The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1908-09-17
%RECOLLECT|ONS OF
THE PANIC OF 1857
One of the Country's Historic
Financial Crashes and the
Quick Recovery.

Louis Windlnuller, of the iir1r OF
Louis Windmuller & Rocker. discussed
yesterday some Of the points of similar
ity between the famous panic of 1857
and the recent financial depression. In
both panics," he observed yesterday.
financial relations with railroads were
at the beginning OF the trouble. In 1857
1t was because OF the too rapid expan-
sion of the railroads and the confidence
or their promoters, who induced banks
10 invest heavily On the expectation
that towns and a paying population
would spring up quickly along the new
ines. When this prosperity failed to
lmaterlalize and the securities the banks
had purchased fell far below the pur-
chase price the crash came. The re-
cent depression of 1907 really started
IN March OF last year, when there was
an expectation of reappraisal by the
financial institutions had large hold
lngs. This started the decline that
ended with the closing of so many
banks and trust companies.
The panic Of 1857 came like a bolt
out of a blue sky. and it caught nearly
everyone by surprise. There We're q
few of US. however, who early in the
hummer drew out all IT, , cash we could
from our banks and kept 1t. was one
OF the few. Why 1 did it l cannot now
recall: am pretty certain, though,
hat 1 had no definite sense Of i'm
pending disaster. 1t may have been a
prenonition, but it was lucky. The
prime Importance of having cash at
that time was even greater than dur
Ing the rouble last fall. We did not
have the makeshift of clearing house
certificates, and many of the bank
notes in circulation were of the wild
cat variety. Each state had it's own
banking system. There We're two sorts
Of banks. The better sort of these de-
posted a safety und with the state
treasurer to insure their circulation and
TO protect their creditors. The notes of
these banks passed usually at face
value. The second class, called free
banks and wildcat banks deposited
simply enough to secure the note hold
ers. The notes from these banks some
times suffered as much as 10 per cent
discount.
Under such conditions 1t is not sur
prising that credit was high, and I
Know a merchant who paid 1 per cent
for the use of a certain sum for a sin
gle day. You can understand that with
such rates business men began to fail
and factories to shut down. The de-
preston, the suffering and the excite
ment far overshadowed the crisis last
bar, because the country has grown
enormously in wealth and our banking
system and currency have improved.
The worst panic we ever have had, in
my opinion, was that of 1873"
Regarding the rapid recovery from
the panic Of 1857, Mr.. Windmuller said
"All the banks in the country outside Of
New York suspended, as l recollect,
with the exception Of the banks in San
Francisco.
But 1t was late in the summer, and
that year we had unprecedentedly
large crops. These saved the day. and
soon gold began to come in from
Europe and from sal Francisco. In
the early winter that year business be-
gan to struggle to its feet, and condi-
ions were normal by the spring of 1855.
This year we are promised a bumper
crop, and I believe the effects of the
recent depression will be virtually
wiped out as a result"