The Birmingham age-herald., 1914-08-05

dl the meeting of the governors at which
 this decision was made was for a long
 time kept secret. None but the governors
 themselves knew of the disclosures which
 made it expedient to close the exchange.
 Years later. when there was no necessity
 for maintaining secrecy it was learned that
 the president of the stock exchange had
 upon his desk a pile of letters and com mrnicatons nearly a foot high. all of
 which were from men of good standing,
 almost all from brokers The communi-
 cations were almost identical in meaning.
 il not in actual phrasealogy They said
 that it would be impossible to meet the obligations unless time were given. I at
 meant that unless the clearing house shut it's doors a large number of suspensions
 and bankruptcies would be announced. and most of these of men who were thor
 ouehly solvent. but who had been caught between wind and water. so to speak.
 There is no doubt that closing the clear ing house at that time saved the day for
 many men whose solvency could be dem
 orstrated provided reasonable time could be given for such demonstration.
 Another Way
 As time passed, so that there was op- rortunity for reflection, many of the lead ing bankers, and especially those who were in authority over the Clearing House association were persuaded that in the | future, should sudden emergency arise. l the clearing house with it's facilities for instant mobilization of the great resources 1 or the many banks. together with the as 1 sistance of international bankers, would feia fa arn tha saf l panic and to check the demoralizing in- | fiuences which the clearing house quota tons would show. That view was found to be correct in 1884 and again in 1885 At the time of the so-called panic of 1900, when for few days there was some ap- prehension that the people al the presi- denmal election might give majority sup port to the platform which retained the ire silver dogma, there did appear some
 pancky conditions. But these were quick ly suppressed by means of cooperation | among the banks and private bankers whereby a large amount of gold w s pooled which would be available if there was serious demoralzation in the stock exchange. A method of this kind, to- eether with clearing house assistance and l the utilization of vast amounts of foreign l exchange, principally cotton bills. was sufficient to check the panic and to pro- ] tect the stock exchange.
 A Few Conditions
 l It was frequently said when the new l banking law was under consideration by l Congress that one of the best features of l it was the certainty that it would prove l sufficient to check panic and probably to prevent the appearance of panic. But all l the conditions contained in 1873 had been purely domestic, excepting that the Barring i failure in London in 1891 and the financial | disturbance created by Englands war with the Boers did to some extent influ- ence conditions unfavorably.
 l Those who have spoken hopefully of a 1 stock exchange future whose prestige would not be impaired by the closing of l the doors on account of trouble never had 1 in mind the extraordinary and chaotic | conditions which were of a sudden devel- 1 oped, OF certainly made visible on the continent of Europe. The New York Stock exchange was compelled to to close it's doors not by reason of any troubles in l the United States, at least none which
 originated here, but simply because there was realization that the great clearing l house for American securities and the l place where standards of values fixed l through daily transactions could not
 stand alone against the continent of hu- 1 rope, Great Britain, and, in fact, the civ l ilized world. When from London there came news that her exchange was closed i it was inevitable that the exchange which 1 bears the same relation to the United States which the exchange in London l bears to Great Britain and the continent
 of Europe would also be compelled to l close. Sometimes the statement has been made that the United States is rapidly 1 taking prestige away rom London as the
 chief money market. and the securities value center of the world. But in this in- | stance New York followed London there- l by demonstrating that not yet has the ! prestige of London in this respect been l lost.
 l I here good reasons for surmising 1 that the decision to close the stock ex-
 change was in part based upon infor-
 nation similar to that which the gover- l nors of the stock exchange of 1873 re- 1 ceived. The probabilities are that the 1 governors knew that not only individuals l but some of the important institutions whose resources are largely placed in se- curties dealt in upon the stock exchange ] would become grievously embarrassed un-
 less some protection were given Protec- 1 ton could be given were the stock ex- l change to close it's doors. It was almost 1 impossible for brokers to call upon cus-
 toners. especially those whose dealings were heavy, for funds with which to re- ! plenish depleted margins. Customers were
 not to be reached by telegraph or if they l were they were so far away that they would not be found. Europe has many of | them this summer, and they are scattered all over the United States. These l brokers were a week or 10 days ago per l fectly solvent and so were their custmers. l The catacalysm which has been pending over Europe was something as unfore- 1 seen as any earthquake or cyclone. l Therefore, the closing of the stock ex- l change is not to be looked upon as ind- l eating unsound conditions throughout the II United States, but simply as an added pre- caution and protection. The closing of the exchange illustrated how intimate are the financial and commercial relations of the civilized nations of the world at this time. They are even closer than was the case when Great Britain was convused for time by the Barring failure or when \ her finances were disturbed by the Boer war.