The Montgomery advertiser., 1907-12-31
Financial Review 1907.

the making of much financial history. It will go down with 1851. 1873 and 1893 as one of the panic years In American finance. but despite the re- markable stress and strain to which the financial structure has been sup iected, the year closes with conditions stronger and safer. than they wete when the year began.
 The year opened with the feeling. in conservative quarters that speculation had already been carried to an unwar- rarlted height and that prudence was imposed by conditions upon bankers and G capitalists, That. That tnlS bhn,,, ieGing bP fbe year. and that there was scarcity or capital for absorbing new securities, was indicated by the diminished transo New York Exchange. While the num- Der of shares of stock dealt Tn up 10 Christmams ofe 1907 did not Iall De low that of normal years prior to 1905, it was very much less than for that year and for 1906. The banner year prior to 1902 was 1901. when the nun 3n !. Der of shares dealt in was 26s,577 ,S54 There was a decline to 160,74S,36S shares in the depression of 1903 and recovery to 26S,o40;s9s In 1905. and az 2ss,- dealt in in 1907 fell to 195, l69,1s2. The field of bonds in 1901 showed sales ssns whieh fe | was attained in 1904 when sales were | s1.9s0. .S10. .56O but was not greatly re- l duced in 1905. when sales stood at I,U of capital were already afforded in | 1908 by the decline of such sales to | $67O.s17,3 1883. and finally'to $561.651,50 l in 1907.
 The source of the pressure on the money market is indicated by the large issues of securities which took place during several years prior to the crisis. The statistics compiled by leading financial journal in Brussels showed | that the total Issues throughout the world averaged for the five years end | nually. In the United States issues of stocks for the first eleven months of 1907 were $7575S9,5oo, and of bonds and notes, $1,o1S,9S0,00O. making to- The extent to which capital resources | had been strained was not revealed public until "the silent panic of March | IA. now almost overshadowed by later events. but at the time of the most
 aad bas e1eT oss of l 9points in Amalgamated Copper ,l in a single day. 21 points in American Sleting. 22 in Reading and 25 in Union Pacific added to considerable previous declines at lower rate, wiped out margins, compelled the .callaing of loans and wrecked the fortunes of cred only slowly during the spring and early summer. to suffer new re- actions In August but it was not until mid. d.october tha tthe storm broke in corner in United Copper. the appeal of the Morse -Heinze banks to the | clearing house for help and the refusal to extend such help until the old con- | trol was elimipated.
 | Events moved fast upon the heels of these revelations. The Knickerbocker | Trust Company was closed October 22, | after paying about $S,000000 in cash, and runs began upon the Trust Com pany of America, which called for the disbursement of $34000.000, and upon the Lincoln Trust Company, which suf- fered nearly proportionate loss of deposits. The suspension of cash pay Py on a ne sna sue clearing house certificates on the following Monday marked the culmi- corteiyou Sf'cs carried % ts to NeW Y York and de posted about s30.0O0.0Oo of public money in the national banks of the city. Foreign exchange which had point. and by November 10 engage ments of gold for import had reached $50,00o.000, and before the close of | December about $106,000, ,000.
 Notwithstanding these messengers of relief, the country banks and the pub lie swallowed up in the week .endir g November 22 about $60,000,000 in cur rency. Several deposits amounting to nearly $30,000,000 disappeared and a loss in cash reserves of the banks was disclosed of s30601. 800. At the same uation reached one of it's most critical stages. Ire advent of an extra holiday on election day, November 5, afforded among the trust companies to protect those upon which runs were bein | made, and the announcement of this on Wednesday morning. turned one of the most dangerous points of the sit- uatiom It was not until ten days later. however, that Secretary Cortelyou an- nounced his plan for drawing money from the hoards and permitting an in- | n offer to the public of $50, O,000,000 in per cent. Panama Canal bonds and 1 $1Oo,00O,0o in one year certificates bear ing interest at pcr \cent. This an nouncement. accompanied by a vigorous letter from President Roosevelt, did much, in the opinion of many bankers it was necessary to issue only about $25 00O0 Of the beads and $15,000 00O of the certificates.
 While these messengers tended to restore confidence to a certain degree there was no indication of the renewal of business activity for some weeks. A premium on currepcy which had run eS force eish al af fhroupg Souember and pel cember, although the rate declined ma tefiaIly after the closing subscriptions | for the Government issues on Saturday November 30. The demands upon the New York banks were swelled for a time bY the taking over of 'oans from trust companies, which were r. under 
 the proportionate legal reserves. The deficit in these reserves, which rose to $54. 600 on November 23. was after that date reduced progressively each week until it stood on December 2S al only $2017O,350. 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 160 in the three months of June. July and August. al though eightytfour banks afterwards resumed business. The number of na
 tional bank suspensions hardly equall' ed dozen during the recent panic, the most important being that of the Ma
 tional Bank of Commerce of Kansas City. The permanent effect upon the national banking system of the scarcity of capital and collapse of various bus
 mess enterprises has not yet been re
 vealed, but there are no indications panic of 1893, when the number of na
 tional banks declined from 3.S54 or
 June l. 1893 to 3.5S3 on April 1. 1899 and the pital declined from $69S.
 454665 on June 1. 1893. to a minimun of $607.41S045 on october 1, 1899. Grea
 progress has been made in the numbel and capitalization of national banks il
 the result of the gold standard law
 Of March A. 1900. which permitted thu
 incorporation of banks with a minimum
 capital of $25.000 and ehansSd thu } terms on which circulation nsght h.
 issued :.
 The number of national banks in corporated from March 1A, 1900. to No
 vemher 30, 1907. was 3,692. of which 2. , 4O1 were of capital less than S50.00 and l. 291 were of the capital require , under the previous law. The ipcreas in small banks did not affect tn