The Birmingham age-herald., 1908-01-22
UNDERWOOD TELLS CAUSE OF .PAN|CS Panic of 1903 Was Caused By
 Lack of Money MONEY IS PLENTIFUL NOW Cause of Present Financial Condition Is Declared By AIabsnian To Be < Lack of Confidence In
 Banking Affairs.
MONEY IS PLENTIFUL NOW

Washington, January A.-tspecial.) )-The
 recent panic and currency question was
 under discussion in the House Of Repre-
 sentatves yesterday. Representative Un-
 derwood of Alabama fo'cefully stated his views on the questions involved.
 He stated that pani1s originated from
 war; pestilence, famine, crop failures,
 dearth of money, reckless speculation or
 want of confidence. and that Congress
 should diagnose the case and find out the
 cause of the present panic before it at
 tempted to apply thu remedy.
 He called attention to the fact that from
 1873 to 1897 the talance of trade was
 against the United States and gold was exported to Europt; from 1897 down to the
 present day the bflance of trade has been
 with the United States, with large ship ments of gold to this country. The per
 capita circulation in 1897 was only s22,S7,
 and at the present time it is ss3.s2 an in- | crease of over oie-third. There has been an immense lncfease in the production of all commodities since the former panic i and a great enhancement of the value of the products wages manufacturing prod
 uts and the wealth of the country had reached a higfer level than ever hereto fore in the history of the country. The
 bank cIearingt had increased from s6o,-
 Last year the country had splendid crops
 and an abundance of money
 No Money In 1903.
 ! MT. Underwood further stated that 1t
 was very dear that the panic of the 9o's had been caused by dearth Of money. low values and crop failures, but that the prgent panic could be attributed | to no such causes, and that 1t was pro- | duced from no other cause than a lack of | confidence in the financial institutions of i the country, coupled with the inability of 1 the money of the country to sustain the immense expansions of credits due largely l to over-sleculation.
 1 Referrf 2 to the national bank act, MT ] Underwood called attention to the fact i, that in reserve centers, such as New York, the banks could retain 25 per cent 1 of their deposits in cash and the banks m ! cities outside of reserve centers could re- i tain l5 per cent of their deposits in cash, 1 and at he same time allowing the coun- l try banks to re-deposit three-ffths of 1 their reserves in the reserve centers. He ! stated that this carried a very large DOT | ton of the reserves of the country to New /, York in the spring and summer of each | year when they were not needed at home, because the country banker could obtain | or 3 per cent interest by depositlng his reserves in New York and was prohibited toners at home. Then. in the fall of the year. when it was necessary to move the l crops there was a great demand for cash in the south and west, with the re- suit that the southern and western banks called on the New York banks for their reserves all at the same time. The New York banker in order to make any money out of these reserves was compelled to loan them out When the unusual call came in the fall he had to call in his loans and reduce the credits in New York. which affected the prices of stocks, reduced the value of securities there and | generally demoralized the whole country. In times of great emergency it alarmed l the people, made them fearful as to the | soIyency of the banks and precipitated the (CONTINUED ON PAGE 7.)