The sun. [volume] (New York [N.Y.]) 1833-1916, 1899-12-25
.,oox spECuLAroHs' PANIC

lo,a panios OF the same kino nave eimoN
,ir,vs extended over the whole country. for
,ha reason that they were tho results ana
~, the causes OF events which dealings In
.,ocks had little or no share In bringing on
~. .,ook market, being the most sensitive to
l,.So,.ble Influences has been sort OF ba-
'a.,o,er Indicating the storm and registering
~" ,ntsnsty. but without being able to check
:, =, control It's movements. Hence 1t has
..onvored from the depression which 10
,',Torsd in common with other branches OF
,,,.I,osa earlier than they did and has re-
onr,ed i,s usual career while they were still busy
- ,onairing damages. On this OCCASION the
..ns,al commercial world Is untouched and
.,,s and no alarm need be felt on Its ac-
oount. Business Is everywhere In state OF
soaI,bv activity. Buyers OF goods are paying
-, them promptly and buying more, and for
All legitimate purposes money Is plenty, al
,houab the rates OF interest have been raised
nv the competition OF speculative borrowers.
and by the prospect OF large impending de-
m.nds from Great Britain for funds with
which to prosecute It's war in South Africa.
Much praise Il due and is accorded TO the
financial leaders OF Wall street Tor their
nromp,ness and courage in meeting the crisis
and mitigating It's severity. The Secretary oil
the Treasury. too. has done all that could be
vIcIous system under which he Is obliged. by
lao 10 conduct the Governments financial
o,,r,t,ons. That the efforts OF these gentle-
man have not been moro completely successful
ia owing TO the extraordinary difficulties with
xhIch they have had to contend. The panic
here has been intensified by an equal II not
greater one in London. and by n financial
strineency. threatening every day to create one
IN Berlin Considering all the circumstances
they have accom- pllshe | wonders.
The crisis has had one good result IL
has thoroughly explo led the deluston that an
elastic" bank currency Ia the sovereign anti
dots against financial stringencles. Tho most
that can be said in favor OF such currency Is
that the first time II IL issued It prevents con-
traction Of bank reserves resulting from the
withdrawal o'lawiul money to meet tho wants
a, interior trade. but. rs experience proves. the
greater part OF the currency issued In this way
stays issued. and the next time II Is needed
fresh issue Of It has TO be made. The same
thing happens the third time and the fourth.
and 40 on. until the volume OF currency be-
comes dangerously large. In Canada. for exc
annie. the banks have gone on charging their
,ssue. year by year. TO meet the wants OF
trade" until In four years they have swelled
than from S3O.0O0.O00 to S50,O00.0OO. Tho
s,ma thing would happen here II all the
existing restrictions on the issue OF bank notes
were taken on. We should have the panics OF
1897 and 1857 over again. only worse. Apart
rom this, the stringency created by the de-
mani Tor gold in foreign countries cannot. as
wa see. be couuteracted by an elasticity in
bank currency. London. for example. would
not take instead Of gold the circulating notes
o! our banks. any more than We would take
Bank az England notes In place OF the gold
which they represent, AMI In which they are
PAYABLE on demand. Nor could the wants
Of tho distressed borrowers In this city
last week have been met by an increase OF
hank currency The same cause that led to n
restriction Of bank loans to them would have
been quite as insuperable bar to furnishing
them with bank credits In the share OF notes
rayabe on demand. All that they needed
was that the banks should certify their checks.
and this the banks could not do because Lon
ipn was drawing on us FOR gold.
l. Il an exaggeration. however. to saw that
the present emergency has equnlled in extent
and importance that In which London found
'.elt In 1920 at thu time OF the Bar ne coll
Apse. and through which II was safely brought
krthe exertons OF the Bank OF England and a
,1nber OF other great London banks. acting
0sether az our leading Now York banks did
ist week. That peril threatened. not. like ours.
tocks. but the whole mercantile world The
mount OF money which the London banks
Undertook to provide was not $4,000 900 or
l20.0OO.OO0 but sI5. 900 900: and the Bank Of
France came to their assistance with sl5. O0O.-
OO In gold. The Earrings closed their doors
temporarily. but their obligations were all
promptly met and an !ncalculable amount OF
distress aud failures among their creditors in
avery quarter OF the globe was averted. No
corresponding disaster was imminent here
though that which was threatened was sum
,iently serious 10 make US grateful for our es-
cape from Il.
Itis also proper to remark that the panic
which our great banks thus courageousy
checked. vas. In great measure. due to their
own previous imprudence. Like q general
who by great skill and herolsm rescues
his army AFTER a defeat 10 which he ought
never 70 have exposed II. they merely saved
themselves from tho con Ieq uonces OF their
own acts. Had It not been FOR the reckless
ness with which. last snring. they stimulated by
excessive loans tho wild speculot ion in stocks
which has now met it's natural fate. there
would have been no need OF the extraordinary
Efforts they have now had to make to save
their debtOrs-and them selves too-from ruin.
IT'S true that the unexpected reverses OF the
British army In Africa could not have been
tore'"en. nor even the war itself three months
ago. hut tho prices OF stocks had not been
undu!y inflated with borrowed money. the
shock Oft crisis in London would have been
met without It's producing a crisis here.
Indeed there is something humilieting in
the spectacle OF combination OF financial
magnates. aided by the Secretary OF the Treas
ury OF tho United States. solemn.y taking
counsel together TO shield a lot Of stock specu-
Ators from the losses which their own folly
mad brought upon them. or course. every one
knows that 1t was not purely disintercstcd
benevolence on their part. Not only the specu-
atorS who owed the money were In danger
out the banks and tho trust companies which
mad lent II. Millions upon millions Of dollars
cue on demand to depositors were at stake,
me panic had not been stayed, the collaterals
which the banks and the trust companies held
would have become unstable, and in case OF a
run these institutions would have been unable
70 respond to the calls upon Thorn. They were
10 the same boat with their debtors and In saw
ing them they saved themselves.
The facility Afforded by banks and trus,
companies for specializing in stocks with bor-
toWed money Is the cause OF an evil far greater