The Birmingham age-herald., 1907-10-27
MOB SPIRIT IS RAMPANT
 IN FINANCIAL CIRCLES


 -~-~-~-~-----~~-------- an important influence on subsequent market conditions. The outpour of secu- rites for which there is a poor demand may tend to keep the general list de- pressed for long time despite the good will and substantial support accorded it by the large interests.
 The KniclSerbocker might have weath- cred the storm, but for the discovery of a piece of bad faith on the part of officials and favored customers. The night before the suspension $15,000,000 had been guar anteed. One of the first institutions to make good it's guarantee was the Han over National bank which came to the center with S1,500. O0O. Very soon thereafter word reached the Hanover bank that Knlekerbocker officials were drawing out their own deposits. Tie conclusion was quickly reached at the Hanover that if Kniekerbocker officials had no confidence in their own company they should not expect others to help out. Within ten minutes trusted messengers were sent over to the Knickerbocker with a check for s1,5OO,OO0. accompanied by stern demand for return of the s1,5O0O0O. That was the beginning of the end. The doors closed half an hour later.
 The developments of the past week oi ten days are likely to bring home to the densest understanding the real effect of continued political campaigning direct ed against the credit structure. Fer months men of affairs and all well gov erned corporations and institutions have been steadily engaged in a process of contraction. They have foreseen the com ing of the storm and have been putting themselves in shape for these emergen cies. All new enterprises were stopped and rigid scrutiny and economy of ex- penditures entered upon. The period Of real contraction began a least six months ago. The shrinkage in quotations of securities has been the register by which Wall street has measured the progress of contraction.
 To the minimizing this has given to the development an appearance of being local. While the decline in securities has been going on almost without intermisslon, general business throughout the country has seemed to be fully up to the aver age and in some places under high pres- sure of prosperity. Nevertheless Wall street has had a surer and truer concep- tion of the actual force of the currents at work than in any other section. The outside world is just beginning to realize what Wall street has seen for months past.
 The Westinghouse receivership typitles to wider extent than will now be be- lieved the hardships which are confronting the general industrial situation. Manu- featuring concerns have for good while found it impossible to command the credit necessary to the conduct Of their affairs.
 They have been and are being denied credit where they have had a right to expect it. They are consequently strain ing every nerve to work off the orders on their books in order to collect moneys which will be due them on completion of contracts. At the same time the all most universal admission is now being made that while there is at the present writing an appearance of great activity in manufacturing lines, the outlook for the future is very discouraging.
 Less has been heard of the destruction of credits in the industrial department than in railroads because the manu- facturers are more secretive about their affairs than railroads.
 Their position is the more delicate and they have better reason for keeping in the background. When railroads are hurt and find themselves unable to go on with extensions and Improvements they are prone to get out on the street cor ners and yell bloody murder For in- dustrial concerns to do this would be tO ibNitV all tutlI CltullOIS u clOSt III LII them.
 Great numbers of interviews have ap- peared recently in the cable dispatches with financiers of the old world in which is found open expression of distrust of American methods and of American se- curities whose virtue and stability are subject to attack and destruction by political parties in control of government or seeking control All this but adds to the insecurity of the present situation.
 A saving phase of the securities mar kets is found in the growing belief that money invested in stocks and bonds of established properties is decidedly safer than in banks and trust companies. h. numerable instances are coming to light of people drawing down their deposits and putting them into dividend paying railroad and industrial securities. A good part of the buying of the last week is oi this origin. although combinati>Ss with vast capital have from time to time been formed to support specialties.
 Criminal prosecutions are more than likely to follow the disclosures of official dishonesty and mismanagement in con- nection with New York banks and trust companies. One of the worst features in connection with this whole lamentable business is the realization of the ifl- efficiency of state and national super vision. Theoretically the comptroller of the currency at Washington and the superintendent of state banking of New York keep a close watch on the insti tutions under their jurisdictions. Their supervision is good as far as 1t goes, but the facts which are coming to light show conclusively that the official knowledge at Washington and Albany Is only skin deep. The examiners clearly have not gone into the bowels of bank manage ment. It has been apparently no trouble for bank officials to put trust funds within their control into cats and dogs and in the forwarding and exploitation of their own schemes. The general puri- fication which will take place will be a good thing no doubt. The pity is that so many innocent people will have to suffer in the general collapse incident to the downfall and exposure of the guilty.
 It is true none the 1ess the great ma jority of banks and trust companies in New York are wisely and honestly han dled, and the interests of depostors and customers prudently and honorably con- served. The same broad statement of honest management applies with equal force and accuracy to a great majority of railroad and industrial corpora tions. It is regretable that the dishonest ex- ceptions to the rule could not have been attacked and punished individually with