Lewiston evening teller. [volume] (Lewiston, Idaho) 1903-1911, 1904-02-27
Financial Panics

ttiL IN american History, Lew lSloI
State Normal SCHOOL,
The human mind. like a pendulum.
swings from the extreme of great dis
trust to that of great hopefulness
Some years the country is very pros
porous, every one seems 10 succeed and
men think that il Is going to be still
more prosperous; as result new
banks and factories are established,
new mines and farms are opened up,
new buildings are erected, saw mills
and lumber camps spring up every
where and millions of dollars are used
in the construction of railroads and
steamship lines.
All of these various lines of busi-
ness create a great demand for capital
and labor that has tendency to cause
many to reach out still further in es-
! tablishing new enterprises and increas-
/ ing the output of those already estab-
lished until many lines of business
cease to be paying investments and are
thrown on the market.
| Failures begin to occur, no new en-
terprises are started the forward
movement of business ceases. every
his debtors and to turn all of his avail
able assets into cash, which tends to
lower the price of everything and bust
ness stagnation follows. confidence is
! lost and credit is destroyed and the
panic is upon the country.
a few immediate causes of financial
panics frequently cited are: Invest
ments that do not earn dividends for
! many years legislation which greatly
affects the circulating medium and
anything which destroys public conf
dence and speculation.
The history of panics would seem to
show that they occur at regular inter
walls of about twenty years. 1919. 1887,
1857, 1873 1893 being the dates of
the most noted.
In 1919 there We're 1872 state banks.
Pennsylvania and Kentucky leading
with fifty-nine each. The banks re-
sorted to all kinds of methods to get
their notes in circulation and the
states did little to force them to stay
within the bounds of safe banking.
Money was plentiful. the people en-
gagged In various kinds of speculation,
became extravagant and as they We're
heavily taxed by the government to
pay the expenses of the war of 1912 the
inevitable crash came when the United
States bank began to force the state
banks to redeem their notes.
The growth in population of the
United States between the years 1921
and 1897 was 5000, 900. The national
debt was soon paid and the govern
ment had a large surplus which 1t used
in internal improvements notably the
Cumberland road reaching from Cum
berland Maryland, eventually to st.
Louis. Mo.
The states during this period showed
great activity in the construction of
roads and canals, New York having
built the Erie canal. The refusal of
the government to recharter the Sec
ond United States bank in 1886 placed
the national deposits, which amounted
to SAL 100000 in the state banks,
Upon the completion of the Cumber-
land road and the Erie canal there was
a large emigration to the northwest.
The ease with which money could be
obtained and the fact that land could
be purchased in any quantity at $1,25
per acre and paid for in paper money,
caused the widest kind of speculation.
The land sales between 1884 and
1886 rose from $500 600 acres to nearly
$4,000. 600. In Mobile property esi-
mated In 1894 to be worth $1249 900
was i'm 1887 rated at $27,4S0. 900. The
president became alarmed and issued
his specie circular which required the
|
and silver This practically forced the
6S4 state banks into bankruptcy and
the people We're left with heavy debts
and no financial Institutions to assist
i'm their payment.
BY 1857 there were over 400 state
banks acting Independently one of the
other, regulating the amount of their
notes by the wishes of their stock
holders. They had obligations in out
standing notes and certificates of de-
post amounting to nearly $4,000. 900
and only about $50 600. 900 i'm coin with
which to meet these obligations
Between the years 1S54-1S57 about
5000 miles of railroad were construct
ed representing an increase of $780,
000.000 in securities.
| 1t only needed the failure of some
large company to precipitate crisis
and ii came when the Ohio Life and
| Trust company, which had been large
| ly engaged in ck-gambling failed
for $7,o000o0. Banks began to con-
tract their loans. confidence was de-
stroyed. business was paralyzed and
the banks throughout the country, with
three exceptions, suspended specie
payment.
In 1871 the Chicago fire caused a
loss of $500, 100000 and the next year
the Boston fire added $50 .O00, 900 to this
loss, The Tweed and Whiskey rings
exposed about this time showed that
the one had defrauded the city of New
YArk of ma tn,iIliAt,c