Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1907-11-29
MEMBER OF. ASSOCIATED PRESS
THE RECENT PANIC AND b IFS
S CAUSE 80 "a

TIE RECENT PANIC AND ITS
CAUSE 81 g
From the point of view of the man
In the street the most interesting arti-
Gle in the December Every body's Mag
azine is a discussion of What Caused
she Panic" by Lyman ]. Gage, ex-sec-
Fetary Of the u. S. Treasury, James J.
Hill. StnyVesant Fish, Byron w. Holt,
editor of Moody's Magazine, w. G.
Summer. and Thomas W.Lawson. The
apini0ns of these experts differ ON
some points, but all agree that the,
present crisis has been widely antic-
ipated for many months. Mr. Gage
thinks that the crisis is due primarily
TO . weak currency system, but he
also believes that the recent wars,
natural disasters. and vastly augment
ed building enterprises have been Sc
rioas eontributory causes. Mr.. Gage
says in part:
modest estimate of the destruc-
lion wrought by the Spanish-American
War. the Boer War. and the war be-
tween Russia and Japan is So, 900, 000,-
900. and to this should be added at
least $500. 100000 of property swallow
cd UP in the San Francisco and the
Chilean earthquakes of last year. All
! this vast sum, if not destroyed, would
have been available for useful works
sof vaIae to man During the past few
Years, also, there has been an unpre-
cedented activity in the creation of
works ministering to human needs.
me construction of railways, electric
! gsating plants. cotton mills, steam
ships. etc, in the past six years has
used mp no less than $4,000, 090, Goo.
Capital thus transferred and fixed in
permanent form has been gradually
furnished by those who possessed it,
and IN place Of it the posessors have
soean supplied with securities, such
las stocks and bonds, from which they
might expect to draw an income over
AN indefinite future. Y.
The creation of these vast works
has been justified by the needs of a
progressive civilization, but that does
not nullify the fact that capital once
transferred to the creation of railroads
and similar enterprises no longer ex-
ISIS IN available form for other pur-
poses II has been further evident to
thinking persons that the pressure for
the use of capital has outmeasured
the. supply Of capital. It is much
pssss resolutions in directors meet.
4 Ings. print and offer bonds and stocks
Tor sale, than it is to gather the CAPT
VI TAI To exchange for them. no matter
how meritoTions an enterprise may be
That We aatelst reached a period when
81 the deadlock between capital and the
I'd demand for 1T was manifest is shown
by the higher terms of interest offer
@ cd for conservative enterprises III
\ Tact. long time bonds could find nj
buyers during the past year. II
the exigeney thus revealed, the grea
borrowing enterprises, finding it i'm
95z possible to negotiate long time bonds
resorted to the device of issuing shor
time notes running for one, two AMI
s three wears, at the most temptin;
rates of interest. Under these unusna
Inducements, the controllers of capita
+ represented by money aud credits il
bank, who would have considered j
iInprudent to invest funds In long tim
bonds, felt justified in taking owe
hundreds Of millions OF dollars of tn
short time securities. and thus th
leIicacy of the situation was greatl
aggravated.
This was about the situation In tn
early fall when the annual harYes
put in its inexorahle demand for Til
temporary use Of capital 1t is
known fact that the thousands .
banks standing next II proximity 4
as me agriculturist keep a large PORTO
s1T their funds on deposit in reserv
tIss. Upon these reserve centers
Shen. the country banks from Louis
lana te Minnesota made their usua
ami sInaai acquisitions. The. situafio
TINS created found the banks IN n
serve ties especially weak in thei
al0sey reserves. With a proper w
tern cf currency iii the United State
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