The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-12-31
LIGHT DAWNS
AS PANIC YEAR
PASSES AWAY
Complete Review of Causes
That Brought on Business
Distress.
"SILENT PANIC" REVEALED
STRAIN ON RESOURCES
NEW YEAR WILL COME IN WITH
MUCH BRIGHTER OUTLOOK
THAN 1906.

New York, Dec 30.-The year 1907
will go down with 1857, 1873 and 1888
as one of the panic years in American
finance, but despite the remarkable
stress and strain to which the financial
structure has been subjected. the year
closes with conditions stronger and
safer than they were when the year be
gan.
The year opened with the feeling in
conservative quarters that speculation
had already been carried TO an unwar-
ranted height and that prudence was
imposed by conditions upon bankers
and capitalists. That this feeling op-
Grated to some extent throughout tn
year and that there was a scarcity of
capital for absorbing new securities,
was indicated by the diminished trans
actions in stocks and bonds or the
New York stock exchange.
Cause of Heavy Pressure.
The source of the pressure upon the
money market is indicated by the large
issues of securities which took place
during several years prior to the crisis.
Statistics compiled by a leading finan
cial journal i'm Brussels, showed that
the total issues throughout the world
averaged for the five years ending
with 1906, about S., 400, 900, 900 annually
In the United States issues of stocks
for the first eleven months of 1907 were
$751;. 9595O0 and of bonds and notes ST.
075.9s0.0OO. making up total of ST.
S31 ,S49, 500.
The "Silent Panic"
The extent to which capital resources
had been strained was not revealed in
d striking manner to the general public
until the silent panic" of March Il,
Il
events, but at the time one of the most
serious and remarkable breaks which
the market has ever suffered. The loss
of nineteen points in Amalgamated
Copper in a single day, twenty-one
points in American Smelling, twenty
Two in Reading and twenty-five In
Union Pacific. added to cOnsidera bic
previous declines at a slower rate, wiped
out margins, compelled calling Of
loans and wrecked the fortunes %
many spectators. The market recov-
cred very slowly during the spring and
early summer. TO suffer new reactions
in August; but itSwas not until mid
October that the storm broke in all its
force with the collapse of the corner IN
United Copper. the appeal of the
Morse Heinze banks to the clearing
house for help. and the refusal to ex-
tend such help until the old control was
eliminated.
When the Rush Came.
Events moved fast on the hseis of
these revelations. The Knickerbocker
Trust company was closed Oct. D. after
paying out about SS,00000O in cash;
runs were begun on other banks and
trust companies; practically all the
New York banks suspended cash pay
ments; clearing house certificates were
issued; foreign exchange fell and gold
imports began. Secretary COrtelyou
made heavy deposits of government
funds and announced his plan for
drawing money from the boards and
permitting an increase in bank nute
circulation by the offer to the public
of $50 000, 900 in 2 per cent Panama ca
nal bonds and 500 GOO 600 in One-year
certificates bearing interest at per
cent This announcement, accompanied
by a vigorous letter from President
Roosevelt. did much, in the opinion of
many brokers, to stay the panic, so
that eventually it was necessary 20 is
sue only about $4,000, 600 of the bonds
and $4,000. 900 of the certificates.
Why Recovery Is Slow.
The situation improved slowly ana
the deficiency in New York bank re-
serves was reduced progressively each
week, until it stood on Dec IS at only
20170, $50.
The national banks have stood up
under the pressure much better than
IN the early stages OF the crisis of 1888.
The suspensions at that time We're
about 100 in the three months OF June
July and August, although eiShty-foIr
banks afterward resumed business. The
number Of national bank suspensions
hardly equaled a dozen during the le-
cent panic. the most important being
81 ha Of
n1erce of Kansas City. The permanent
effect upon the national banking sys-
tenn of the scarcity Of capital, and coll
lapse of various business enterprises
has not yet been revealed, buC there
are no indications that it VIII be 50
severe as after the panic of 1893.
When as the panic broke on Nov. 1,
1907, the total circulation was 5000, $780,
466. The measures then taken by Sec
rotary Cortelyou to promote circula-
tion in order to tide over the monetary
stringency resulted in an increase of
about SO 600 during the next seven
weeks, so that the circulation stood on
Dec. 2t, 1907 at $3.50, 1882
Heavy Importations of Gold.
Accompanying the increase of bank
note circulation in order TO meet the
pressure for currency was the dramat-
&c movement of nearly Sl06. 000. 900 in
gold from Europe within period of
about six weeks, The official figures
Of the treasury showed imports of gold |
for the month OF November amounting
to $63, 46S, 036. which were more than |
twice the total importations for The |
preceding ten months. The remainder |
came early in December. This enor-
nous movement of gold was facilitated |
by the sharp arrest of imports % lux /
uries and a combined effort by pro- /
ducers, railways and bankers ID ship /
promptly to Europe the large crops Of /
Continued on Page 2.