The Washington herald., 1913-08-16
NEW YORK COTTON.
,,.hsd b. ". u Hibb. Z co.
WHEN THE PUBLIC
CONFIDENCE IS SHAKEN
New Safeguards Eliminate Cresksd
Finance ara Honest Bankruptcy
Il Not Destructive Of Vame.

tCopyright, Isi3, by q. II. Keys, Sew Yrk.)
Three or four big and spectacular fall
ures of recent date. together with what
might almost be called collapse in some
Of the issues of Industrial stocks fioated
last year, brought the banking houses In
the big American cities a flood Of let
tiers and inquiries from their customers.
A good many Of these letters seem to
indicate that the confidence of the writer's
in the whole banking business and In
the whole financial system Of the coun-
try has been pretty badly shaken.
When an old conservative banking
house which has been doing business for
many years in standard securities sud
denly changes its character and becomes
a promoter on a large scale of stocks
and bonds which turn out badly, the
effect Is very widespread and dangerous.
Not only are there money losses to be
met but there is a loss of confidence
which cannot be repaired. The investor
is apt to lose faith, not only in that par
ticular house. but in the whole banking
fraternity.
1t is, therefore. little wonder that
people write letters these days In which
they complain that there seems to be
nobody in whom they can put confidence.
One such writer recently instanced two
well known banking trims through whom
he had met heavy losses OF this sort ana
went on to say that even the government
bonds and the obligations OF New YORK
CITY and other powerful municipalities
seemed to him to be unsafe and had
declined very greatly In value. When
he wrote that letter he was looking Al
the world through deep blue spectacies'
and there seemed to him to be no saie
place In the world where he could put MS
money.
OF course, people who live close to the
world of finance know better than that.
They recognize fully that there has
been some bad banking in the promotion
of new securities In Wall Street and else
where They know that In one or twc
Instances there has been good deal oi
the get-rich-qsIick spirit in some OF these
banking exploits. They also know, how
e-er. that a very large part Of the weak
financing that has been done has beer
tn, result Of honest errors on the par
Of the bankers and not the result OF dis
honest exploitation OF their customers.
The fact remains that II Is Just as safe
T. ay as It ever was to buy standard
securities. A good many people. in fact
think that II Is safer TO put money away
in securities now than II ever was be-
fore. because Of a very large number OF
new safeguards that have been invented
and put at work to eliminate crooked
finance by forcing the publicity of earn
irgs and records and by compelling all
de .iers in securities to submit themselves
|. certain amount OF regulation and
supervision by the law.
As n matter Of fact, almost all this
spirit of suspicion and this lack of con-
fidence on the part Of the public has been
brought about by two or three episodes
The general list OF investment securities,
whether listed bonds and stocks or un-
listed bonds and stocks has hardly been
shaken at all. There have been four or
five more or less spectacular receiver
ships. There have been five or. six bank
q, = houses, generally second and third
grade. whose operations have resulted In
failure and loss. Even in the worst
cases the losses are relatively small.
By way of contrast let us draw a COM
pa rison. few years ago Philadelphia
firm which had promoted a lot Of trolley
lines and other enterprises on paper fell
into bankruptcy. With them went prac-
tically all their companies. There were
ii usands Of investors throughout the
country who held the bonds and stocks
of = e companies. When 1t came to a
final accounting, practically none of this
raper had any value. interest ceased on
the bonds and dividends disappeared
from the stock. You could not sell these