The San Francisco call., 1904-09-04
WAR SCARF"
FROM RED SEA
"reminiscences of Other Like
Incidents Suggested by the
Russian Seizure of Malacca
SECURITIES AFFECTED
Reasons for Violent Falls
in Prices at Such Times
and for Their Rapid Rise

&-
The sudden fright of the foreign
stock markets over the passage OF
Russian privateers through the Bos-
porus and the seizure Of English and
German mails has had all the ear
marks of a traditional European
war scare" British consols dropped
a full point, French rentes u, and
prices on all European bourses fell
steadily for three days. Then they
began to recover and it was character.
istic that recovery set in while actual
news of the action of England and
Russia was most disquieting. The
Paris banking community had appar-
emily learned from the highest quar-
ters what the Russian Government
proposed to do before any outside
channel of news had been similarly
favored. The episode naturally excit-
ed reminiscence, for the war scares"
are landmarks in the history of Euro
pean finance and some of them are
the best of all reflections OF historic
incidents.
WAR SCARES IN WAR TIME.
The fact that this weeks war scare"
occurred when a war was already go
ing on was not unusual. Such scares
are regular incidents Of both politics
and markets whenever a war is going
on. The f1utter in our markets during
the episode with the German Admiral
Diedrich, at Subig Bay in the Philip
pines, during July, 1898. was one. but
very small one. The Russian advance
on Constantinople. in 1878, when the
treaty Of peace with Turkey was under
consideration, and England's prompt
dispatch of its fleet to the Bosporus,
was another case in point. A far more
interesting case was that of the Trent
affair." in November, 1861, when Cap
tain Wilkes seizure of Mason and Sill
dell from the British ship brought
England and this country close to the
verge of war. This was a case where
the markets grasped the situations
real meaning very slowly 1t was only
when the attitude of Lord Palmerston
became known to the London bankers
and their friends that the crash began,
which brought United States 6 per
cents to SO, as against 95h before the
incident, and sent down British per
cent consols to 8s1s. as against an
earlier price of "a. But, as a rule, the
on the markets have been those where
the possibility of war appeared sud
denly in the diplomatic sky and took
the markets fairly off their guard. OF
this there are three notable precedents
in the past generation.
AFGHANISTAN IN 1885.
The first and perhaps the most nota-
BILE was the high sensation over the
"Pendjeh affair in 1885. A boundary
dispute on the Afghanistan frontier be-
tween Russia and England had not
greatly Influenced the markets until in
March the Russian troops suddenly
moved on the Afghans in the disputed
passes. At the close of March the Rus
sian general, Komaroff. had summoned
the Afghans to surrender; they had re-
fused on the advice of the English COM
mander, whereupon they were attacked
and routed. Consols, which in March
had fallen from sSA to 967, had recov-
cred to 9S again when the news of this
fight came in on April Z. In two days
they broke again to 94Z, with French
rentes falling "a points, and the Lon
don Stock Exchange was in condi-
ton of which a financial critic wrote:
ITO find a parallel we should have to
go back to the commencement of the
Franco-German war" But England
and Russia did not fight. M. de Giers,
speaking for Russia, alluded to this
regrettable incident" The dispute was
referred to the King of Denmark, and
by May, when negotiations were re-
sumed, consols and rentes were above
their price for March.
THE VENEZUELA MESSAGE.
The war scare" at the end of 1895
and the beginning of 1896 was equally
sensational. First came President
Cleveland's Venezuela message" Of
December 10, on which British consols
in five days broke from 1O71z to 1855.
with a crash on the general English
and American stock markets which will
be well remembered. From this col
lapse a rapid recovery ensued, and con-
soils were back to 1071k when, on
Wednesday, January 1. came the news
of the Jameson raid. The price fell by
the close of the week to 1864. The Ger
man Emperor's telegram to President
Kruger less than one week afterward
and the hasty mobilization of the Brit
ish flying squadron sent it down to
1O5H. Yet this cloud, too, blew over
as quickly and completely as the 9TH
ers; the Jameson prisoners were re-
leased by Kruger, Germany explained.
the Venezuelan quarrel went to an ar
bitration board and by January 16 con-
soils were back at 10S-
MARCHAND AND FASHODA.
The "Fashoda incident" of 1898 had
an element Of the. comic in it. but the
stock exchanges took 1t somewhat
seriously Fire eating Major Marchand,
with French commission and native