New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-03-29
THE ORIGIN OF CRISES.
". III. Tough, Jr., Tells What
Causes Sharp Declines an Prices.

In discussing Specific Causes OF Crises oefOre
the New York Chapter OF the American Ahsalu.e
az Bank Clerks at the University BUILDING NHo"-
sngton Square, ". II. Tough. jr.. secretary OF the
New York University School OF Commerce. Ae-
counts ana Finance said that IL was time the
intelligent people should stop accusing the BANKS
the railroads the insurance companies. Z H. taf-
riman and Theodore Roosevelt OF invoking CONNER
oial crises" Sharp declines in prices, he salu
were caused by war. crop failures and physlcal
cGlaTnities.
.'You who are familiar with the stock markell
he said know that concerted action on the part
OF q few powerful individuals may also al tlines
bring on breaks in security prices. II has not been
many days since we experienced here in New Aork
a stock market panic which may well suspecI
70 have had some such cause. The normal hhlhe-
date cause OF such panic. the calling OF loals'
was conspicuous for its absence So far as ING
public IS concerned the origin OF the selling move
Tnent remains a mystery. II was not economic law
hut human nature. that at work here DuI
fortunately even within the narrow limits VI '"O
Stock Exchange, much less in the country al 49,
no individual or group OF individuals Is YET strons
enough 10 operate long in opposition 10 economic
forces.
Disclosures OF widespread graft and interna-
tiOnal uismanagernent OF large concerns are also
possible of credit withdrawals AS 4
general thing however the disclosures come al.et
rather than before, disasters Besides the so-caeo
disclosures are usually widely read, exaggerated
accounts OF what well informed bankers nave
known all along. We all know how silsill was eiIe
effect on general business of the insurance ihNesu-
CATION. AS a factor IN bringing on conllheIclal
disturbances Il would be difficult 10 point OUT
wherein the so-caIled Hartman investigation re-
Gently has exerted any such eject as Is some
times ascribed 10 It.
Under our antiquated Sub-Treasury system tleIe
a. always the possibility OF carting gold away
sroun bank vaults where IL helps make credit
safer and pIing it up in government vaults. where
mora than q certain quantity is worse than use
1ess The Aldrich bill, which has just gone INTO
effect however allows the Secretary OF the Treas
nv TO deposit his surplus receipts IN nauohat
banks, and we may safely assume, SUPPOSE t1ia'
sf1fur0 Secretaries Will follow thai policy.
I've have had I'm this country IN the last l&O
wears anti-rairoad legislation an INSURANCE pIooe
and q San Francisco disaster. no one OF "illcH
eOuio do more than encourage a temporary zee
movement on the Stock Exchange. when creoit Is
rences are about as harmful 10 general business
as heat lightning a summer evening II is oAly>
when the financial sky IS already threatening that
the lightning fash preEages storm
at Is N a strictly limited sense, men, tnHt gov
ernmeptai action failures, adverse foreign eN-
change, disclosures OF graft, q crop Iallure OF
break IN prices, be called cause OF crises ne
real cause is the inevitable tendency under credlt
SYSTEM Of payment toward extension OF credit
leading 70 higher price level. which in turn cans
and so on until finally an immense volume OF
credit rests upon @ reserve Of cash when can no
LONGER support the load. II Is about TINE mat
INTELLIGENT people should stop accusing the banks,
the at.rOads tho insurance companies, b H. har-
Yirnsn and Theodore Roosevelt Of INVOKING COM
Tnercial crises When a building falls down you DO
not nold the last who walked around II re-
sponStble for its downfall.