The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1899-07-17

are personally interested in its affairs,
but it is even Yet an important finan-
cial institution, with its regular stock
holders meetings, its taxes, its law
suits, its reports and its bookkeeping.
Moreover, it is unique in being a cor
poration having large assets and no
liabilities-beyond the obligation to its
stockholders. All the entries, except
driblets of expense, appear on the
credit side of the ledger.
The circumstances which led up to
these peculiar, even unprecedented
conditions, make a story probably
without parallel in the annals of ma
tional banking.
Prior to the panic of 1873 the Third
National bank ranked as one of the
stanchest financial institutions in the
west. 1t had a Capitalization of $780,
900 and its directory included some of
the most prominent names in Chicago
such men as George NJ. Pullman, J.
Irving Pearce, Joseph Mediil, C. H
Curtis, c. NJ. Henderson, c. r. Steele,
John II. Thompson, William T. Allen
and S. S. Benjamin. Only one bank
in its home city exceeded it in the ex-
tent and Importance of its business.
When the financial crisis of 1873 was
at its height the Third National bank
suspended payment for a single week
as a precaution against a threatened
run. Then it opened again and pre-
pared to resume its old place il the
business world. But a bank is like a
man. 1t is trusted implicitly until it
reveals some inherent weakness. After
that its business friends watch It keen
ly and approve its methods with an
IF" and its business enemies await
the strain which again shall test lis
strength.
The Third National bank had the
finest offices in Chicago, the largest
force of clerks, the longest list of coun-
try correspondents, but it also had the
single slip from the path of financial
rectfude to live away. Some OF its
officers, knowing the need of unusual
efforts to maintain its business su-
premacy, signed the bonds of the
treasurer of Cook county, thereby le-
ceiving large deposits Of the public
money to swell the quarterly reports
The bank also appeared as the main
depository Of board of park commits
sioners. Of which its president had he
come the treasurer. Other bankers,
looking on, saw the signs and under
stood them.
In 1873 the deposits exceeded $4,000
900, but in spite of all the bank could
do they kept creeping down and down
until late IN 1877 they were only S1I6f-
co., During most of this time the bank
officers were firmly optimistic: they
believed in the solidity and business
worth of their bank.
In September. 1877, an extensive no
tel property. owned by President Pearce
stroyed by fire. 1t had no connection
with the bank, and yet the bank felt
the shock. a few weeks later Presi-
dent Pearce called on the New York
correspondent of his bank and asked
for a. temporary loan TO be used in case
-1.a hoo NJ
should be Withdrawn suddenly. The
New York bank hesitated and hedged
If il were not for the large demands
now being made as an incident to the
hard times, and the uncertainty of the
money market-and other circumstan-
ces that assist a bank president who
does not wish to loan money-they
might possibly spare a few hundred
thousands.
On President Pearces return to Chi
cago he found that some of the direc-
tors of the bank had been touched
with the growing distrust. They were
losing confidence in the ability of their
own bank TO meet the demands which
might be made upon it. They had
kept the feeling to themselves and yet I
after the manner of such things. it
was all down the street in a single day. |
travelling by such secret ways as only
an evil rumor knows.
In spite of the loss of confidence
there was no regular run on the bank |
Its business was conducted by the |
usual number of clerks and its mail /
had not diminished. It was buoyed up |
and supported by the reputation of |
substantial prosperity and dignity /
which it had known in the past and |
vet ii was suffering from a wasting |
disease known to financiers as a west |
pocket run" Depositors came smiling I
ly and drew out their money. and II /
was not replaced. A st. Louis paper |
printed q. brief telegram limiting at the |
condition of the bank, and the country |
correspondents, always ready with |
their suspicious, began to fear for |
their balances, and every mail brought |
drafts that helped to drain the banks /
reserve.
A bank can fortify itself against the
excitement of a regular run and fail. |
struggling, with some of the honors of |
war. but ii has no protection against |
the creeping misery of these quiet.
friendly withdrawals, continuing day
after day for weeks, and each OF them
an insidiouS thrust at the banks sta
bility.
one day the county treasurer gave
notice that he would want a half mil
lion dollars. He was very agreeable
about il and he had his excuses-tut
hA must have the money. RtA 80,