The sun. [volume] (New York [N.Y.]) 1833-1916, 1907-11-24


cautious in undertaking loans for railroads.
During many years large railroad systoms
burdened with heavy interest charges had
struggled along with varying fortunes.
Some had STAYED on bankruptcy by new
borrowings; others, aided by the trans-
POrtatiOn OF tho large crop Of 1891, were
delaying the day of reckoning. Prof.
Dewey points out that the first open break
in the superficial signs Of prosperity was
the bankruptcy Of the Philadelphia and
Reading Railroad. accompanied by a stock
panic on February ls. 1893. just a fortnight
before Harrison went out Of Office. Money
rates rose. and as gold exports continued,
securities in which speculation played a
part fell IN value. The financial condition
Of the Federal Treasury a strained to a
high tension. L~essening revenue and in
CTeaslnK expenditures slowly but surely
we're converting SURPRISES into. deficits,
and with a change in the character OF
Government receipts the gold reserve
crumbled away early In that same month
of February. Il was. indeed. upon the
verge Of falling below the traditional point
Of safety when a few banks in the city OF
New York lent to the Government on call
90. 900. 900 In gold. The Treasury also de-
AHyGA NhoCbAhh EbIuATGhlrItA, A1u VTtHhEh-
tons we're quietly made for an issue Of
bonds.
II was in the midst OF these perplexities
that the direction Of the finances was handed
over TO Cleveland's second Administration
on March 4, 1898. Much pressure was
forthwith brought TO bear on the new
President to urge him 20 cali at once a
special session OF Congress to reform the
a--SNy Va-. .uI th.,. w-.- .l.. .ava. kopa
that it would be possible TO repeal the act
Of 1890 without delay. The President,
moreover. was advised TO cell bonds 10
strengthen tho gold reserve. To none
of these appeals did Mr.. Cleveland yield;
he was by no 20 certain that Congress-
would abandon silver. and apparently
he hesitated 10 borrow money without a
fresh authorization from Congress. For
a short time a drifting policy was followed,
put public apprehension was increased
when John g. Carlisle, the new Secretary
Of the Treasury, gave notice that the fur
Their issue of gold certificates for gold de-
posted in the Treasury would be suspended.
The gold reserve had fallen below 3iCO. OOO.-
600, and although the daily Treasury state
ment, open TO all. had given steady evidence
Of Treasury embarrassments this formal
ADthuAANAbA AAOhbgA n DtaNOh ~ vi
the part Of many
Nor was distrust allayed when Mr.. Car
Isle announced that the Treasury would
pay gold for all Treasury notes ~ long
as IL had gold lawfully available for that
purpose" The words quoted were n
strued to mean that tho Secretary doubted
his legal power to use the gold reserve of
500. 900, 600 for the redemption Of the Treas
49, l. G--... - --ksol a,.a ..,ebl-f-ad
in 1890. Mr.. Cleveland himself then came
to the rescue and declared on April "a
tina the Administration would exercise
every power IL possessed -tO keep the pub
lie faith and to preserve the parity between
gold and silver and between all financial
obligations of the Government In the
opinion OF some contemporary authorities
on finance this declaration would have
been strengthened by an additional and a
specific pledge that the Treasury would sell
bonds for gold to any extent to maintain
specie payments; but seemingly the Ad-
ministration was not as yet convinced hal
it possessed adequate power.
Public attention was now focused on the
gold. reserve. its ups and downs were read
eagerly an constituting a barometer Of
public and private credit. Disasters
quickly ensued. The anticipation OF poor
crops at home and abroad, together with
the renewal of a railway war between great
trunk lines, intensified anxiety. Con-
fden0e in the management OF -trusts'
received a severe shock from the failure OF
the National COrdage Company early In
May, 1898, only five months after the declara-
ton Of a stock dividend Of 100 per e
Another stock panic occurred. and banking
institutions refused to meet the demands OF
borrowers. Many banks. terror stricken,
refused to grant ordinary credits on any
terms, and old established business houses
found themselves crippled. Presently the
New York city banks refused to ~rediscOunt
notes offered by interior institutions. and
this tightening of credit led to the suspen-
sion Of banks in the South and West. In
June. 1898. banks in New York city issued
Clearing House certificates. which were
practically lent TO embarrassed banks upon
acceptable security n for a brief moment
relieved the money market. Within a
few months SIS 200. 600 Of Clearing House
certificates were issued in New York,
Boston and Philadelphia. an o equal
to a third OF what was then the total circula-
ton Of those banks. Not thus, however,
could the downward movement be stayed.
In June the Erie Railroad failed,
The closing OF the mints In India TO
private coinage unsettled the value Of
silver, the price Of which in London fell
within less than a week from s7H to Sol!
pence an ounce. The hope that silver
might be supported by an international
agreement was for the time being destroyed.
Mines in the West were now closed, and in
Colorado industry came almost TO a stand
still. The securities OF almost all rail-
roads and industrials fell. and banks met
the demands for funds only by increasing
the amount Of Clearing House certificates
and by e~ncroaching upon their legel re-
serves. Finally banks in New York city
refused to cash checks Of depositors K
cept in small amounts. By August cur
rency was at a premium Of 3 per cent.
Not until the end Of October did Con-
Kress, in the sreoial session summoned
to meet on August 7. consent to repeal the
silver purchase law Of 1890. During the
interval business and trade suffered severely.
Between May and October national bank
deposits were diminished by eS7s. 600. 900
and loans by about as much 4 complete
A. k.k-.aNaK n.A IC.. -