Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-11-21
HEPBURN ON FINANCE
Views Of the Former Con-
troller Of the Currency.
CHANGES SUGGESTED
OUR MONETARY SYSTEM NOW IN
A HEALTHY CONDITION..
How Surplus Capital Has Been Absorb
ed-Effect Produced-Outlook
for the Future.
CHANGES SUGGESTED

1
sometimes called. A. Barton Hepburn. vice
president of one of the larger banks of New
! York, felt that the moment was opportune
| to sound note of warning.
| His long experience as a banker. and
! especially as the controller of the currency
! (Which is the administrative authority over
| the national banks of the United States),
and the accuracy with which many of his
earlier predictions had been fulfilled, caused
much attention to be paid to the few eau
| tious, careful and moderate words which
| he spoke. 1t seemed to him that the coun-
try was advancing too rapidly for the capi-
tai that it possessed. He thought that the
organization Of industrials and the expan-
SION OF new capital ought for time to be
checked.
What he said. while it attracted much at
tention, did not seem to affect the action of
any one who was busily engaged in manu-
featuring capital stocks or in specializing
In the market or promoting the sale of new
stocks. Yet what Mr.. Hepburn felt justi-
hed In saying in a. few words was echoed
IN brief opinion expressed by Russell
sage Whatever Mr.. Sage says is sure to
NIX, at least for the moment, the attention
OF every one engaged in financial affairs.
But there is natural wonder whether a
capitalist of such vast resources and one
especlaily whose chief vocation is that of
iendlng money upon call. might not be
tempted sometimes to express an opnion
for the purpose of influencing the narLet
no one can say justly that Mr. Sage ever
dld that, and yet what he saws is nsuaIIv
accepted with some reservation
Held the Same View.
few weeks after Mr.. Hepburn had ven-
Iured the cautious opinion, that there
shouio De check to capital expansion, one
| oi MS successors as vice president of
| the largest of American banks. as he was
a a
authority in the Treasury Department. hav-
| ing been assistant secretary of the treas
| ury, in a more formal and emphatic man
1 ner, at public banquet and in response to
| toast, expressed exactly the idea which
Doth Mr.: Hepburn and Mr.. Sage had
| thought 1t worth while to declare as their
! own ~
This banker f. A. Vanderlip. arsued
with some detail. that the surplus capital
or the country had been practically ex-
i hausted 5y the enormous drafts that had
| peen made upon it in the past five or six
| years. and that there could not be much
| expansion without causing shock demoralj-
| zatfon and. probably. disaster What each
OF these three widely-known financiers pre-
| dicted, the great money center of the Unit
ed states, and, relatively. the other money
centers had been feeling throughout the an,
tire summer.
During the period of the most savara 40
| preston and excitement in New York CITY
Mr.. Hepburn was the guest of an associa-
ton OF bankers in New England and To
| them made an address in which he touched
| upon certain currency questions; and, after
| that address. in an informal manner add
ed to what he then said and what he had
| spoken year earlier In the way of mont
ton. He declared that in his view n wac
probable. If not inevitable that there would
be In general commerce. business and indus
| try, reaction. just as there had been in
the world of finance. stocks and specula-
| ton.
1t was known in New York that this was
| the opinion of many of the leading bankers
| but not any of them cared to express it
| publicly Mr.. Hepburn was asked to ex-
plain In some detail the financial conditions
both OF business and of corpora tions as
well as OF the currency situation, which was
| In some feature so acute during the summer
OF 1903 that President Roosevelt felt that
he might be justified in summoning Con-
gress into extraordinary session, partly for
the purpose of considering the currency
| subject.
Interview With Mr.. Hepburn.
When Mr.. Hepburn was asked what
was meant by his statement that the
surplus capital which had been so
| handsomely accumulated in the last five
or six years had been absorbed. he re-
Piled:
Soon after the country in the great
political canvass of 1895 decided in op-
position to the financial dogmas with which
Mr.. Bryan's name was identified there be-
gan to be reaction from the period of
distress and Generalization which char
acteriZed the years from 1890 to 1896 In
addition to that. there were two or three
years Of most favoring crops, and the re-
peal of the so-called Sherman silver law
| in the summer Of 1893 had caused con-
hdence to some extent to be restored; but
1t was not to be perfectly restored until
the people of the United States had de-
cided, in a general election, whether there
was to be free and unlimited coinae e of
silver at the ratio of 1S n I
the gold basis was to be established as the
permanent basis of our currency
TT so happened that a year or two later
there came the announcement Of the dis
covery of enormous deposits of gold in the
whole Alaska peninsula, and almost CO.
incidentally wit mat there was great IN
crease in gold production in the United
States. Now all Of these causes operated
to restore confidence, and furthermore to
stimulate trade and commerce We began
to export our surplus products in enormous
balance in our favor each year for sever
al years was in the neighborhood of $780,
100000. Domestic industry and trade were
very greatly quickened. The iron and steel
industry responded most impressively to
this new impulse.
Accumulating Money.
Through this great productivity of crops.
of precious metals and of Industrial
agencies, the country began to discover
that 1t was accommodating capital. It was
able, by means of its surplus foreign trade
to absorb a large amount of American Sc
eurities held in Europe for many years. 1t
was able to pay off some of our indebted
ness abroad and II was discovered that we
were establishing what are called bankers
credits over there. Relatively l have
often thought that the increase of surplus
capital in the west was even greater than
elsewhere in the United States. Farmers,
who had beer in debt many years, Were
able to pay off their mortgages. to buy
improved machinery and to add to their
lands: and the records furnished by the
banking departments of the various states
showed that they were accommodating
money.
I'VE, therefore. had a greater amount of
surplus capital-certainly greater in fig-
ures. probably greater relatively-than in
any other time in our history. The newt
able result of that followed When blind
capital as 1t is sometimes called, or surplus
capital. becomes very large, it seeks utiliza-
ton. People want to make as much money
as possible. That Is the time when capital.
Is In plenty. 1t is used up in these ways,
and then there follow decentralization aud
panic"
Mr. HEPBURN was asked to detail more