The San Francisco call., 1899-12-28
Cause of the Wall Street Panic.

The Kew York circular Of Henry ClewH says
wall street has received a severe shock dur
iug The past week. the direct consequence OF
nn overproduction OF industrials and tight
money. IL WAS a surprise chiefly because Of
tho time ~ occurrence. collapse OF the
fucculntion in industrals has long been eX-
pectcd. bat comparatively fcw people shared
with me in the often outspohen belief during
tlc paft So months that II could happen while
the country was on The high road ~ pros
perig.
TONERS Cf tho caus y ~ thls break j or Two
years. and especially in les. We nave been
creating mnny new caTporatons Win enofInous
amounts of securities az INFESTED merit ana
containing "a dangerous amount ~ water. The
fact that many uf these new creations were
simply consolidated affairs ana that great
prosperity was ilsurlug extra ordinary profits
could not conceal The dangerous extent o.
w6l.h they uere Inflated. an extent which IN
ordinary periods would have brought an earlier
and much more severe collapse. The financing
oi these great combinations and the noatins
sums ~ money. especially as The public did
not absorb thcm freely as expected, and
therein ls the safety ih the pies ny sltuA'loi';
20 long as money rates conlihuea easy Ana
business good u was comparatively plain sail
ing. ana had these conditions continued. u
is quite Akcly that We should nave soon been
lrcclpitated into a state OF wild bulllsh specu-
latlon. followed by much worse collapse than
witnessed last week by a singular combina-
tiau ~ good and bad conditions a very whole
t0Ine check has been applied 10 this tpc-u-
lativo tendency. and there Is little prospect oi
seeing o. renewed upon The former scale.
AS stated in our previous adyices tight
money Was the Instrument by which these
fpccuiatllus were held IN check. The higher
rates for money. induced by the activity OF all
branches Of trade and industry. could only be
regarded with satisfaction. and IL is worth
while cmphaslzlng the fact that good mercan-
tile borrowers have found no difilculty what
ever ln securing The accommodation they need
"a on 6a1 per cent basis. 10 was the specu-
lutlye borrowers. particularly those carrying
inflated lnduEtrla4E, that met with discrimina-
tou. and the day 81 reckoning was simply
FASTENED by the heavy absorption of funds
hy the treasury well the efforts OF the
great banks of Europe 20 replenish their gold
reserves. Secretary Gage made strenuous ef-
forts O. countcruct she elects of the treasury
in the money market. but they have only been
partially successful. Cold Is beginning 20 80
outward more freely probably about 5000. .UJl
leaving THIS week but this need cause no
special alarm. We have a plentiful supply 90
gold here ana the worlds output this year
viii ln all probability be larger than last year
in spite OF tho temporary Etoppage OF the
Transvaal production. All that send tl
London viii simply 80 where Il is most needed
and DO the most good.
when the panic was al its height the clear
inE-h0usc hanks and several of our leading
bankers c0urug cOuslg came 10 the HuC
offered some $50 yoo. 900 OF call money Thi.
had The desired effect II prevented further dis
aster and there Is little question but that tht
worst has been seen. Losses have been severe
ln some quarters and any decided improvement
may be deferred until the ful effect OF these
has been determined and the money market
gets into better shape. The latter should bt
forthcoming after we fairly Eet into the new
year