The Washington herald., 1908-02-27
Senators of Both Parties
Blame Gamblers.
CAUSE OF THE RECENT PANIC
senator .CuIBersOn, Minority Leader,
Says Stringency Was Engineered
for Private Gnin-SenatOr Nelson
Arraigns New York Banks and
Holds Them TO Be Responsible.

Cflch, CHAIRMAN OF the Senate committee
on Finance
This gives the bill the legislative right
of-way in the Senate. TO the exclusion OF
all other business. after 2 o'clock each
day.
Senator Culberson. Of Texas. addressed
the Senate yesterday on the bill. lie
opened by commencing the proposed
amendment of Senator owen. of Okla
homa. forhlddlng the deposit OF public
funds in any bank to be loaned or used
for speculative purposes. Mr.. Culberson
explained that he intended to support the
amendment. but he intended TO offer GER
tain amendments himself, having the same
general object in view.
He read two proposed amendments 10
the Aldrich bin. one OF them makes il o
Tisdemeanor punishable by fine upon tile
officers and forfeiture Of charter. for any
national bank to lend its funds for specu-
lative purposes. The other amendment
requires national banks hereafter to keep
in their vaults al all times all their legal
reserves, and repeals those laws which
allow the keeping Of a certain amount OF
reserve in central reserve banks.
Says Panic Was Forced.
Discussing financial conditions, Mr.. Cul-
berson charged that the panic was not
due to business or industrial conditions.
bat was ''precipitated by men who de-
81. T..
He declared that the New York banks
held more money at the tine the panic
was precipitated than ever before; that
there was a larger per capita elrcula-
ton. and that the cause Of the panic was
demand for liquidation and result
ing collapse Of gigantic gambling swim
dies on the New York Stock Exchange. 4"
He characterized the action OF the
banks in suspending payment as Illegal
and unjustifable"
Mr.. CulbeTson declared that the two
great underlying causes Of the wide
spread panic were the reserve holdings
in central reserve cities and the other
'illegitimate banking" He characterized
the latter tendency as being born Of
that most sordid of all human cravings
riches without labor"
Would Check Speculation.
lie insisted that prompt legislation was
demanded 10 put "a check upon specula-
tive tendencies. He intimated thar there
was a plan 10 put out his own and other
proposed amendments on points OF order
and by other propositions. and pass the
Aldricb bin as it came from the commit
tee.
He dwelt upon the Importance Of his
amendment requiring interior banks to
keep their reserves in their vaults and
not I'm reserve cities. when the panic
came" he said. the New York banks
held S2S5,oo00O0 Of the reserves OF banks in
other parts of the country"
At the same time the amount of these
speculative loans on stocks and bonds
was $251.0o0o0o. During the period of f.
nanCial strngency. from August until De-
Cember. the New York banks reduced
their reserve Indebtedness only ten mil
lion dollars. but increased their demand
fer speculative loans more than fifty mil
lions. The New York banks during the
period Of the panic were selling money
at exorbitant rates to the interior banks
whose reserves they held.
Reserve system mt Fault.
Mr.. Culberson read newspaper accounts
of the measures taken TO relieve the
money market by the syndicate formed
by J. Pierpont Morgan, at the time call
money was at 100 per cent. and denounced
the reserve system that made 1t possible
for stock gamblers to bring about condi-
tions that made such relief necessary
T. II. 4
son said that the fiat had gone forth
that the AIdrich bill was 10 become a law.
He would be surprised If it did not. For
forty years the Republican paTty had
been absolutely dominated by the financial
interests. All the way down from the
packing Of the Supreme Court in the legal
tender case and including the legislation
OF last year, when the banks were given
the free use CT S2500Oo0oO OF government
funds. the mastery Of the financial in
terests over that party had been COM
plete. The Aldrich bill was clearly in
favor Of those interests rather than OF
the people at large.
Nelson Blames Copper Deal.
Senator Nelson, Of Minnesota, who fol-
lowed charged responsibility for the
panic to undue and excessive speculation
in copper stocks last March. What had
touched of the panic was the attempt
in October of the Amalgamated Copper
trust TO crush Heinze. Unfortunately
however, in crushing him, the run on his
bank resulted and the run spread to other
banks. until in one week the banks and
trust companies Of New York paid out
$soe,000,000 of withdrawn deposits.
The trouble had started right In New
York, among the big banks and over call
loans on stock gambling. and he thought
II rather cheeky" for the bankers of that
city, under the circumstances. to lay the
stringency to demands FOR money to move
the crops.
The Western banks had had plenty of
money for that purpose, but the New
York banks would not pay over what
they owed the Western banks Now. II
some little bank Ike the one in his home
town which, by the way. never stopped
cash payments. had done what that great
aggregation of New York banks had
done. it would have been promptly closed
by the Comptroller
Big Banks Have Assurance.
He therefore. thought it was with very
poor grace that the great New York
banks came 10 Congress and said: lyon
need not pay any attention to the small
banks. they are of very little account
The panic had clearly demonstrated the
fact that il was the big banks in New
York that had exhibited the greatest law
}essness in stopping payments. and if thev
had not tied up the reserves OF the other
banks throughout the country. there
would have been no panic outside of New
York City.
To prove that the panic was due 10
stock gambling. and not 10 a shortage of