The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-10-31
WHAT CAUSED TT.


There are great many people who
evidently do not understand what
brought on the trouble in Wall Street
last week which was the foundation Of
the f1urry-the furry that did not pan
out, by the way.
There are in New York a number of
groups OF banks that are controlled by
corresponding groups of financiers and
promoters, and whose funds are used
by these f1nanciers in promoting their
own deals. The greatest of these groups
is that headed by the National City
baEk-the Standard Oil group. James
StilIman is president of this bank, and
associated with him in it are the Rookie
fellers and their financial allies. Mr..
Sti1lman has also secured control Of
number Of other banks and trust COM
panies. and through the chain thus
formed he and those in the group with
him are able to control vast amount
of money. Mr.. Hartman is in this
group.
Another group is made UP Of J. Pier
pont Morgan and his associates, and
the Hill railroads and the Rock island
are represented in this group.
A third group is made up Of the
More-Heinze interests.
Each of these groups is made up of a
number Of national and state banks
and trust companies. with assets run
ming up into the hundreds Of mill
lions When Mr.. Hartman or any Of
the Standard Oil railroads wish to
float more stock or now bonds, the Ma
tioal City bank helps along in the deal
with it's vast resources. 1t will loan
money on such stocks or bonds as col
lateral. This makes the sale Of those
securities easy, for buyers can put them
up as collateral and secure more money
with which to make more purchases.
But If these securities go down to
point where there is danger that their
values will not cover the loans, the
bank has to call in the loans This
probably forces the debtor to sell the
stocks in order to get money to pay his
loan, and if much stock is thus thrown
On the market especially when money
is tight, there are few buyers and the
price of that stock continues to drop.
The eHinze copper interests attemrt-
ed to float a big deal in copper, and of
course the Morse-eHinze banks backed
the deal. It was discovered two weeks
ago that this copper corner was bad
rotten, to use an expressive term. The
bottom fell out of Heinze copper stocks,
and the banks had to call loans on
them.
This sort of banking is not recog-
nized as the best brand in the world,
and the discovery Of true conditions
Jared the faith of the New York public
in the banks. 1t is estimated that dur
ing the first part Of last week $75,000,-
600 was drawn out Of New York banks
or withheld from deposit. Stocks of all
kinds went down and the banks had
to call in loans. Then came the run on
the KnickerbocI1er Trust company and
the closing of several allied banks for
fear they could not meet the demands
of their depositors for cash.
Now the New York banks are where
most of the reserve funds of the coun-
try are carried. New York drafts are
recognized as good everywhere. and so
bankers all over the country carry large
deposits in New York against which to
issue drafts. Thus IL happens that
much of the money in Wall Street does
not belong there but is owned by the
people of the west and south.
Therefore when Wall Street saw it's
currency was getting scarce. it decided
that 1t needed all tnaC II ndu anu IneTe-
fore would not send out any to other
bankers, but would issue clearing house
certificates instead to show that the
money was there. That is what made
trouble for the rest of the country. Chi
cago, ST. Louis and similar cities i'm
mediately decided that if New York
was going to act that way. they must
do the same or New York would get
all their currency. That made Topeka,
Wichita, and similar bankers do the
same, in order to keep currency in these
towns.
But when the trouble got down 20 the
little country banks, they showed their
confidence in their depositors by going
ahead as usual, and their depositors re-
ciprocated in the same way. Nowhere
in the country lid people demand their
money from the banks except in New
York and from one or two minor banks
in Chicago and Pittsburg.
This situation in New York will ex-
plain why conservative and honest
bankers are demanding that Wall Street
spectators, plungers and promoters be
eliminated from the control of the big
banks in the metropolis.
Quite likely there are more bears