The Tupelo journal. (Tupelo, Miss.) 1876-1924, 1906-11-16
TUpELo MISSISSIPPI FRIDAY NOVEMBER rs 1906.
How a Financial Pam
ic Was Prevented.

Some months ago the question
was very anXlously asked: Are
we to have a financial crisis?
At that time the Western and
Southern crops were beginning
to move, necessitating the with
drawal of a vast deal of money
from the Eastern centers. At
the same time speculation in the
stock market and in other oper-
ations was rife, demanding i'm
mediate supplies of cash in the
Eastern centers Of trade and
population.
So extreme were the eXigen
cies of the situation that it was
impossible to prevent a vast fl
>nancial crash with the accompa-
nying, or rather the succeeding,
industrial and commercial, stag
nation, save by making immedi-
ate and immense additions to the
stock Of money in the banks.
When the question was asked
where and how this money was
to be got, the answer is simple.
1T came out of the United States
Treasury. 1t would never do
for a Republican administration
to permit a financial crisis to oc-
cur, particularly on the eve Of an
election that might change the
political complexion of Congress-,
and the crash was prevented by
taking more than $3.50, ,0O0,0 900
out of the National Treasury
and putting it in the national
banks, where it could be loaned
out at heavy interest to specula-
tors. Of course, the govern
ment gets no interest for the use
of. the money. All the profit is
reaped by the banks.
Therefore there was no finan-
cial crisis in the autumn of 1866.
Such catastrophes always come
in the fall ann usually in Septem-
ber,. when the Western grain
crops and the Southern cotton
crop have to be marketed, and
there will be none in 1907 or
1903, because the Republican ad-
ministration has got to be saved.
1t was so during Pres. Harrisons
term, the national trouble being
STAYED off until he vacated the
national chief executive office,
but so "ticklish" was the stu
alton and so completely had the
National Treasury been depleted
of the large reserve which Pres.
Cleveland had left to Harrison
that when Cleveland, coming in
for a second term, followed Har-
rison. he found the treasury
empty and the business of the
country plunged in a terrible fl
nancial crash. that of 1898.
All the indications are that
should a Democrat be elected in
1908 he will he confronted with
the same sort Of conditions that
were precipitated upon Cleve
land, the crash which followed
his advent into the Presidency
calling down upon him universal
curses and condemnation for
events for which he was in no
way responsible. Should Mr..
Roosevelt succeed himself for a
third term, it is difficult to pre-
dict how he will be able to avoid
the storm. The game of pouring
out public money to save the
Yeculators cannot be kept up
forever.
Some may ask why, in the
presence of great activity in
business and large and general
prosperity there should be any
talk about financial troubles.
The answer is that the great ac-
tivity in business and the gen
eral prosperity make money
easy to get-forR while and stim-
ulate to enormous and reckless
speculative movements. i Unless
the supply of money can be KEPT
up there will be a failure some
where, the bubble will burst and
the resulting reaction of contrac-
ton will be equal to the previous
expansion. q
Burton, a prominent writer on
the subjects in his book on Crises
and Depressions,'' gives the fol-
lowing conditions as the warning
indications Of financial trouble,
thus.
|. An increase in prices, first
Of special commodities, then, in
a less degree, of commodities
generally, and later of real estate
both improved and unimproYed.
2. Increased activity of estab-
lished enterprises, and the for
nation of many new ones. es-
pecially those which provide for.
increased production or improv-
ed methods, such as factories,
and furnaces, railways and ships,
all requiring the change Of cir
culating to fixed capital.
8. An active demand for loans at