The Birmingham age-herald., 1907-12-31
TAFT TELLS ALL ABOUT =
 FINANCIAL SITUATION
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@~-~-~---~--O~~~~-------- ---~-~-~@--~~~~~-~~~~~>- country has suffered from severe mone- tary panic. Even yet the clearing house certificates finger in your bank ex- changes as emphatic evidence of it's se- verity, and of the extreme measures which had to be taken to avoid greater disaster. Doubtless many of my hearers have not yet recovered from the intense nervous strain and mental suffering to which they have been subjected since the middle of October. The panic has been given a certain political bearing and inn portance For this reason I have select ed for my topic for tonight: The Panic of 1907, It's Causes, It's Probable Effects and the Relation to It of the Policies of the National Administration.
 What did cause the PanicP Writers on financial subjects who have given their lives and constant attention to matters of this kind. who are able to institute a comparison of the present panic with previous panics. and who are entirely fa- miliar with the conditions preceding all of them, substantially agree on the cause. Panies and industrial depressions are the result of the characteristics of human na- ture which manifest themselves in busi- ness and elsewhere The world generally has a certain amount of losnable capital available for enterprises or the enlarge ment of old ones. In periods of prosperity this capital, with the instrumentalities for enlarging 1t potentially by credits, is put into new enterprises. which are profitable, and the increase in free capi- tai goes on almost in arthmetical pro- gresson. After time, however, ex- penses of operation and wages increase. and the profit from the new enterprises grows smaller The loanabe capital gradually changes it's form into invest ments more or less convertible Much of that which might be capital is wasted In unwise enterprises. In extravaganza. In living, in wars and absolute destruction of property, until the available free cap ital becomes well nigh exhausted the world over, and the progress of new en- terprises must await the savings of more. Men continue to embark in new enter prlses, however, the capital Tails them and disaster comes.
 Capital Exhausted.
 ''For eight or nine months last past there were many indications that the loanable capital of the world was near exhaustion This result was brought about not only by the enormous eX- pansion of business plants and business investments which could not be readily converted but also by the waste of capital in extravaganza of living and by the Spanish war. the Boer war and the Russian Japanese war. and in such ca tastrophes as Baltimore and San Fran cisco 1t became impossible for the soundest railroads and other enterprises to borrow money for new construction or reconstruction. The condition was not confined to this country, but extended the world over and was made manifest in the countries of Europe even before 1t was felt here.
 Secondly, the conclusion cannot be avoided that the revelations of irregular ity. brooches of trust. stock jobbing. over issues of stock violations of law, and lack of state or national supervision in the management of some of our largest insurance companies. railroad companies. traction companies and financial corpora tions shocked investors and made them withhold what little loanable capital re- majped available. Such disclosures had much more effect probably, abroad than they had here because here we were able to make distinctions, while there at re- mote distance the revelations created dis trust in our whole business fabric.
 Gambling of Bankers.
 When, therefore, two or three inst'- tutions banks and trust companies, sup posed to be solid, were found to have their capital impaired by stock jobbing of their officers, the public was easily frightened and the run on the banks began. The question then became not one of loan able capital. but of actual money to be used in the transactions Of the day-a very different question. though, of course, closely related.
 Tt would seem that our system of cur