Amador ledger. (Jackson, Amador County, Calif.) 1875-19??, 1908-01-31
MCGee Returns
From Eastern Trip.

| VIM. j. MCGEE, who has just return
ed from New York, says the financial
conditions in the East are greatly
improved; that the banks have begun
to make loans again. 1t IS generally
thought the worst is over, but it may
be many months before the country
gets over the effects of the recent
crisis. Mr. MCGEE returned via
Washington and New Orleans. Mrs
MCGEE remained in Boston for a visit
with her mother and her daughter,
who is studying music in the Boston
conservatory.
Mr. MCGEE was asked after being
East and seeing conditions, what he
thought caused the money scare. He
handed us clipping which he said
was a portion of secretary Taft g
speech recently delivered in Boston,
and which he thought was the best
reason that had yet been given for
the panic. The clipping is as fol,
lows:
1.-The world generally hasa certain
amount of loanable capital available
for new, enterprises or the enlarge
meut of old ones. In periods of pros
perity, this capital with the instru-
mentalities for enIarging it potential
~ by credits is put into new enter
prises which are profitable, and the
increase in free capital goes on
almost in arlthmetIcal progT ession.
After time, however, expenses OF
operation and wages increase and the
profit from the new enterprises grows
smaller. The Ioanable capital gradu-
ally changes its form into Investments
less and less convertible. Much of
that which might be capital is wasted
in unwise enterprises, in extravaganza
in living. i'll wars and absolute de.
struction of property, until the avail
able free capital becomes welI-nigh
exhausted the world over, and the
progress of new enterprises must
await the savings of more. Men con-
time to embark III new enterprises.
however, the capital fails them, and
disaster comes.
For eight or nine months last past
there were many Indications that the
loanable capital of the world was near
exhaustion. This result was brought
about not only by the enormous
expansion of business plants and
business Investment, which could not
be readily converted, but also by the
waste of capital in extravaganza of
living and By the Spanish War, the
| Boer War, and the Observation-Disclosures
War, and in such catastrophes as
Baltimore and San Francisco. 1t be-
comes impossible for the soundest
railroads and other enterprises to
borrow money for new construction
or reconstruction. The condition
was not confined to this country, but
extended the world over, and was
made manifest in the countries OF
Europe even before it was felt here
Secondly, the conclusion can not
be avoided that the revelations OF
irregularity, breaches Of trust, stock
| Jobbing, overissue of stock. violations
of law, and lack of rigid state and
| national supervision in the manage
! ment of some of our largest insurance
companies, railroad companies, trac-
ton companies, and financial cor
porations, shocked investors and
i made them withhold what little loan.
able capital remained available.
Such disclosures had much more
effect, probably, abroad than they
had here, because here we were able
to make distinctions, while there, at d
remote distance, the revelations Great.
ed distrust in our whole business
fabric.
when therefore two or three in
situations, banks. and trust companies
supposed to be solid were found to
have their capital impaired by stock.
jobbing of their officers, the public
where easily frightened and the run
upon banks began.