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

| 6bCulS lIlOteu ldSG Oh Tue u6elS OIL THESE
revelations. The Knickerbocker Trus
Company was closed October %. afte,
paying out about 100000 in cash, and
runs began upon the Trust Company OF
| America, which called for the disburse-
ment of s34,OOO.OOO. and upon the Lin.
coin Trust Company. which suffered
| The suspension of cash payments by
| practically all the banks and the deci-
sion Saturday. October rs. to issue clear
| ing house certificates on the following
Monday marked the eliminating stages
of the crisis. Secretary Cortelyou hurried
to New York and deposited about
$50, 100000 of public money in the national
banks Of the city. Foreign exchange,
which had been adverse, fell to the gold
import point. and by November 10 en-
gagements of gold for import had reached
s5O.OOO,00O. and before the close Of De-
cember about $106 600.
Notwithstanding these measures of re-
lief. the country banks and the public
swallowed up in the week ended Novem-
Der ., about $50 900, 900 in currency Gov
eminent deposits amounting to nearly
$50, 100000 disappeared, and loss in cash
reserves of the banks was disclosed of
$50. COL 500. At the same time the bank
and trust company situation reached one
of its most critical stages. The advent
of an extra holiday election day. No
vember ). afforded a breathing spell for
combina ton among the trust companies
to protect those upon which runs were
being made, and the announcement of
this plan Wednesday morning turned one
of the most dangerous points of the situa-
ton. 1t was not until ten days later
however, that Secretary Cortelyou an
nounced his plan for drawing money from
boards and permitting an increase in the
banknote circulation by the offer to the
public of $4,000, 900 in = per cent Panama
canal bonds, and s100.OO0OOO In one-year
certificates bearing interest at 3 per cent.
A Turning Point.
This announcement. accompanied by a
vigorous letter from President Roosevelt,
did much, in the opinion of many bankers,
to stay the panic, SO that eventually it
was necessary to issue only about $685.
100000 of the bonds and $4,000 900 of the
certificates.
While these measures tended to restore
confidence to a certain degree, there was
no indication of the renewal of business
activity for some weeks. A premium
upon currency, which had run as high as
per cent, continued in force all through
November and December, although the
rate declined materially after the closing
of the subscriptions for the government
issues Saturday, November 80. The
demands upon the New York banks were
swelled for a time by the taking over of
loans from trust companies which were
under pressure, which increased the def
cit in the proportionate legal reserves.
The deficit in these reserves. which rose
to S54. 1O3, GOO November %. was after
that date reduced progressively each week,
until it stood December % at only $780,
17O,3jO.
The national banks have stood up under
the pressure much better than in the
early stages of the crisis of 1893. The
suspensions at that time were about 100
in the three months Of June. July and
August. although eighty-four banks after
ward resumed business. The number of
national bank suspensions hardly equaled
a dozen during the recent panic. the most
important being that of the National Bank
of Commerce of Kansas City.
Then and Now.
The permanent effect upon the national
banking system of the scarcity of capital
and collapse of various business enter
prises has not yet been revealed. but there
are no indications that it will be 50 severe
as after the panic of $685. when the num-
Der of national banks declined from 1854
June l. 1893, to 1883 April 1, 1890
and the capital declined from S69S, 454 ,66j
June l. 1893, to minimum of $607,-
41SGi5 October !. 1899. Great progress
has been made in the number and capital
ization of national banks In the succeed
ing eight years largely as a result Of the
goId-standard law of March IA, 1900,
which permitted the Incorporation OF