The Savannah morning news., 1903-10-24
THE PITTsBURG BANK FAILURES.

II was stated that the cause of the
failure of the Federal National Bank
at Pittsburg, Pa, on Wednesday was
the circulation of unfounded ru-
mors respecting the banks solvency,
thus causing a run on it, and 1t is
alleged that the cause of the failure
of the First National Bank of Allie
gheny, Pa, announced in our dis
patches yesterday, was its connection
with the Federal National Bank Of
Pittsburg.
The real cause of the failure of
these banks will not be generally
known probably until there is a care
full examination of their affairs. The
chances are that they had loaned
great deal of money on securities
which had for the time being become
practically unstable. The fall in the
prices of securities within the last few
months has been very great, so great
and rapid, in fact, that banks which
have loaned heavily upon them have
been large losers.
1t may be asked why the banks did
not sell them before their market value
became less than the amount of the
loan for which they were pledged. Per-
haps they tried to do so, but in many
cases were unable to find any market
at all. or at least a market that
would save them from heavy loss.
Doubtless in many instances securities
have been retained by banks with the
hope that the market would improve
In the Northern cities the banks do
a very large business in lending to
brokers on securities which are put up
as margins in speculative ventures.
One of the reasons why there has
been such a decline in the prices of
securities is the actions of the banks
in selling them, the owners no longer
being able to increase their margins.
1t is to be hoped that the bottom
has been reached in the matter of the
prices of stocks and bonds. 1t was
thought it had been reached many
weeks ago, but that opinion, it seems,
was an erroneous one. Notwithstand-
ing the downward movement of the
market for stocks and bonds, however,
there seems to be a feeling that the
period of prosperity which the country
has been enjoying so long, is going to
continue. In his address before the
American Bankers Association at San
Francisco, reported in our dispatches
yesterday, Controller of the Currency
Ridgely, speaking of the prosperity
which the country is enjoying, said:
1T isn't going to disappear or vanish
in a day because of d slump in stocks
or the collapse of a few underwriting
syndicates. 1t may be necessary to
pause little to get our breath after
the pace we have been going, but if
there is any serious check it win only
be because we have lost our nerve and
courage. The course of business to-
day depends very largely on the bank
ers. If the banks continue to act
wisely and conservatively, as they
have, they can avert anything like
serious trouble and keep the country
in shape for continuance of very
prosperous times"
No one understands better than the
Controller of the Currency the impor-
lance of conservative management of
the banks. If the banks refuse to en-
courage speculation there is not much
danger of hard times in the near flu
ture. With the banks healthy conf
dence will remain firm, and with con-
fdence unimpaired there will be plenty
of money in circulation, and with plen-
ty of money for business purposes
prosperity will continue.