Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-12-31

THE EVENING
tutions.. banks and trust companies
supposed to be solid. were found tc
have their capital impaired by stock
jobbing of their officers. the public
were easily frightened and the run
then became, not one of loana5Ie cap
ital. but of actual money to be used
in the transaction of the day-a very
different question. though. D: course
closely related.
Increasing Confidence.
1T would seem that our system of cur.
rencyfs not arranged so as to permit its
volume to be increased temporarily to
| counteract the sudden drain of money by
the, boarding in a panic. 1t is probable
that the str.ngency which reached its
height on that dark day of October "a
might, in part, have been alleviated had
we had a currency which could automat-
lcaily enlarge itself to meet the tremen-
while public confidence was being re.
| stored. The national administration. to-
gether with many Of the large capitalists
OF New York and elsewhere, put their
shoulders under the load and by various
devices of an unusual character have
brought about the present condition OF
gradually increasing confidence.
The injurious consequences to follow
from this panic are not likely to be sc
long drawn out or result in such disas-
trous industrial depression as the panic OF
1893 or the panic of 1873 and this for
the reason that the condition OF the coun-
try makes I SO much easier to resume
business gradually, to accumulate capital
and then to renew the enterprises which
had to be abandoned for lack of it. In
the first place. We have gold currency
with no suggestion now of a departure
from the gold standard. In 1893 the pres
sure for free silver was on. and the
threat of national reputation had
the return of prosperous times. Our
government finances now are in excellent
CONDITION and we have large surplus.
Our farming communities in the west to-
day are not under the weight of mort
cages and of debt which distressed them
In 1e.,S and 1873. They are prosperous and
wealthy.
Railway Conditions Improved.
Again, the railroads, which make up a
large part of the wealth o. this country.
are on A much soldier foundation than
they were in 1893. Then many of them
had to be taken into the hands of receiv-
ers and immense amounts expended by
means of receivers certificates. displa cling
and destroying the value of vested secure
ties. in order to put roads in a safe and
income-earnins condition. ',he railroads
today are in a better physical condition
than they have ever been in their history
But few OF them have recently been built
into new territory in which business has
iat.on.
Again. the balance of trade is with us.
We were able to settle for the hundred mil
mons or gold that we withdrew from Eu-
rope In order to meet the demand for
money in the markets in New York by
the excess of our exports over our i'm
ports in the single month of October
All these things point to the proba-
btlity OF a restoration of confidence, and
after proper liquidation and an in
dustrial depression of some months. to
a resumption of business on a normal
basis.
Modern business is conducted on a
system of credit which in normal times
increases the facility with which the
work of manufacture, production and
beyond the limit of earlier days. and
enables a total of many billions to rest
on very small percentage of actual
money passed. Every manufacturer,
every merchant. is. under modern con-
ditions, dependent in the successful con-
duct of his business upon bank credits
extended at regular seasons. The banks
themselves in turn acquire the means OF
granting these credits largely from the
money of their depositors. And in loan
ing from their deposits the banks RELY
upon the improbability that more than
certain part of the deposits will be
called for at any one time lack of
public confidence in the banks creates
a common desire among bank depositors
to withdraw their money The fright
which seizes the creditor-the depositor-
and leads him to hoard his money,
spreads like %ildfire, and Is as unreason-
Ing and unreasonable as the spirit of a
mob. A run on the bank ensues. The
banks then call on their debtors, and the
tremendous structure depending upon
credit tumbles. Meantime, men who prop
erly count themselves as millonaires
who are honest. conservative, solid bust
ness men. always responding to their OBJ
legations, find themselves as helples IS
unde- such a financial cataclysm as they
would be IN an earthquake
GRADUALLY reason resumes it's sway but
the injury to the credit and the blow which
has been struck at the normal business
pr1gress mas more or less permanence.
Values have sf1runk. plans for new and
Increased business enterprises must be
abandoned and liquidation and house,
cleaning take place. The business men
who have had to stand the strain, who
have seen their fondest homes crushed
and have only been able to come through
the crises with the greatest effort and
most substantial financial loss, are uat,I-
rally sore and depressed. They believe,
and generally they are right. that this
disaster has come upon them without
feult OF theirs. 1t Is unjust to them.
No matter how many symptoms of the
coming trouble there may hav, been.
panics always come with shock and a
tremendous surprise and disappointment.
And hardly is the panic over but a fierce
discussion arises as to the cause o. its
coming. With various motives editors
and public speakers rush to the front
to fasten UPON some thing or some one
the responsibility for what mas happened.
II is entirely natural that, In the con-
ditfon of mind in which the suffering
business men a-e left by the great strain
and trial. such suggestions should re-
ceivn marked attention. and that the
more definitely the personality of the
scapegoat can be fixed the more pleasure
1t gives the victims of the catastrophe.
Fight Against Trusts.
This mental attitude of the business
community which 1 have described as
likely to be found after every financial
panic is clearly present today The eco
nomic and political history of the last
four years gives 1t especial Importance,
because 1t offers to certain clements in
the business and political community an
exceptional opportunity. Let me invite
your attention to that history. 1t is that
OF giant struggle between the national
administration and certain powerful COM
binations in the FINANCIAL world. These
combinations. for lack of better name,
are called trusts They engaged In diff
ferent lines of manufacture and produc-
ton. and by assembling large amounts Of