The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-12-31
ALOOK BACK W ARD
Panic of 1907 Reviewed and
Compared With Others.
OF Less Severity and Shorter i'm
It's Duration.
CLOSE OF THE YEAR
Finds Conditions Safer and
S0under Than the Beginning.
Numerous and Effectual Meas
ureS of Relief,

/ y
1907 will go down with 1857, 1873 and
1898 as one of the panicky years in
American finance, but despite the re-
! markable stress and strain to which
| the financial structure has been sub
| Jected, the year closes with conditions
stronger and safer than they were
when the year began.
The year opened with the feeling in
cons ervative quarters that speculation
had already been carried to an un-
warranted height and that prudence
was imposed by conditions upon bank
ers and capitalists. That feeling oper-
ated to some extent throughout the
year and that there was a scarcity of
capital for absorbing new securities
was indicated by the diminished
transactions in stock and bonds on the
New York stock exchange.
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 lead
Ing financial journal in Brussels Show
ed that the total issue throughout the
world averaged for the four years end
ing 1906 about $3,4OO,0 100000 an
nually. In the United States issues of
stock for the eleven months of 1907
were $757,359,500 and of bonds and
notes notes $I.91s;9so oGo; 20 making up
The extent to which capital re-
sources had been strained was not re-
vealed in striking manner to the
of March Is now overshadowed by
later events, but at the time one OF
the most serious and remarkable
breaks which the market has ever
suffered. The loss of 19 points in
Arnalgamated copper in a single day,
2 1 points in American smelling, 22 in
Reading and 25 in Union Pacific aided
to considerable previous declines at
c1~ -
compelled calling of loans and wreck
ed the fortunes of many spectators.
The market recovered only slowly
during the spring and early summer
to suffer new reactions in August; but
it was not until mid-October that the
storm broke in all its force with the
collapse of the corner in United Cop
per, the appeal of the Morse-Heinze
and the refusal to extend such help
until the old crowd was eliminated.
Events Moved Swiftly.
Events moved fast on the heels of
these revelations. The Knickerbocker
Trust company closed October %,
after paying out about $S,000.000 in
cash; runs were begun on other banks
and trust companies; practically all
the New York banks suspended cash
payments; clearing house certificates
were issued; foreign exchange fell and
gold imports began. Secretary Cor
telyou made heavy deposits of govern
for drawing money from the boards
and permitting an increase in bank
note circulation by the offer to the
public of s50,OO0,OO0 in per cent
Panama canal bonds and S10O,0O0,0Oo
in one year certificates bearing inter-
est at per cent. This announce
ment. accompanied by a vigorous let
ter from President Roosevelt, did
much in the opinion of many bankers
was necessary to issue onlv about
to stay the panic, so that eventually it
$25,000,000 of the bonds and $15,-
100000 of the certificates.
The situation improved slowly and
the deficiency in New York bank re-
serves was reduced progressively each
week, until it stood on December %
at only $20170,350.
The national banks have stood up un-
der the pressure much better than in
the early stages of the crisis Of 1898
The suspensions at that time were
about 160 in the three months of June
July and August, although "a banks
afterward resumed business. The num-
Der of national bank suspensions hard
1y equaled a dozen during the recent
panic, the most important being that of
the National Bank of Commerce of
Kansas City. The permanent effect
upon the national banking system of
the scarcity Of capital and collapse Of
various business enterprises has not
been revealed but there are no indica-
tions that it will be SO severe as after
the panic of 1893
When the panic broke on November
/. 1907, the total bank circulation was
s6OS, $50, ,466 The measures then taken
by Secretary Cortelyou to promote cir
culation in order to tide over the mon
etary stringency resulted in an increase
of about $4,000, 900 during the next seven
weeks, so that the circulation stood on
December 21. 1907, at $6S2, 795, 925.
Movement of Gold.
Accompanying the increase of bank
cir n
pressure for currency was the dramatic
movement of nearly $106, 900 in gold
from Europe within q period of about
six weeks. The official figures of the
treasury showed imports of gold for
the month of November amounting to
S63, 463 036, which were more than twice
the total importations for the preced-
ing ten months. The remainder came
early in Decem Der. This enormous
movement of gold was facilitated by
the sharp arrest of imports of luxurics
and a combined effort by producers,
railways and bankers to ship promptly
to Europe the large crops of cotton,
wheat and other farm products of the
autumn season. Imports of merchan-
disc which had been as much as $125,-
SOC, 403 in August fell to an average of
about $1O9. 900, 900 for the next three
months ending with $110, 7S9, 109 for Nc
venber Exports of merchandise on
the other hand which had been as low
as $127,270,447 in August advanced to
$3.50, ,256, ,OS5 in October and $204, 444, $50 in
November.
From another source the volume of
currency in circulation was swelled by
the increase of deposits of public money
in the banks from s1S1, 70o.0 053 on June
80 to $259, ,S51 ,004 on December 26. This
increase of about $7S.000,000 had been
partly deposited in the banks prior to
the panic but from these various