The Washington herald., 1913-12-09
BLAMES BANKS
FOR 1907 PANIC
Senator Swanson Holds New
York Financial Institu-
lions Responsible.
HCARDED CASH, HE SAYS
Root 0'Gorman, and Weeks Answer
Speech of Virginian on
Currency Bill.

Oh ISVf and to grove that they hao Deen
unfair with the country bankers in with
holding money deposited with them by
Inc country banks, which was the fea-
ture Of the speech on the currency bill by
Senator Swanson. of Virginia, met with
prompt response from Senators Root And
O'Gorman and Senator Weeks, of Massa-
chusetts. Senator Swanson said that his
information came from the Treasury De-
partment, and from Richmond bankers.
In brief, he asserted that the New
York bankers had absorbed the reserves
OF the country banks and then refused
the demands of the latter to return the
money when the panic came. Senator
OGorman listened impatiently to the at
tack and then inquired Of Mr.. Swanson
TO be more specific.
Il stated specifically" said Senator
Swanson, that the New York City
banks held So. 100000 Of reserves of their
own and they owed the country banks
nearly $40 0000 co.," Senator Swanson.
in reply to a question from Mr.. o'Gor-
man, explained that be obtained his in
formation from reports of the Comp
troller of the Currency, to which Mr..
O'Gorman replied that the Senator from
Virginia was evidently mistaken. But
Senator Swanson was insistent that he
was right
Defends New York Banks.
Thereupon Senator O'Gorman read
from the testimony taken before the
Banking and Currency Committee, quot
ing leading Southern bankers to prove
that the New York City Bank was act
ing fairly with their country correspon-
dents and that there had never been
any difficulty to get accommodations
with the New York bank.
When the Senator from Virginia in
dulges in unwarranted, inaccurate and
unfair criticism of the bankers of the
city of New York" said Senator OGor-
man, he does himself an injustice and
he does injustice to his own constituency.
II he thinks he reflects their views"
Replying, Senator Swanson insisted
that he had before him a summary OF
the report Of the Comptroller Of the
Currency as to the condition of the ma
tional banks on August ., 1907, just prior
to the panic. It showed that the banks
of New York owed national banks s213,-
100000, and owed State banks $1s6, ,000, ,O0j,
or a total of $40S, 10000 that was on de-
posit with New York banks, due to other
banks.
Refused to Make Payments.
"It has not been disputed by the Sem
ator from New York that on October 81,
1907. the banks of New York telegraphed
and refused to make payments to the
interior banks" said Mr. Swanson. .At
that time the banks of Richmond. Va,
had due them between 100000 and
100000 IN New York, and they could
not get any money. There were no
bankers in any, city In the country at
that time who did not have money due
In New York. The New York banks
suspended payment. They did not send
cut mohey, and it was absolutely i'm
possible to get shipment of currency.
They suspended payment when they
had $224.0oo,000 in their reserves. The
Bank of England had only $125, ,O00O OOo,
but It did not suspend payment The
New York banks could have continued
to ship currency to make payments to
the interior banks and not have precipi-
tate6 a suspension of payments They
either got scared too quickly or else their
action had a sinister motive IN It"
Senator O'Gorman interrupted to state
upon authority that at the time the
country banks were demanding their
York City bank had more money loaned |
,c the country banks than they held as |
deposits from the country banks
Senator Swanson insisted that this was |
not true. He charged that he came to |
Washington with a delegation of Rich |
nond bankers, asking for relief, and
hat the Treasury Department refused |
over to the Richmond banks deposits |
carried by the Richmond bankers in |
New York, but that the government |
made an order transferring internal |
revenue funds from Richmond to New /
York.
Details Financial Furry.
Senator Weeks, of Massachusetts,, made
very clear and detailed statement of
conditions OF the financial furry of 1907 |
He explained that these national banks
were required to keep a reserve approx
mating 0,000,0OO. and that the banks
did not suspend payment until their re-
serve had sunk to s224, ,O0o, 600. far below
tho required legal reserve.
Now I ask the Senator from Virginia"
said Senator Weeks, eff 1t is fair TO at
tack the banks of New York for stop
ping payments at some point where they
knew they were breaking the law which
we had deliberately imposed on them?"
Senator Swanson replied that the New
York bankers should have contracted
their loans, If necessary, to pay the
country banks.
Senator o'Gorman said that the New
York bankers had testified before the
Senate Banking and Currency Committee
that they did not solicit reserves from
the country banks and they would well
come leg1Slat1On TO relleVe lnefl, IOr II
simply imposed on them the necessity of
making call loans in order to meet the
interest charged on account Of accepting
reserve money on deposits.
May Vote ON Bill Next Week.
The speech of Senator Swanson was the
Interesting feature of the day session at
the Senate. The currency bill was before
the Senate all day. Following Senator
swanson, Senator Knute Nelson spoke
until shortly before the close Of the aft
srnoon session. Senators Burton and
Bristow were scheduled to follow quickly
on the heels of Senator Nelson. The
speed that is being made with the cur
-ency speeches indicates that the expecta-
ion of passing the currency bill before
Christmas win be realized. 1t looks now as
4 the vote might be taken on the bill in
he Senate before the end Of next week.
rhe set speeches probably will be con-
,luded in a few days and the bill be taken
I'D and considered by paragraphs.
Senator Weeks Of Massachusetts,, was
he principal speaker at the night ses-
ion of the Senate. His talk was in
ormal and devoted TO replying to q
peech Of Senator Swanson. At the be-
,inning of the night session. Senator
3ristow raised the question Of no quorum. I
nd there was some delay in finding a | I
uficient number OF Senators to enable !
he Senate to proceed with its business. y
Proposed for Mrs. GailIard. 1
A bill to pension Katharine Ross {
saiIlard, widow of Lieut.. Col. David B.