New-York tribune., 1907-11-12
ONLY PASSING PANIC"
Dean Johnson Does Not BeLeUe This
Is an Industrial Crisis.

The present financial disturbance is probably
a passing panic and genuine industrial crisis.
according TO Dean Johnson, Of-the New York Uni
versity School of Commerce In discussing the sub
ject last night before the New York State Society
Of Certified Public Accountants at the Waldorf
Astoria Dean Johnson said
A panic Is an unreasouing scramble for cash, due
10 q general loss Of confidence in the ability OF
banks to maintain cash payments Its cause may
be baseless suspicion OF banks, a bad banking sys.
tenn excessive speculation in securities or any
other circumstance which inspires doubt and mis-
a crisis. On the other hand is the elimination Of
country's liquid capital has been run into tho
moulds Of Improbable enterprise, In this country
example, the financial disturbances OF lS25 1915
financial credit panics, rather than industrial
or capital crises: On the other hand the years
1885, 1887, 1851 S7a AID 1888 were crisis years and
the comp2nyng panics in those years the
results OF well founded apprehension with regard
TO the soivency of banks
The speaker said It was too early to say positively
in which class tho late disturbance belonged. but
that there were at hand facts on which it safe
to hazard an opinion. He added:
Banks have been forced to suspend eccommoda-
tonS. and business interests have been subjected
70 the seyerest possible strain Yet there have been
no important failures and il has not transpred that
our banks have been basng their loans on inflated
this panic seems TO be as caiiseIess as a thunder
storm coming from a clear sky, but when we study
our banking system and consider the weaknesses
OF human nature the panic is not hard to explain;
In my opinion II IS the product of two years or
talk, gossip and sander, and OF inherent weakness
In our credit system.
The increasing scarcity OF capital during the
last year not in itself sufficient TO precpiate
panic. It's natural effect was to put check upon
speculation That cflect il did exert aud ire my
opinion nothing would have happened IL our
banks had beer in a position to protect their own
and the countrys credit against the assaults OF the
ignorant and malicious.
II our banks, individually or through the clear
ing houses, had the right to Issue promsSoTy notee
payable to bearer the banks would easily have sat
iSieG the rQbliCS demand Tor cash. thelr reserves
would have remained intact. and currency would
not be selling at q premium.
our currency system is Vtaly defective. ana on
that account this country Is constantly exposed to
are liable 10 be repeated every two three years.
The United States IS doing moro business on credit
than any other country In the world, and yet onT
banks which the natural cOnseTVatOrS or credit
are bound hand and foot when 1t Is attacked
In reality, the country has slipped from tho gold
basis and is Inundated before the world. The West
thing in which Wall Street alone IS interested for
the banks OF the West are az badly pinChe0 rs
those OF the East and the producers or the Nest
and South unable 70 market their crops.
This panic has brought to light two facts: o.
That our banks should be permitted to coin their
credit into an available medium OF exchange; 90
That In time OF stress the financial brains or TINS
country should be IN a position to take actlou
which shall prevent the destruction OF confidence
The first need he said Congress could meet by
granting to the national banks such measure OF
freedom in the issue OF bank notes as was recou-
raended by the American Bankers Association In
September. The second he believed. could be met
only by the creation OF Il semi-govmnment bank.
which should assume the duties OF issue and re-
dempton that now burden the United States Treas
ury He cited France On example.