by one
OF the ENJOYS sent to Europe by President Nc.
Kinley, on tho ~fruitless mission of negotiating
an international bimetallic agreement, 1t ovokes
no personal memories. In the paper which
Senator Wolcott submitted to the British Gov.
eminent for its consideration, the closing propo-
sition was one for something having the gen.
eral scope Of the Huskisson plan" What the
Huskisson plan is the Senator did not explain,
and 1t is Of no Importance, but the mention OF it's
authors name revives an interesting passage in
financial history.
Tho resumution Of specie payments by the
Bank of England in 1928. after q suspension
which had lasted since 1897, was followed by
an expansion of business and by an increase Of
speculation. similar to those which ensued upon
our resumption in 1879. The overthrow Of
Napoleon Bonaparto had ended the long and
expensive wars against him which Great
Britain and her allies had waged, and had SO
strengthened the British Governments credit
that it was enabled TO convert it's 8 per cent.
debt into one bearing A per cent. and less.
just rs our Government converted into A per
cent. bonds those upon which it had been pay
ing 8 ana g per cent. Moreover, with the adj
vent Of peace came an increased demand for the
commodities consumed in daily life. which soon
told upon the supply, and set in motion a gen.
eral rise of prices. To the stimulus thus given
to trade was added that of the capital lot loose
by the paying Off of fundholders who refused to
accept the lower rate Of interest offered by the
Government. A spirit of speculation was con-
sequently engendered which, between July,
1924. and June, 1925, carried the price of sugar
from 80 shillings per h~undredweisht to IL shil-
lings. tallow from 80 shillings to AZ s~hillings,
coffee from 80 shillings to so shillings. cotton
from o pence per pound to 1sla pence. nutmeRs
from 2 shillings and @ pence per pound to IL
Bhillings and 6 pence. and other spices in pro-
portion. Seeing this rise go on, dealers over
stocked themselves, and. az they had
not the cash to pay for their pur-
chases, they gave notes and accepted bills.
which were readily discounted. not only
by London banks but by numerous lit
tie country institutions. From merchandise
the speculation spread to stocks. The Spanish
South American republics. which had just then
become independent, came into the London
market as borrowers and their bonds found
ready buyers. The day Of railroads had not yet
arrived, but numerous stock companies wero
formed to open and work mines, insure property
and lives, to improve the navigation of the
Thames, build docks. brew ale and beer, grow
wool, and. angular enough, there was one for
cutting q canal across the Isthmus of Darieni
Shares upon which R5 and a1O each had been
paid in, with a further liability up to e1OO. sold
at premiums of from 20 to LOCO per cent, and
were bought furiously by all sorts Of people.
The profits made by those early in the field In.
cited q fresh set to emulate their achievements.
and thus the process went on until 1t eliminated
and could go no further.
The inevitable revulslon came in December,
1925. when sixty-three country banks and four
London banks suspended payment. The Bank
of England on Saturday evening, the Gath of
the month, had barely FL. 000. 900 In gold left in
its vaults, the demands upon it being not from
its depositors, but from the country banks.
whose notes were presented to them in i'm
menso amounts for redemption and whose
wants the Bank Of ENGLAND vainly endeavored
to supply. The redemption and withdrawal of
these country bank notes occasioned q dearth of
circulating medium, to remove which moro coin
was taken from the Bank. and nothing but the
opportune discovery OF q quantity of its old
Ell notes, which had been laid aside as not likely
" " . untu, OuNldJSu, 40 "ab AitOF"AEu paul, u
return to the condition of barter. The Bank, at
the same time, enlarged it's issue Of a5 notes
and increased by several millions its accommo.
dations to merchants, so that by the end Of De.
cember tho crisis was over. and business re-
sumed, though languidly, its ordinary course.
Pretty much the same condition Of affairs pre-
vailed on this side Of the Atlantic. The spscu'
lative fever which had seized upon Great Britain
had likewise attacked our citizens and with the
Same fatal effect. In November. 1925. money
was worth In New York from lla to 8 per cent
a month and a private letter described the
merchants in Front and Pearl streets as crack
ing like parchcd corn" 1t is an interesting
illustration, however. of the modest scale Of
business in those days. that the liabilities of five
houses which failed were de scribed, with some
thing like awe, as amounting. In the aggregate
TO ", SOC. 900.
Soon after the crisis was over. William Hus
kisson, to whose currency plan Senator WolcotI
Heferrel as above mentioned. came forward