The sun. [volume] (New York [N.Y.]) 1833-1916, 1907-11-24

the cause and course OF the panic of 1898.
Most Of the political and party c~ontrover-
sizes OF the dozen years reviewed by Mr..
Dewey may be referred to the contest be-
tween III Representatives OF vested inter-
ests. Of capital and accumulated savings.
and the producers Of farm staples and the
organizations Of workmen in trades and
manufactures. The real issue arose from
the conviction of large classes OF the COM
munity, including most Of the Western
farmers. that the process OF distribution
was such that they got less than their fair
share OF h nations annual products.
Z.
We begin with a glance at the authors
account Of the panic OF 1893. hat period
Of financial and industrial depression has
never been known as the Cleveland panic.
for the reason that il began in the last month
Of President HaTrison's administration and
was obviously due to causes which ante
dated Mr.. Cleveland's entrance upon a Sec
ond term. II was and 10 universally ecog-
nized that Mr.. Cleveland in 1898 suffered. as
did a Buren, in 1887, from mistakes COM
mitted by his predecessor. In a chapter
devoted to his subject we are reminded that
in the latter part OF the Harrison admins
tration the gold reserve maintained in the
Treasury wa called upon to perform a
double duty. IL was obliged to protect not
only the legal tender notes Of the civil war,
but the new and expanding volume OF notes
which by the act OF 1890 the Treasury was
ordered to issue for the purchase Of 81. 900. 900
ounces OF silver bullion annually. To the
earlier issue. therefore, Of s340, OOO. 900 had
nnxw 80 -. .IAoA kka o. rlr sn,raaaa ~ ara
100000 Of credit notes. all Of which could
seek redemption at the Treasury.
How long could the prop supposed to be
afforded by the gold reserve be maintained?
On June 30. 1890. the gold reserve was $780,
100000; in a year it fell to bil7. 900. 900; in
1898 IL was only sos. OOO. 900. The shrinkags
indeed could not be attributed wholly TO
the more liberal coinage Of silver. The
collapse Of Argentine credit in 1890 dis
turbed the money markets OF the world;
England in particular was affected and
the banking house OF Barring Bros. came
perilously near to complete insolvency.
American securities were sold freely on
English account and gold was demanded
in payment. To secure this bullion legal
tender notes we're presented to the Treas
ury for redemption. At the same time
the character OF customs receipts changed;
for a long time before the act Of 1890 be-
came operative IS per cent. or more OF the
import duties had been paid in gold. BY
January. 1891. however, il was observed
that legal tender notes were being used in
increasing amounts. After February, 1892,
the gold receipts from customs were in
significant, being in no month of that year
more than 10 per cent. OF the whole.
Prof. Dewey does not find 80 easy the
analysis Of the state Of industry and oom-
merce during the tweIvemOnth Immediately
preceding the panic OF 1893. He recalls
that TO the ordinary observer there were
many signs of prosperity. The year 1902.
in fact, was distinguished by a volume of
business transactions unsurpassed in the
history OF the country. Foreign trade
was beyond precedent. railroads increased
their tonnage. the money market was favor
able to business, and the O Of liza
biIities involved in business failures was
less than it had been for ten a The
crops. it is true. did not attain the enormous
yield Of 1891, but they compared well with
previous records. The production OF iron
and steel was also at a high level. Careful
students Of commercial indications newer
theless detected other Influences at work
which might mean trouble II not disaster.
For example: The prices of breadstuffs
were low and declining. and heavy gold
exports continued. The loss Of gold by
itself OF course was not necessarily sig
niacant, for trade ststistice have fire.
quently shown an unfavorable balance
against the United States and yet no hurtful
conseuuenoes have followed. The forces.
however, which were drawing gold out of
the country in 1897 did not act in a normal
manner. As a rule foreign exchange is
favorable 10 the United States for a portion
OF every year, particularly in the latter
months. when crops are sent abroad. In
1892. on the contrary, from February
onward. month after month without ex-
ception the rates OF exchange touched
the outward shipping point. The net loss
Of gold was $1,000 900. as compared with
s34. 900. 900 in the preceding year.
Prof. Dewey also directs attention TO
the fact that In 1892 not only were the i'm
ports Of merchandise large. as compared
with the purchasing power OF the mer-
chandise exported. but. a more important
circumstance. foreigners did not invest
40 literally in American securities. A
considerable part of our Indebtedness
to foreign countries had therefore TO be
settled by shipments Of gold instead Of
by stocks and bonds. Speculation in the
new and huge industrial companies further
undermined the stability Of the financial
structure. The earning capacity OF the
big trusts had not yet been proved; the
trusts counted upon generous profits on
inflated capitalization. and the uncer-
talnty OF such profits being realized afforded
a congenisl opportunity for the specula-
tive trader. Al times the Stock Exchange
dealings in industrials far exceeded the
business in railway shares. The violent
fluctuations in the rriOes OF securities
we're also portentous. During 1892 and
the early months Of 1893 Sugar ranged
from 70 to i34: Cordage from Of 20 lat:
Distilling and Cattle Feeding from % to u.
and Lead from % to So. A wider and wider