The semi-weekly messenger. [volume] (Wilmington, N.C.) 1897-1908, 1907-11-15
FINANCIAL
Contracting Conditions at Times OF
Various Financial Panics.

SCCh In lASH - '''
while history presents many analogles
it uevJ' TetiIv repeats Itself, Ter con-
ditiCus are never the same IN tIe pro
gress OF human affairs. 1t Is as"
surfing that there is hardly even an
analogy between conditions now and
those which prevailed at the time OF
the most recent and best remembered
crisis, that OF 1899.
For some years before 1890 there
had been d steady gain in prosperity,
with the usual accompaniment OF ex-
pandinE cGcQlt and o~verconfident enter
prise, and the special feature Of large
capital absorption in railroad con-
struction and equipment.
In that year came the shock OF the
Barring failure in London and the coR-
traction of foreign credit. Difficulty
in raising capital and the maturing OF
obligations resulted in Il series of rail-
road defaults and ~receiverships. At
the anne time the insidiOus infatina
and dilutiOn OF the currency by he
Silver Purchase Act and the treasury
AN'Co "S1 "1A"''AF "AAON1 NDlA
denCe, while treasury assets were
shrinking and gold ebbinG away,
Prices had advanced and the Mckinley
tariff of 1880 gave them a new i'm
pulse while government receipts &c.
clined.
a treasury surplus Of $250,Qo0 900 in
the nil.I- OF 1880 slowly dWindled
and in the middle of 1893 when the
trouble eliminated, there YVES a def
cit.
The gold reserve Was depleted ana
when the silver act was repea ed
confidence in the currency had beeT
thcrDr a. eE,-,on. 4 large amount
OF gold had been hoar0ed and the
strain upon the banks caused Orne
serious 1ai2U"es and the adoption o. all
available emergency evP"dionts.
The situation is no1v entirely dill
ferent so FAR as the condition Of The
currency and treasury is concerned
The basis Of the former is solid AID
assured end the lattag is o~versuppl;od
with funds.
One element of weakness remains
the sane. the Inability of the banks
to use their credit, however welg Sc
cured for the relief OF ~stringPn"y
i'll the currency. They can only use
capital for that purpose by the cum
bersonae process Of investing in gov
eminent bonds.
There Is now, however, the result
of credit expansion, absorption Of cap
ital, speculative enterprise and advance
in prices, which prepare the way for
all crises, and at the first alarm there
has been the withdrawal of deposits
from banks and the needless boarding
of money, which is always the most
perilous factor in the situation, aggra-
waiting the difficulty Of controlling it,
which is the one great need for the
restoration of confidence. There is no
parallel to the present case in the crisis
of 1873 winch was caused by the re-
nENed activity following the Civil War
the stimulus Of an inflated and tiuctua-
ting currency, speculative extravaganza
reckless expansion of credit and Over-
production which led to a collapse that
was sudden and certifying and hard to
O from.
For the nearest parallel we have to
go back Grty years to the crisis of 1S5.
and there We shall find one most IN
pOTtant difference.
There had Leen for ten years or NOR"
Il period OF activity and prosperity
until then unprecedented. 1t had been
helped by agricultural development, i'm
migration, the growth of industries
under reasonable tariff and the great
INCREASE III the production of gold from
the opening Of mines ir Australia and
california.
There was the compliment confidence
and 1opefulness that We have seen in
late years, a tendency to push en-
tcrprises beyond the limit Of capital
.s$oArnes and assured credit, much Dor
rowing abroad and Indulgence in ex-
t~ravagance before unknown in this
country.
The distension reached its climax.
and when the inflated banking and
promoting concern known as the Ohio
Life Insurance and Trust Company.
with its extended branches and tinan-
cial affiliations, suddenly suspended ON
the Oath OF August there WAS a VIC
lent collapse, and a hurricane Of bank
failures and commercial bankruptcies
swept over the country prostrating ev-
e%rything, but there was rapid Iiquida-
ton and quick recovery,
But this is a parallel with one most
important difference from the pres
ent, besides the relatively greater re-
sources and less expansion at this
time, That was the time Of the stats
banking systems, when banking laws