Decorah public opinion. (Decorah, Winneshiek County [Iowa]) 1895-1928, 1907-11-06
CAUSE OF FINANCIAL CRISIS.
An Intelligent Explanation Of the Reason
for Failure Of New York Banks and
Slump in Stocks.

Slump in Stocks.
In all the discussions OF the present
financial situation we have seen
nothing which gives more concise
and intelligent explanation of the
cause of it all than the following
from the Sioux City Journal, which
we reproduce:
What is the matter with Wall street,
and what is the cause?
1t is easy enough to see what is the
matter. Within the last ten months
SS, 600, 600, O0O of quoted values has
been squeezed out of railway and in
dustrial securities. Whether or not
some or all of these values were ficti-
tiOus does not matter much in the
present situation. The values existed
for the purposes of Wall street, and
they were made the basis of credit.
Less than 9 year ago Wall street had
$S, 600, 600. coo more of securities on
which to borrow mon-y than it now
has. The securities were used largely
as collateral for loans. They were ac-
cepted by the lenders on the basis of
existing quotations. The elimination
OF values has been going on steadily
since the first OF the year. In fall
ing market the big speculators have
been unable to unload on the public
any Of the depreciating goods. AS
stocks have declined in value the
banks have called for additional col
lateral or have demanded the repay
ment Of loans made upon depreciating
securities. The result has been q
gradual Tightening Of money avail
able for speculation. While this pro-
cess has been going on the corpora
lions have been trying to raise money
for improvements and other pur-
poses by issuing bonds and notes. In
ord to attract investments they
have had to offer interest rates that
made such investments preferable to
outright purchases of stocks. This
had added to the depression in the
stock market.
Granting tie loss in securities
values is responsible for Wall streets
troubles, the interesting question is,
What caused the loss of securities
values? Obviously it was loss of con-
fidence in the securities. This sug-
Rests the question, what caused the
loss of confidence? The Wall street
answer to this question was given by
Vice President Turnbull, Of the
Knickerbcker Trust Company, who
said: "All the disturbance in the
money market has been eau ed BY
one man, who in the p st six months,
in public and private speeches. has
been undermining the credit system
Of the country The one man of
whom allusion lis made is OF course,
President Roosevelt. President
Roosevelt has pro. ecuted Tome corpo-
rate vi0latOrs OF the law, and has
pointed out and asked the remedying
OF some reprehensible methods OF stock
manipulai ion. In the latter respect
PresidenC Roosevelt has been cnly
one of many. AS q result OF the at.
tention RiveA to the subject the public
ras become convinced that q little
regulation in the direction of common
honesty would be good for the big
corporations as we'll as for the public.
Until hat regulation has been secured
the public seems to have made up its
mind to fight shy Of corporation
inves ments.
II the warning had not come the
slump in securities might not have
come this year. but it would come
later. and it would be q bigger crash.
And when is did come the Wall
street operators would be nicely "out
from under" and the general public
would be called on to bear the brunt
Of loss from the pricking Of artificially
inflated securities. One is not dis
posed to blame Wall street for feeling
sore at President Roosvelt. He helped
to open the eyes of the public. and
Wall street has been compelled to foot
the bill Of it's cwn making. But tho
public is much obliged to President
Roosevelt foi helping in an eye open.
lug process that saved tie public lot
of money. Even il the public shall
feel the pinch before the readjust-
ment is completed it will still have
no grievance. 1t is much better to
have 1, little touch of depression now
followed byla reorganization of big
business on q sOunder basis. than to
have q big depression later on, fol
lowed by q resumption Of big business
upon the old, shaky foundation.
It would be happy solution of the
gubernatorial question II there should
be . united call from the factions Of
the party ior Congressman Haugen to
lead the ticket as the candidate for
governor. He has all the qualifica-
tions and would make us a model
governor. The chief executive of a
state like Iowa should be q thorough
business man with practical know.
ledge of business matters, and Mr..
Haugen fills the bill in this respect.
When it comes to affairs of state Mr..
Haugen served in the legislature and
has several terms to his credit in con-
Rress. so that in addition to being a
practical businessman he has that
thorough knowledge Of public affairs
which is so valuable to one who holds
high executive position. II would
q Il 4 a. = q