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

Gentlemen of the Merchants and Manu-
facturers' Association of Boston:
Il am glad to be here. For more than
two years 1 have been trying to accept
your kind invitation. I do not feel
My father was born in Vermont. My
mother was born in Boston. My two
grandfathers were born in Mendon, Wor-
cester county. Much of my boyhood was
spent in Millbury, and I was educated at
Yale. While l cannot claim to be one of
you, l like to boast that 1 have enjoyed
the good influence Of the same traditions.
Il had expected to talk to you about the
Philippines tonight. That was one Of the
reasons why l accepted the Invitation so
lightly. 1t is subject easy for me to talk
about. 1t may be 1t Is getting little
stale. For instance, 1 have heard that
one of the best methods Of d!scouraging
my friends. the correspondents of the
press in washington, from pursuing en-
barrassing inquiries into other matters, Is
to insist on discussing with them for
publication interesting phases of the Phil
ippines situation. They leave forthwith
But / had supposed that however. dead
the islands might be as a topic inviting
discussion and attracting attention else
where. one could rouse some excitement
over 1t still in Boston. l have been
warned, however. that here, too. there
were subjects more absorbing, at least
for business men. So when was honored
by an invitation for this morning to ad-
dress the ministers of Boston. whose pro-
fession carries them naturally in consid-
GRAFTON of other worlds. said my say In
respect to the Philippines, and the to me
very absorbing national problem, which
l hope and believe we are working out
successfully. 1t follows that. for this
company. l must find another subject.
The Monetary Panic.
During the last three months the
country has suffered from a severe none
tary panic. Even yet the clearing house
certificates linger in your bank exchanges
as emphatic evidence of its severity and Of
the extreme measures which had to be
taken to avoid greater disaster Doubt
less many of my hearers have not yet re-
covered from the intense nervous strain
and mental suffering to which they have
been subjected since the middle of &C.
tober. The panic has been given a certain
political bearing and Importance For this
reason. ] have selected as my topic OF
tonight:
THE panic of 1907. it's causes, it's
probable effects, and the relation to it
of the policies of the national admin
istration.
What did cause the panic? Writers
upon financial subjects who haze given
their lives and constant att-ntion to
matters of this kind. who arc able to
institute a comparison of the present
panic with previous panics, and who
are entirely familiar with the condi-
tons preceding all of them. substan-
TALLY agree upon the causes. Panics
and industrial depressions are the re-
suit of the characteristics of human
nature. which manifest themselves In
business as elsewhere. The world gen
orally has a certain amount OF Ioanable
capital available for new enterprises or
the enlargement of old ones. In pc
RODS of prosperity this capital. with
the instrumentalities for enlarging its
potentiality by credits. Is put into new
enterprises which are profitable. and
the increase in free capital goes on al
most in arithmetical progression. After
"a time. however. expenses of operation
and wages increase and the profit from
the new enterprises grows smaller The
loanabie capital gradually changes it's
form into Investments less and less
convertible. Much of that which might
kbe capital is wasted in unwise enter
prises. in extravaganza in living, in
wars and absolute destruction of prop
erty, until the available free capital
becomes well-nigh exhausted the world
over and the progress of new enter
prises must await the saving IF more
Men continue to embark in new enter
prises. however: the capital fails them,
ana ulSdSttT COIutS.
Causes Of the Crisis.
For eight or nine months last past
there were many indications that the
loanable capital of the world was near
exhaustion. This result was brought
about not only by the enormous ex-
pansion of business plants and business
Investment which could not be readily
converted. but also by the waste of
capital in extravaganza in living and
by the Spanish war. the Boer war and
the Russian Japanese war. and in such
catastrophes as Baltimore and San
Francisco. 1t became impossible for
the soundest railroads and other en-
terprises to borrow money for new
construction or reconstruction. The
condition was not confined to thus coun-
try, but extended the world over and
was made manifest in the countries Of
Europe even before II was felt here
Secondly, the conclusion cannot be
avoided that the revelations O.: irreg-
ularity, breaches of trust, stock job
bing overissues of stock, violations OF
law and lack of rigid state or national
supervision In the management OF some
of our largest insurance companies
railroad companies. traction companies
and financial corporations shocked in
vestors and made them withhold what
little loanable capital remained avail
able. Such disclosures had much more
effect, probably, abroad than they had
here because here we were able tn