The Washington herald., 1914-08-02
MEETING WAR CRISIS.
Good Effect Of Protective Measures
,Adopted by Financiers.


After the eonvuisfve developmentv IN
the financial markets on Thursday after
noon there was no other course open to
the governors Of the New York Stock
Exchange than to vote to close that In
stitution, which had admirably performed
its duty to the country and TO foreign
lands to the limit which reason could
sanction There can be nothing but
hearty approval Of the promptness with
which the governors OF the exchange
reached their decision yesterday morning
that the time had come for suspending
the primary American securities market.
When this conclusion was formed. the
London Stock Exchange. where the great
world market for securities is established.
had already closed Practically there
was a complete suspension of business in
London several days before. II anything
was required to demonstrate the impera-
tive necessity Of adopting in the interest
OF American finance such a protective
measure as shutting the New York Stock
Exchange for the first time in more than
forty years on account OF critical condi-
tons, proof was furnished by the nnan-
cial paralysis Of Europe and by its fur
ther rejection yesterday In various direc-
tions, both abroad and at homA
History will accord full credit to Wall
Street for enduring as long and as well
as IL did the fearful shock given to IL
and the subsequent strain imposed upon
It by the frightful disaster Of war pre-
pared so swiftly IN Europe. The situa-
ton which confronted the New York
Stock Exchange authorities was more
desperate than that which compelled the
closing of the exchange for ten days in
the panic Of 1873. They deserve praise
for the intelligence with which they re-
sorted to necessary measure for pre-
venting further depreciation Of securities
and for protecting the country's financial
resources against the drafts which
Europe was making through the sale Of
securities to procure gold. An equal
need Of praise is due to the banking COM
munity for its cooperation In making
this protective action effective to stop the
spread Of excitement and alarm which
the stock market here had begun all
too clearly to reflect
Naturally the leadership Of the New
York Stock Exchange was followed by
all the other stock markets Of the coun-
try. The United States as a whole had
done all that should be asked Of IL in
affording facilities for converting secu-
rites into cash under the circumstances
Of Europe's debacle. The selling frenzy
Of the world had begun to converge here.
and We doubt II anybody fails to recog-
niZe in this suspension Of stock market
dealing. for the benefit Of the people Of
the United States. with the most stu
pendous financial crisis in the history OF
civilization.
The essential fundamental soundness Of
the coUntry's economic position called
for the Inauguration Of protective meas
ures, and It was desirable also that in
the interests of all humanity processes
should be begun to preserve, as this
country can preserve, a stable footing
somewhere for finance and trade. The
fact that the cotton exchanges Of the
country had to close in haste yesterday.
after a brief disastrous session OF un-
precedented declines in prices, was a
token of the destructive consequences
which the European upheaval would con-
tinue TO have unless obstacles were placed
in the way. Nothing. however, could bet
ter indicate the dimensions Of the crisis
which Europe had created than the run
which began on the Bank OF England
Yesterday. forcing the bank TO raise its
discount rate abruptly from per cent to
s per cent. a figure not reached since the
Overerd- -Gurney panic in 1850
Other emergency expedients may and
doubtless will have to be adopted. As
soon as possible ways Will have TO be
found and means devised to save finance.
industry, and trade from a paralysis Of
activities. but the expedients already re-
sorted to afford a breathing spell and
create an area of quiet in which banking
and business and governmental leader
ship will have an opportunity and time
TO consider what remains TO be done.