The Roosevelt Panama libel case against the New York world and Indianapolis news : decision of Charles M. Hough, Judge of the United States Court for the Southern District of New York, and Albert B. Anderson, Judge of the United States Court for the District of Indians. Together with an account of the circumstances that led to these unprecendented prosecutions on the part of the United States Government, and a stenographic report of the trial of the New York world

THE

ROOSEVELT PANIC

OF 1907

By ADOLPH EDWARDS

He** loved of the distracted multitude.

Who like not in their judgment but their eye*.

Hamlet.

Well, whiles I am a beggar, I will rail
And say there is no sin but to be rich ;
And being rich, my virtue then shall be
To say there is no vice but beggary.

King John.

1907

ANITROCK PUBLISHING COMPANY
NEW YORK

THE

ROOSEVELT PANIC

OF 1907

By ADOLPH EDWARDS

He's loved of the distracted multitude,

Who like not in their judgment but their eyes.

Hamlet.

Well, whiles I am a beggar, I will rail
And say there is no sin but to be rich ;
And being rich, my virtue then shall be
To say there is no vice but beggary.

King John.

1907

ANITROCK PUBLISHING COMPANY
NEW YORK

Copyright, 1907,
BY J. W. HANCOX

-3SOO
icroft Library

THE

ROOSEVELT PANIC
OF 1907

BY ADOLPH EDWARDS

RETROSPECTION

Add an immortal title to your crown.— Richard IL

IN the course of time a man in clerical
garb will stand before the earthly re-
mains of Theodore Roosevelt and re-
peat the familiar words, " Dust to dust
and ashes to ashes," and the gaping mul-
titude will look on, as it always does,
dumb, stolid and unflinching, before the
last and greatest mystery of human ex-
istence.

eyil that men do lives

The
Historian's after them," and the unmoved

TO ale

and inexorable historian shall
submit to the judgment of unborn masses
the record of the achievements of this
3

unique figure in the annals of American
history. The ruin he may have caused,
the homes he may have wrecked, the un-
speakable misery of want and starvation,
or of the dread of them, he may have in-
flicted, the reckless blunders, the wanton
lack of judgment and deliberation, of
which a nation of eighty millions, nay,
the whole world, has suffered the inevi-
table consequences — all this shall be writ-
ten, not in the heat of passion or under
the stress of suffering, but coldly and with
relentless deliberation, so that final judg-
ment may be passed and an impartial ver-
dict handed down to those who hereafter
shall rebuild, haply on a more certain
foundation, that which in violence and
cruel haste has been destroyed.
Looking Within the memory of men

Backwards— not yet middle-aged are the

Hard Times j . , . . j i . ,

distressing incidents which ac-
companied the panic of 1893 and the
subsequent period of commercial inertia
—the soup and coffee-rooms in densely
populated centres to fill the stomachs of
those whose willing hands could find no
employment, Coxey's army of the unem-
ployed marching desperately on Wash-
ington, and all the ills which followed
closely in the wake of the destruction of
4

confidence and the inability of capital to
employ labor even at the poorest^ wages.

The Silver "^ wave of madness, not unlike
Craze— Return the present, was sweeping the
of Confidence j^ and hag gone into history

as the " Silver Craze/' born of money
stringency, commercial paralysis, and the
consequent desperation of empty stom-
achs. Then came the election of 1896,
the glad cry of " The Full Dinner Pail/'
and slowly, like an awakening giant, the
country, stimulated by the tonic influences
of a return of confidence, came to a reali-
zation of its strength and resources, pro-
gressing by leaps and bounds, as no other
nation has done before it, until a measure
of well-being was vouchsafed to the poor-
est citizen, greater than any that the
world had ever known.

William McKinley. a man of
McKinley's , _

Fitness for rare personal magnetism and
the Office of charm, seemed particularly
called to rehabilitate the credit
of the country, to encourage its industries,
and so to elevate it among the nations
of the earth that Americans became proud
to be known as citizens of what promised
to be, financially, commercially and indus-
trially, the most powerful Sovereign State
of the world. Dreams of military prow-
5

ess have been, and fortunately still are,
very foreign to the American mental con-
stitution. Military duties have never been
prominent among those for which fathers
desired their boys especially to be fitted.

un(^er *^e skilful leader-

McKinley
Man of ship of William McKinley a

righteous war was brought to
a successful issue and large new areas
were added to the territory of the United
States. All of these accomplishments
were not of the President's seeking. His
tasks, as well as his inclinations, led him
more particularly along the paths which
conducted to the re-establishment, moral
and physical, of his countrymen. Toward
this end he labored steadfastly with that
quiet dignity and resoluteness of purpose
that so greatly distinguished him, and the
magnitude of his success must surely,
during the closing days of his life, have
been gratifying even to him.
His the True It is natural that foreign peo-

' American P^eS s^ou^ JU(^ge our individ-

Citizenship ual characteristics by those of

our Chief Magistrate, and at no time

during the incumbency of William Mc-

Kinley did he betray any quality not

consistent with the highest type of Amer-

ican citizenship. Not only in the proper

6

and orderly conduct of the affairs of
State, but in those rich and noble qualities
of heart and mind, so tenderly manifested
in his unfailing devotion in his home life,
he bound himself to the hearts of his coun-
trymen with the bonds of an almost sacred
affection which in these trying times of
governmental hostility, violence and malice
may well be regarded with holy reverence.
The At a time when McKinley was
Beginnings of already a veteran Congress-
Roosevelt man^ a voung man fa ;^ew

York City was dabbling in politics. He
had been a member of a Free Trade Club
(later ran for President on a High Tariff
platform) ; he was an unsuccessful can-
didate for Mayor of New York, and later
occupied a position as Police Commis-
sioner, which offered an opportunity for
the display of that strenuousness which
later in life he was destined to use with
such dire consequences in a more exalted
position. His occupancy of the position
of Assistant Secretary of the Navy, his
almost hysterical eagerness for a war
with Spain while holding that post, his
mental exaltation when war was finally
declared, his boyish enthusiasm in the
mustering of a motley crowd of plains-
men and cowboys, untrained in military
7

tactics, his widely exploited experiences
at Santiago during which he displayed
remarkable exhilaration over the blood-
shed and carnage he encountered, his sub-
sequent return to America and election
to the office of Governor of New York,
are sufficiently familiar and offer abun-
dant evidence of that craving for excite-
ment and self-advertisement which is usu-
ally associated with the period of extreme
youth or with a condition of unbalanced
mentality, such as would seriously unfit
him to assume the graver responsibilities
involved in the administration of the af-
fairs of a nation of eighty millions.
A Sacred Vow ^ *s w^hin the memory of the
Dragged in youngest voter that this man
the Dust

tyred President and there uttered a vow
to adhere to those policies which had so
efficiently contributed to the advancement
and well-being of the nation. How that
vow has been wantonly violated is now
only too bitterly realized by those who
have seen their entire fortunes swept
away and find themselves, many at the
close of their careers, confronted with
absolute poverty and want. It will be
keenly realized by the President himself
8

if, during the period of the next few
months, those to whose baser passions he
has catered shall rise in the desperation
of empty stomachs and starving families
to execrate and revile him for his unfaith-
fulness to the sacred trust imposed upon
him.

II

THE MAJESTY OF THE
LAW

Evils of ^* *s generally conceded that
Unwise one of the greatest dangers of
Legislation f .

our present system of juris-
prudence lies in the great multitude of
unwise and needless legislative enact-
ments that are railroaded every year
through our various law-making bodies.
It is evident that the greater the number
of laws the more difficult it is for the
citizen even of law-abiding habits to keep
within the law. In order to become ac-
quainted with only a small percentage
of the laws which are annually passed in
his own State, the individual would have
to devote all of his leisure time to this
class of literature. Yet ignorance of the
law is no excuse for its violation, and
the law-abiding member of the community
should, therefore, in these days of riotous
9

governmental prosecution, examine closely
into every detail of the business under
his control, however far-reaching and
complicated its organization or ramifica-
tions; should keep a watchful eye on the
actions of every member of his family,
and should proceed with the utmost cau-
tion in whatever activities he may be en-
gaged, lest he be haled before a magis-
trate and be mulcted, for violations of
the law committed in ignorance, possibly
years before, in the sum of one, five or
thirty millions, or as much as the magis-
trate might think he was able to pay. In-
cidentally he might be sent to jail.
No Safety ^ *s no* difficult to conceive
for Law- that there may be many thou-
sands of otherwise reputable
•citizens who , ignorantly violate some law
almost every day. Many there are who
do so knowingly, who would be unable to
conduct their legitimate business without
such violation, but who thoroughly under-
stand that their lawlessness, having been
constantly winked at by the Government
for a considerable length of time, will
continue to be permitted indefinitely. Yet
these men are by no means immune, for
any incoming Executive may " view with
alarm " their disrespect of the majesty
10

of the law, and at his mere caprice their
businesses, lands and chattels may become
forfeited and their own persons be seized
and imprisoned.

Ridiculous Let it not be presumed from
Laws what is written here that it is
the purpose to palliate disregard of the
law, but to point out the grave menace to
the community of reckless legislation
which is as likely to affect the rights of
the meanest citizen as the most upright
member of the community. It is this
legislation, hastily enacted and remaining
unenforced on the statute books, that cre-
ates that lack of respect for the law which
is becoming more and more apparent in
the business community. Nothing more
than this tends to a general lowering of
the morals of the people as a whole, lead-
ing as it does to the creation of the senti-
ment that all laws may be lightly regarded
because some of them are incapable of en-
forcement and should never have appeared
on the statute books of the country.

isthePresi- ^u^ ^ ^ *s a dangerous policy
dent Superior that the individual should be
permitted to entertain the opin-
ion that the law of the land may be violated
with impunity, how much more dangerous
is it if the Chief Executive of the nation
11

fosters the belief that he himself is supe-
rior to the law and may with impunity dis-
regard those rights of the individual which
it is the purpose of the law to safeguard?
The violation of law by a private citizen
should be discountenanced and punished,
but the possibility of widespread damage
in such instances is so small as to be almost
negligible when compared with the conse-
quences of a lack of proper regard for
the law by the very person to whose keep-
ing is confided its administration.
High-handed By various hasty and ill-con-
Measures sidered proceedings the Presi-
dent has laid himself open to the charge
that he himself is not a law-abiding citi-
zen. There is an honest difference of
opinion among those competent to pass
judgment upon the prerogatives of the
Executive whether the wholesale discharge
of a regiment of soldiers in time of peace
and without due process of law was not
a lawless act. The withdrawal of the li-
cense of an experienced pilot on the Mis-
sissippi, after a generation of service,
without affording the accused an oppor-
tunity of defending himself in an orderly
fashion, if it was not a lawless act cer-
tainly displayed an assumption of arbi-
trary power hardly demanded by the cir-
12

cumstances of the case. If in matters such
as these the President oversteps his power
he is a lawbreaker, no better and certainly
no more entitled to clemency than the
meanest citizen that appears before a mag-
istrate on a charge of disorderly conduct.
But the President cannot be fined — not
even Thirty Million Dollars' worth.

Noisy An abortive attempt at the ad-
Publicity ministration of the law is in-
stanced by the tin-horn, brass band meth-
ods employed in the investigation of the
meat-packing industry, costing the country
millions of dollars of foreign trade and
temporarily crippling an industry giving
employment to tens of thousands of peo-
ple. If it is true that the canned meat
and allied products are offered to the pub-
lic in more tempting garb than heretofore,
under the inspection of the gilded satraps
who are drawing the public's money in
salaries and perquisites, there is no evi-
dence of that fact within the knowledge
of the ordinary consumer. But whatever
may have been the result, it is beyond
cavil that the same end might have been
achieved without the calcium-light, ghost-
dancing publicity that held the country
up to the scorn of the civilized world.

13

Ill
IMAGINARY EVILS

Monopoly Nature abhors a monopoly as
impossible it does a vacuum. The Express
Companies, with their system of money
orders and quick deliveries, compete with
the Post Office monopoly conducted by the
Government. In foreign countries, mo-
nopolies for the sale of merchandise are
owned by the Government; but, even in
those countries, smuggling is carried on
and an illicit trade conducted by those
who are sufficiently courageous to run the
gauntlet of governmental supervision.
No Restraint Under our laws, combinations

of Trade jn restraint of trade are pro-
hibited. It is doubtful whether any such
combination exists to-day in the United
States. The fact that the present Ad-
ministration, with all its delirious eager-
ness to convict some prominent " male-
factor of great wealth/' has been unable
to secure sufficient evidence to bring to a
successful issue any litigation of this char-
acter, is good evidence that violation of
the law in this respect does not exist.
14

Trusts Cannot Much has been said regarding
Control Prices ^ damage done to the coun-
try as a whole by the so-called Meat Trust,
a combination of packers who are popu-
larly believed to be in control of the meat
industry, and to be able thereby to regu-
late the price of this commodity. Yet it
is a matter of recent history that a reduc-
tion of ten per cent, has been made in the
price of beef, and the reason is that pro-
duction has outstripped demand. Under
such a condition no single corporation or
combination can maintain the price of any
commodity, the rantings of demagogues
to the contrary notwithstanding. The
prices of tobacco, leather, cotton goods,
breadstuff s, and all commodities of general
consumption, will continue to be regulated
in the future, as they have been in the past,
by natural laws independently of human
effort to the contrary.

standard oil, It has been said that the
Rivals Standard Oil Company is the
one real monopoly of the world, and yet it
is a fact that independent refineries are to-
day selling oil in the markets of the United
States in competition with the agents of
this giant corporation. The fact that they
are able to do this is evidence that no
monopoly of oil exists.
15

American That the Standard Oil Corn-

Commercial pany, by the genius and inge-

f Success .

its business, has been able to effect econ-
omies in the distribution of its products
to such an extent that it has outstripped
its competitors in certain sections; that
these men of American birth and educa-
tion have been able by their peculiar gifts
to construct an organization, perfect in
almost every detail, which to-day, in its
gigantic proportions, in the - smoothness
of its workings, and in its great money-
making power, is the marvel of the world,
is an achievement of which Americans
may well be proud — prouder even than
of the shedding of Spanish blood on San
Juan hill. For the one means death —
gruesome death, of which every reasoning
man and breathing creature stands in ter-
ror — and the other means life and com-
petence and happiness to thousands of
human beings who otherwise might be
overwhelmed in the great struggle for
existence; the one means the setting of
the hands of the clock backward to the
days of human savagery, to the days when
might meant right, to the days when man
roamed the primeval forests little better
than the beasts, preying on his kind; and
16

the other means the accomplishment of
those ideals to which the civilization of
the world is tending — the establishment of
the brotherhood of man, and of the eternal
principle that man shall seek his livelihood
and his happiness by the sweat of his brow,
and not by the shedding of blood.
Who Saved It has been said that the coun-
the Day ? j-ry stan(js jn grave danger by
reason of the actions of certain " male-
factors of great wealth/' among whom may
be mentioned many of those most prom-
inent in the history of the development of
the industries of the country. It was men
like Harriman, Rockefeller, Morgan and
Stillman who threw themselves into the
breach when the distracted multitude was
clamoring at the doors of the banks for
its money during the week ending Octo-
ber 26, 1907; and this at a time when the
President was slowly recovering from the
exhilaration caused by the slaying of
" semi-domestic fat bears " in the cane-
brakes of Louisiana.

Unparalleled John D. Rockefeller, who is
Philanthropy presumed to have benefited
most extensively by the profits of the so-
called Oil Monopoly, and who has borne
the brunt of much vituperation both from
private and governmental sources, has
17

made provision for the distribution of a
sum said to be in excess of $150,000,000
for the benefit of his countrymen. An-
drew Carnegie has expressed the purpose
of distributing his entire immense fortune
for philanthropic purposes before he dies.
These are only two of the most prominent
examples of the benefactors who the pres-
ent Administration would have us believe
are " malefactors of great wealth." Great,
indeed, must be the desire that his fellow-
beings should share with him in his pros-
perity, when a man bequeaths the greater
part of or his entire fortune for the benefit
of mankind. If these are monopolists and
malefactors, Heaven grant that these
United States of America may have many
such; and God help the American people
if they have so far lost their reason that
they will permit men such as these to be-
come the butt and target of political
demagogues.

Honesty ^e PO^C7 °^ the Present Ad-
Essential to ministration is to hold these
men up to the American people
as lawless members of the community,
lacking in all scruple and principle. Noth-
ing can be more prejudicial to the morals
of the rising generation than to inculcate
the doctrine that it has been possible for
18

men to achieve so great a measure of suc-
cess by dishonest and unscrupulous meth-
ods. There is no walk of life in which
honesty is so important an essential of
success as in mercantile operations, or in
which surer and swifter punishment is
meted out to those who transgress the
moral code of the community. Confirma-
tion of this is to be found in the recent
examples of men who hitherto have stood
high in the financial community but who,
by reason of questionable methods, have
brought upon themselves utter ruin and
disgrace. It is because the present Ad-
ministration has sought, by every conceiv-
able means, to bring the leading members
of the financial community, the Rockefel-
lers, the Harrimans, and the Morgans, into
disrepute, that the present distrust among
the ignorant, and the consequent misery,
are caused; and it will not be until the
public mind has been disabused of these
fallacies, until it is generally recognized
that many of the evils which it is sought
to correct are purely imaginary; until it
is shown that these imaginary evils have
been conjured up for the purpose of real-
izing a petty political ambition; until the
President of the United States discards
the lamentable habit of standing on the
19

front porch of the White House and in-
dulging in cheap epithets, that we can
hope for any return to normal conditions.
Hj. h The gratuitous assumption on

Morality the part of demagogic leaders
Standard ^ ^ m(>ral plane Qf the

financial community to-day is lower than
it was in the former generation, in the
period when the Goulds, the Fiskes and
the Drews were more or less in control
of the financial destinies of the community,
is as vicious as it is unfounded. The evi-
dence is that our financial leaders stand
higher in the money markets of the world,
and that our securities are looked upon
with greater favor in foreign countries, at
the present time, than ever before in the
history of the country.

Much has been said with re-
American , , ,, ,
Railroads gard to tne alleged over-capi-

Under- talization of our railroads and
capitalized . , . ,

industries, but it now appears

that the capitalization of the railroads of
the United States, per mile, is less than
one-fourth of that of British railroads,
and that on this modest capitalization a
very moderate average return of four per
cent, is derived. In the light of these facts
it will be readily seen how outrageously
absurd and demagogic are the attacks
20

which have been made upon the railroads

of the country.

The Citizen's Such ev^s °^ over-capitaliza-
Priviiegeto tion as may exist inevitably
be Foolish r.ght themselves^ and the con.

servative investing public may safely be
relied upon to furnish the corrective
wherever such abuses may appear. It is
the constitutional prerogative of the in-
dividual to be foolish, so long as his folly
does not interfere with the rights of his
fellow-citizens. No law can be enacted
that will prevent the individual citizen
from investing in mining stock at ten
cents per share in the hope that he will
be able to sell the same stock at a figure
many times greater than his purchase
price. Although sporadic efforts have
been made in that direction, no law has
ever been devised that will prevent the
public from gambling in securities or in
the commodities of general consumption.
But, whatever may be the evils of specu-
lation, they are not to be compared with
those that have been wrought by the
President himself upon the financial com-
munity. It was not surprising, though
most lamentable, that his spectacular
methods should have won the approval of
the unthinking masses. The applause
21

with which his utterances have been
greeted was like incense, and inspired
him with courage to proceed along those
lines which he ignorantly supposed would
bring him greater renown. The slaughter
of the corporations appealed to him as
" bully sport," and our President loves to
pose as a sportsman. Whether he is
hunting Spaniards at Santiago, or good-
natured bears in the jungles of Louisiana,
the scent of animal blood is the keenest
of delights, and the lust to kill grows
stronger in his animal nature with every
fresh conquest.

IV

EXAMPLES OF MED-
DLING

Unsettlement During the earl7 da7s of the
of the Rooseveltian era of interfer-
ence with the normal business
conditions of the country a great strike
was in progress in the anthracite fields of
Pennsylvania. The usual accompaniments
of violence and bloodshed were present.
The mine owners were strong in their
assertion that, if the necessary military
protection were afforded, they would be
able to operate their mines, but the back-
bone of the then Governor of Pennsyl-

vania boasted of an inordinate quantity
of cartilage. Either through actual fear,
or through a desire to captivate the labor
vote, the Governor was unwilling to apply
the necessary measures for the protection
of the property holders and confessed
himself unable to cope with the situation.
Under these circumstances there can be
no doubt that had it been the fortune of
the country to have at the head of the
Government a man of the calibre of
Grover Cleveland the disturbance would
have been quelled with the same prompt-
ness as was displayed at a similar junc-
ture when the railroad strikers at Chi-
cago were disturbing the peace, and the
Governor of Illinois was either unable or
unwilling to subdue the riotous mobs that
were destroying public and private prop-
erty within its boundaries.
Protection It is a principle of the ethics
Refused of arbitration that no one
should seek the office of arbitrator; that
both parties to the dispute should make a
request for arbitration before it is of-
fered. In the case under discussion, the
President's action was as astounding as
it was unprecedented. Instead of pro-
tecting the lives and property of the citi-
zens by requiring that peace should be

established in the region under revolt, or
by sending an armed force to protect
those who were desirous of working if it
were made clear to them that their lives
would not thereby be jeopardized, he
holds a hasty conference with the leaders
of the revolt and summons to the White
House, under the form of a request, the
distracted mine owners who, unable them-
selves to protect their property, were de-
nied the protection which it is the prov-
ince of the Government to extend to its
citizens. Under the veiled threat of in-
curring the displeasure of the Adminis-
tration, they were obliged to make peace
with those who had risen in armed rebel-
lion for the purpose of destroying their
property, with the result that the price
of coal since that period has been higher
than ever before.

Reformed Aside from the interference
Spelling— with the business of the coun-
Naturalist

an irresistible impulse to meddle with
affairs which are of a purely private
nature, and many of these peculiar mani-
festations of his restless and strenuous
nature have led him into predicaments
that have often provoked amusement. At
one moment we find him engaged in pro-

moting the sale of " The Simple Life/'
Again, amid his multitudinous duties, he
finds time to devote his attention to re-
forms of spelling, football, the habits of
domestic and wild animals, the morals of
the private citizen and his home life.
Race It is hardly to be wondered at
Suicide fl^j. a man possessed of such
animal spirits should have seen fit to pro-
claim the doctrine that a woman's chief
duty was to bring children into the world,
which is the same as saying that a man's
chief duty is to be the cause of their ex-
istence. It would appear to be consider-
ably more to the point if it were said that
a more important duty of the mother is
so to rear such sons as she may have, that
should one of them ever occupy the ex-
alted position of President of the United
States, he may so conduct himself as not
to create misery and poverty in the place
of prosperity and happiness; and her
daughters so that they may conduct
themselves with such modesty, and be
such types of the real gentlewoman, that
should one of them happen to occupy the
position of eldest daughter of the Presi-
dent, and should she thereupon have the
fortune to marry a highly estimable and
conscientious congressman, she may not be
25

paraded by the yellow press of the coun-
try until the public becomes satiated with
the exaggerated accounts of her most
trivial actions. These are matters which
the ordinary woman, if too busily occu-
pied in the pursuit of bringing children
into the world, may really be pardoned
for overlooking; and yet it may reason-
ably be contended that they are of equal
if not greater importance.
Unsound Men- The mention of collateral evi-
tai Processes dence such as this, tending to
establish the unsoundness of many of the
mental processes of the President, when
they are occupied with matters outside of
the realm of the administration of his
office, is of service in discussing the capac-
ity of this extraordinary figure to conduct
those affairs with which the nation is more
immediately concerned. His unbounded
confidence in his own popularity, in his
ability to rise superior to the mistakes
and follies he may commit, is one of the
most dangerous characteristics which may
be attributed to him.

In a recent market letter, a
iClassification) ,

prominent brokerage firm of

New York divided the American people
into three classes :

(1) Those who learn by knowledge;

(2) Those who learn by experience;

(3) Those who never learn at all.

If it be true that the American people
may be thus 'classified, it would be inter-
esting to determine in just what class the
President belongs. That he has learned
by knowledge, by which we suppose that
the writer of the letter means to say in-
tuition, is contradicted by the many errors
into which he has fallen. If it is possible
for him to learn by experience, Heaven
knows his experiences have been sufficiently
varied; and if he belong to this class it is
not unreasonable to hope that he will
shortly suffer such a readjustment of men-
tal equilibrium as shall cause him to recant
the many fallacies and chimeras to which
he has given utterance, and thus, by con-
tributing to the re-establishment of the
finances and business of the country, make
atonement for the havoc which his rashness
may have occasioned. Should he belong
to the third class which we have mentioned,
the public must resign itself to the prospect
of continued disturbances and be prepared
for additional disaster.

Spectacular To whatever class he may be-
Methods long, he may be presumed to be
sufficiently sane to recognize that so far
as his popularity is concerned he is rapidly
losing ground. Not only is this the case
in this country, but it is evident that popu-
lar sentiment is turning against him in
the outside world. The French people,
ever wont to follow with enthusiasm the
man on horseback, have been ardent ad-
mirers of the spectacular tendencies so
repugnant to those who have been educated
under republican ideals. The summoning
of warships from far and near for an an-
nual review at the President's private home
at Oyster Bay was one of the manifesta-
tions of this peculiar characteristic of the
President's temperament, and was pre-
cisely of such a nature as to appeal to the
Latin populace.

Russian But the French people have
Bonds had other and more potent rea-
sons to love Roosevelt, not the least among
which is the alleged statesmanship dis-
played by him in bringing a victorious na-
tion to its knees at Portsmouth, and exert-
ing such moral suasion as to convince it
that it was its duty, after having annihi-
lated its enemy, to allow him to go scot-
free and to pay not one cent of indemnity.

28

Was it to be wondered at that the French
investors in Russian bonds should rub their
hands with glee and cry " Bully " ?
Wanin ^ *s interesting to note, and
Popularity would have been humorous had
it not been for the seriousness
of the situation, that there was a sudden
and remarkable revulsion of feeling at the
French capital when French investors in
Westinghouse, Pennsylvania and other
American securities were hit in the Roose-
velt panic. The Matin awoke to find that
its idol's feet were made of clay, and
other prominent French journals united in
decrying the man who had saved the day
when the Russian Empire was tottering
and Russian bonds were being hawked
about the markets of Europe impossible
of sale. It is not difficult to conceive
what might have been enacted in the
streets of Paris if Roosevelt had been a
French President, and if he had had to
reckon with an excitable Latin populace
clamoring, not at the banks, for that
would be a waste of time, but at the doors
of the Executive Mansion, with demands
for vengeance.

Americans But if the American people
Must Use partake of the phlegmatic na-
the Ballot . they

also have inherited from them the deter-
mination and steadfastness of character
which so often have been manifested in
the various crises that have occurred in
the history of the country. Their indig-
nation is none the less sincere once they
have become the victims of a shallow and
ruinous policy. While the French peo-
ple would have been exhausting its ener-
gies in frantic rage, the American people
will march in solid phalanxes to the vot-
ing booths, and there record their disap-
proval. The popularity of the President
may well have caused serious doubts to
arise in the minds of thinking people as
to the ability of the public to weigh the
consequences of a reckless administration
of law. But let us not forget other occa-
sions when the American public has shown
itself able to solve in an orderly, fashion
the problems which confronted it. It is
not surprising that we should have lost
faith in the President. Let us not lose
faith in ourselves.

30

SOME REAL EVILS

Present ^n arriving at the causes of the
versus Past present unsettled condition of
the country's finances, it is necessary to
take into consideration various unsound
conclusions that have been deduced from
uncertain or absolutely false premises. It
would be worse than idle to close our eyes
to the fact that there have been abuses
and evils in the financial and business
world; but if it can be shown that these
abuses are no greater than have always
existed, that the funds entrusted to those
who have in charge the management of our
financial institutions are cared for with
the same diligence and conservatism as may
be assumed to have been usually exercised
in former periods of our history, that the
code of morals governing the conduct of
affairs of this nature is as strict, if not
stricter to-day than heretofore, and that
by reason of the very fact that the general
moral tone of the community is higher than
ever, such evils as have been shown to ex-
ist have been more severely criticized, it
is then evident that we must look elsewhere
for the real cause of our present distress.
31

Poiicyhoiders' It; is only necessary to recall
Interests to mind the happenings in the
financial world of some decades past, in
order to appreciate the fact that men in
those days were no better as a whole, if,
indeed, they were not considerably worse,
than they are to-day. No impartial ob-
server of our present conditions will dis-
pute the fact that such an occurrence as
the purchase of probably the most impor-
tant railway franchise of the city of New
York could not to-day be effected by the
wholesale purchase of its Board of Alder-
men. The contribution of money by a
large insurance company to a political cam-
paign for the purpose of assisting in the
election of a President on a platform which
was calculated to safeguard the interests
of its policyholders, which to-day is looked
upon as a crime, and for which one of our
prominent bankers has been under indict-
ment, would undoubtedly, years ago, have
been considered quite within the rights of
the company in question. Even to-day it
is seriously open to question whether the
more conservative body of policyholders
would not unanimously concur in the opin-
ion that it was the duty of those to whom
its interests were entrusted, to use the
funds of the company for this purpose.
32

Evils of Undoubtedly the investigation
Extravagance of the methods employed by
those in charge of the large insurance com-
panies brought to light evils of extrava-
gance^ and demonstrated the absolute lack
of scruple on the part of many of those
entrusted with the management of their
affairs. But in connection with the inves-
tigation, and in the consequent publicity
which was given to these matters, there
were many absurd vaporings on the part
of those who could see nothing but whole-
sale fraud and criminality of purpose. It
is not unreasonable to suppose that the
average policyholder would be willing to
contribute to the elaborate office furnish-
ings which characterized the private sanc-
tums of the presidents of these companies,
for, after all, the cost of these caprices falls
lightly upon the individual policyholder,
who undoubtedly would prefer that a capa-
ble president should be paid a salary of
$100,000 per annum, at an annual cost to
each policyholder of approximately 25 or
50 cents, than to have in his place a man
who would be satisfied with a more moder-
ate remuneration, but who would be less
capable of managing the affairs of the
company.

33

While it would be useless to
Immediate

f Results of the dispute that the house cleaning,
Investigation which wag undertaken in this

branch of the finances of the country, will
in the long run redound to the benefit of
the community, on the broad assumption
that evil should be eradicated wherever it
is found, nevertheless the splendid work
which was done by Governor Hughes as
counsel for the Armstrong Committee, in
its immediate effects, was highly detri-
mental to the extent of crippling the busi-
ness and throwing large numbers of
agents out of employment. It is evident
that the policyholder prospers in propor-
tion to the prosperity of the company in
which he is interested. The more busi-
ness his company does, the greater are
likely to be his returns from his invest-
ment, and when the company of which he
is a policyholder is brought into discredit,
it naturally follows that he must suffer in
common with the rest of the large body
of policy holders. There is no evidence of
any immediate possibility of the individ-
ual policyholder receiving any pecuniary
benefit as the result of the investigation,
and it will doubtless be many years before
the confidence of the public is fully re-
stored with respect to this class of invest-
34

ments; and it is quite possible that the
disclosures which have just been men-
tioned have had a contributory effect upon
our present condition.
The Trust Considerable criticism has been
Companies directed at the methods of the
Trust Companies. It is said that their
officers are guilty of reckless management
in offering exceptional inducements in
order to secure deposits, but in consider-
ing this question it may not be amiss again
to refer to the constitutional prerogative
of the individual to be foolish or reckless
if he be so inclined. It is common knowl-
edge that ordinary deposits in trust com-
panies do not offer the guarantees of the
national banks. Those who entrust their
balances to the former institutions must be
aware that they are only third-rate credit-
ors; that in the event of the failure of
the company Government deposits rank as
preferred credits, and that deposits of
trust funds, for the safe-keeping of which
these companies were originally designed,
must be paid before the regular depositor
can receive his share of the funds result-
ing from the liquidation of the company.
If, with the full knowledge of these facts,
the individual is willing to assume the
risk involved for the purpose of securing
35

the four per cent, interest allowed on daily
balances, rather than to deposit his funds
in an institution the management of which
is more or less under the control of the
National or State government, and which
is surrounded with restrictions so far as
its investments are concerned, then it
should not be unreasonable to contend that
in the event of disaster he is suffering the
consequences only of his lack of conser-
vatism.

Reckless ^ *s no^ the purpose to ad-
Depositors vance the argument that de-
posits of the public's money should not
be safeguarded by law so far as it is
possible to do so, but merely to point out
that institutions conducted under National
laws exist, of which the individual may
avail himself, if he so desires. The meth-
ods to which certain financiers have re-
sorted for acquiring control of a string
of National or other banks are open to
criticism only in so far as they may be
shown to be reckless. It cannot be alleged
that it is dishonest to purchase the control
of the stock of one bank, hypothecate this
issue with some other institution and thus
secure the funds for the purchase of the
control of another bank, and to continue
this operation indefinitely or so long as
36

the funds of the manipulator hold out.
That this is a reckless piece of specula-
tion and should be frowned upon is be-
yond cavil, but that per se there is nothing
about the transaction that is not strictly
legitimate is quite as susceptible of proof.
It is the abuses that may grow out of what
is in itself a strictly lawful transaction
that makes the transaction itself repre-
hensible.

Lack of There is a familiar saying that
Foresight a thief is not a thief until he
is caught, and it is quite possible that the
financier to whom reference has been
made in the foregoing paragraph would
have been able to carry his plans to a
successful issue had it not been for cir-
cumstances entirely beyond his control,
namely, the depreciation of the securities
of the country, and the stringency of
money. Eliminate these two conditions
and it is quite conceivable that his plans
would have redounded enormously to his
own advantage, as well as to that of the
banks in which he was interested. It can
hardly be disputed that the failure of
the Knickerbocker Trust Company was
equally attributable to the same condi-
tions. Had the investments of this insti-
tution not suffered a greater decline than
37

has taken place in the last generation,
there can be no question that it would to-
day be perfectly solvent. The greatest
fault that can be attributed to those who
were responsible for its management is
their lack of judgment in not foreseeing
the inevitable consequences upon the credit
of the country of the attitude of the pres-
ent Administration.

Junketing ^ tne statement is sound that
Legislators the debilitated condition of
financial institutions to-day is directly at-
tributable to the depreciation in the value
of securities, the destruction of credit and
the consequent lack of funds, it is only
necessary to trace the immediate cause of
these conditions in order to fix the respon-
sibility where it belongs. It may be truth-
fully stated that the finances of the country
are conducted to a greater extent along
old-fashioned and conservative lines to-day
than are the affairs of the Government.
In the good old days of the past decade,
cabinet officers were supposed to have some
duties in addition to those calling for al-
most uninterrupted junketing trips extend-
ing throughout the civilized and uncivilized
world. Statesmen in those days stuck
pretty closely to their desks. It may be
assumed that they were occupied with the
38

details of their office ; that, having assumed
the responsibility for the proper manage- .
ment of the affairs in their various depart-
ments^ they were not unmindful of these
responsibilities, and their anxiety to carry
out the trust imposed upon them in such a
manner as to reflect credit upon the Ad-
ministration as a whole impelled them to
devote a certain number of hours each day
to matters directly pertaining to their
offices. But these are old-fashioned meth-
ods. The public is not aware whether or
not the cabinet officers have private desks
in their various sanctums, but it certainly
should not be censured for assuming that,
unless carefully dusted at regular and fre-
quent intervals, it would be necessary to
excavate them at least once or twice during
the period of four years, if perchance at
any time it was proposed to put them to
practical use.

Americans -But these innovations are prob-
Love Peace ably the natural consequence
of the expansion of the country and the
growth of its power among the nations
of the world. We are told in the speeches
of the President that we should be at all
times prepared to fight. This may be all
very fine for the President, but it is a lit-
tle disquieting to the nerves of the ordinary
39

citizen. The President likes to fight, and
is always prepared to fight; but the aver-
age American citizen is peace-loving and
his preparedness for battle is a matter that
is open to serious question. It may be
doubted if he even cares very much whether
he is prepared or not, in view of the fact
that it is his intention to avoid a fight if
he can possibly do so. It is true that the
President's statements in this regard are
usually modified by the other assertion that
we are for Peace, but he again qualifies this
when he says that we are only for Honor-
able Peace. Now whether peace is hon-
orable or dishonorable, the private citizen
will not be permitted to judge. This is a
matter that will probably have to be de-
termined by the President himself, and it
is quite possible that his decision of the
matter will not be greatly influenced by
the fact that the American people would
prefer to have a calm and judicious de-
liberation of the question as to whether we
might not refrain from fighting and still
retain our honor untarnished, rather than
to go to war and be honorably killed.
War Not Most men are afraid to go to
Desired war^ first, because they are
likely to be killed or at least seriously
injured; and, second, because they have
40

families who are dependent upon them for
support. The President is anxious for a
big navy and he will probably get it, be-
cause he says if we have a big navy we
shall probably not be called upon to use
it; and if we do not have a big navy, we
are apt to be attacked, and the Philip-
pines, which the country seems to be most
anxious to get rid of, will probably be
taken away from us.

Navy a ^ now appears from the state-
Bluff ments of a prominent Army
and Navy publication, that some of our
most powerful-looking battleships and
cruisers have serious defects that would
cause them to be of little service in battle.
This is rather a discouraging condition
for the taxpayer whose money has been
spent upon their construction, but if the
purpose of building a big navy is to place
us in a position where we shall never have
to use it; if, in other words, the navy is
one huge bluff intended simply to play
Santa Glaus with among the nations of
the earth, we need not worry about it so
much after all. However, it also appears
from the statements of persons who are
supposed to be competent in matters of
this kind, that no proper provision has
been made for officering all these new
41

vessels. This oversight, of course, need
not cause any considerable concern, for so
long as the bluff is not called we shan't
need the officers.

The President To return to the peripatetic
' at Panama tendencies of the cabinet of-
ficers, it may not be beside the mark to
point out that however lacking in atten-
tion to detail our present cabinet officers
may have become, the President himself
keeps a watchful eye on the various enter-
prises in which the Government is en-
gaged. This made it necessary for him
to make a tour of inspection to the scene
of the construction of the Panama Canal,
and it is gratifying to learn that he found
things in the Canal Zone in proper shape
and the work of construction progressing
satisfactorily. This was the first time
that any President had left the country
during his term of office, and if the Presi-
dent goes to Panama, there is no reason
why he should not take a little side trip
to Paris to see the sights or to visit the
American Ambassador, or to the Philip-
pines to assist in pacifying the Pulajanes.
It might not be difficult for him to find
occasion to add the Sultan of Sulu to his
famous gallery of liars, just for the sake
of lending variety to its membership.
42

VI

FIXING THE RESPONSI-
BILITY

Credit Must A statement has been credited
be Maintained to Baron Rothschild to the ef-
fect that if the public for the short period
of twenty- four hours should lose every
confidence in his ability and integrity, he
would be bankrupt. This statement is
said to have been made at a time when
it was necessary for the rulers of the
world to obtain the consent of the great
master of finance before entering upon
war. So delicate a thing is credit that
the richest man in the world in those days
was absolutely at the mercy of any per-
son with sufficient influence to destroy his
reputation for honesty and ability.

What is The distinction between actual
Credit? casn an(J credit is rarely con-
sidered. . Business men speak of a cash
transaction when they mean that the ar-
ticle sold is to be paid for upon delivery,
but actually it is a cash transaction only
if the payment is made in coin or cur-
rency. Evidently, if the payee receives
a check the transaction is based purely on
credit which is the result of his confidence,
first, in the man whose check he receives
43

and,, second, in the ability of the bank to
honor it. Destroy the payee's confidence
in either or both of these, and he will ac-
cept only cash. Then, and then only,
does it become a cash transaction. Or-
dinarily, however, the business man refers
to a credit transaction as one according
to which the payment is to be made after
a certain time has elapsed, or at some
time subsequent to the date of the trans-
action. Here, of course, a greater amount
of confidence is required on the part of
the payee or the seller.
Effect of Now, let us suppose that, by
Distrust the incendiary speeches of a
certain person at the head of the adminis-
tration of the Government, the individual's
mind becomes filled with forebodings as to
the integrity of the persons with whom
he has commercial or financial dealings.
By a natural mental process he arrives at
the conclusion, that if those who stand high
in the financial world are unworthy of his
confidence it will be advisable for him to
proceed with the utmost caution in his
dealings in general. That form of credit
which is dependent upon the greatest con-
fidence, namely, the time allowance for the
payment of bills, is curtailed, and if other
events of a disquieting nature succeed one
44

another continually, it is not surprising
that his lack of confidence should become
so acute that he will refuse to avail him-
self even of those forms of credit usually
characterized as cash transactions, namely,
the acceptance of checks in lieu of cash.
It is then that the period of hysteria com-
mences; that the public clamors at the
doors of the banks of the country for their
money, and that a general financial panic
ensues.

Money But before this actual crisis is
Stringency reached there is an inevitable
general curtailment of funds by reason
of the restriction of credit, the lack of con-
fidence in the purchaser displayed by the
seller, that is to say, lack of confidence in
his ability and integrity, those essential
qualities of commercial success mentioned
by Baron Rothschild.

Depreciation Another manifestation of this
of Securities period of diminishing credit
facilities is the depreciation of the value
of the securities of the country, the paper
issued by the great corporations to the
public in return for cash. The desire to
turn these securities into bank deposits
naturally precedes the attempt to turn bank
deposits into cash.

45

Let the reader now truthfully
been answer the inquiry as to the
Revealed? cauge of the destruction of con-
fidence, and he arrives at the immediate
and direct cause of the present situation.
It has already been pointed out that any
evils that may exist in the moral constitu-
tion of our financial community are not as
great or certainly no greater than have
existed in the past. It has been said that
the President is not to blame for having
turned the limelight of publicity upon the
evils as they exist. But let us put aside
hysteria, and ask ourselves seriously what
the President has uncovered. Is it possible
that the champions of the President's pol-
icy will have sane people believe that be-
cause a Western railroad sees fit to offer
inducements in the matter of freight-rates
to the Standard Oil Company, thus per-
mitting it to transport and distribute its
commodity at a smaller expense and to
proportionately reduce the selling price of
its article — will these men have us believe
that the bringing to light of this fact has
caused the banks of the greatest financial
center of the country to totter, and occa-
sioned a financial crisis greater than any
in this generation? Will they have us
believe that because they discovered the
46

fact that the canned goods of the country
are prepared for market in just as dirty
surroundings as probably exist in the kitch-
ens of first-class restaurants of the coun-
try, this has been the cause of the destruc-
tion of confidence that is so wide-spread?
It has been pointed out in these pages that
it is impossible for any man or combination
of men to uphold the price of any commod-
ity of general consumption, once the pro-
duction of the commodity outstrips the de-
mand. But let us assume for the sake of
argument that it is the Beef Trust that
has been maintaining the price of beef,
and that this high price has not been
caused by increased consumption and de-
creased production. Is it possible to be-
lieve that sane people have found any
cause in this condition of affairs, even if
it does exist, to withdraw their balances
from the banks of the country and hoard
the currency in safe deposit vaults or in
stockings ? We assert with the utmost con-
fidence that it is impossible for any man
to lay his finger on a single evil, or on all
the evils en masse, and show that they have
been contributory causes to the present
state of affairs.

47

A Foregone ^ tne German Emperor, for
Conclusion example, should see fit to pro-
claim throughout the length and breadth
of his empire the dishonesty of the lead-
ing members of the financial community
in Germany; should he resort to a shorter
and uglier word and call them " liars " ;
should he intimate that they were robbing
the people; it would be perfectly natural
for the German people to lose confidence
in the paper commonly called securities,
issued over the signature and under the
endorsement of these men, and if they
should throw these securities on the mar-
ket for whatever prices they might bring,
there would be nothing unnatural about
it; on the contrary, it would be entirely
in accord with natural laws. Nothing,
therefore, has happened in this country
that might not have been expected as the
result of the procedure of the President.

As a mere matter of specula-
Where has

Money tion, it is interesting to con-
Disappeared? sider what hag become of the

enormous amounts of money which have
been liberated by the wholesale liquida-
tion of securities. Undoubtedly, a large
proportion of these amounts must have
found its way into investments apparently
of a safer character than those from
48

which they were withdrawn. A reduc-
tion in the price of securities of many
billions of dollars cannot take place with-
out the release of a large amount of capi-
tal. Where has this capital flown? It
is the old, old question that has been
raised in every period of financial strin-
gency. That a great deal of it has gone
into real estate is common knowledge, but
it is also a fact that the savings banks
have steadily been losing in the amount
of their deposits, and it is impossible to
believe that the real estate investment in
the country has been of such vast pro-
portions as to swallow up the entire
amount of these funds. Obviously, then,
there must be a large number of people
whose lack of confidence has reached such
a point that they are unwilling to use
their means even in the purchase of real
estate. The only answer which can be
given is the one which always is given in
times suck as these: the money has been
hoarded. The ignorant, the weak-minded,
the timid, have become affrighted. Their
little savings, so far as the community as
a whole is concerned, so far as the re-
quirements of trade are concerned, so far
as bank deposits are concerned, have
evaporated. They have ceased to exist
49

for all practical purposes. Temporarily
they are destroyed, and the cause of this
destruction is the man who, by his incendi-
ary speeches, by his promises to do things
which it is not within his power to do,
has created terror in the minds of the
weaklings of the community.

VII

FIXING THE DATE

Amused ^ would be a difficult if not an
Americans impossible matter to fix the ex-
act time when the public mind began to
be filled with forebodings as regards the
finances of the country. It has been shown
that during his first administration the
President availed himself of unprecedented
means for the purpose of interfering with
business as it was affected by the disturb-
ances in the coal-fields of Pennsylvania.
It is not likely that at that time anyone
dreamed of the possibilities of evil which
were hidden in the then still undeveloped
proclivities of the President. Nor is it
possible to point to any particular act of
his which marked the commencement of
the era of distrust. His idle expressions
of opinions on subjects which concerned
the private life of the citizen, to which
50

reference has already been made in these
pages, were looked upon with amusement
more than with any fear that they indi-
cated an unbalanced mentality. The pub-
lic is fond of being amused, even by its
Chief Executive. We have never had an
actual clown in the White House. But
even if the President were a clown and a
good clown, one that would command an
exorbitant salary at a hippodrome, for in-
stance, the country might be proud of him
as a clown and be ready to forgive the loss
of dignity and self-respect involved. A
good clown has no use for " malefactors
of wealth " except to coax the dollars
from their pockets into the box office. A
good clown would have too great a sense
of humor to take himself too seriously, or
to suppose for one moment that the Su-
preme Court of the United States would
place such constructions upon the Consti-
tution as to permit him to indulge his
whims, or to carry out schemes unsanc-
tioned by presidential prerogatives.

51

Such a man. having a real sense
Intimate

Relations with of humor, would never attempt
Harriman to quarrei w^ the gentlemen

who had provided the funds necessary for
his election. He would never have pro-
voked the publication of the famous Har-
riman letter. Now, in communications of
a business nature, it is customary to use
the address, " Dear Sir." In social notes
or communications of less formality, the
writer indulges in "Dear Mr. Blank";
but it is only after intimate confidences
have been exchanged, it is only after men
have grown to know one another, to under-
stand one another's secret motives, that they
address one another as " My dear Blank."
It is possible that when the President ad-
dressed Mr. Harriman as " My dear Har-
riman/' he was presuming too greatly upon
a short acquaintance, or possibly he as-
sumed that his exalted office gave him the
privilege of addressing an ordinary multi-
millionaire in terms of intimacy.
Harriman ^ *s significant, however, that
Quarrel just at that time the Repub-
lican Party in New York State was in
dire distress for money; that an officer of
the cabinet had resigned his position for
the purpose of assuming a prominent po-
sition on the Republican National Com-
52

mittee; that it has been stated on good
authority that considerable sums of money
were paid to Mr. Bliss out of the pockets
of " malefactors of great wealth " ; that
it has never been seen fit to deny these
allegations; that it has been impossible to
trace to their source these contributions;
but that it has never been denied that
they were made. They were made after
" My dear Harriman " had accepted the
President's invitation to call at the White
House to discuss the situation, and after
he had actually paid the visit. The pub-
lication of the Harriman letter ,and the
circumstances which surrounded it re-
ceived world-wide publicity and created a
tremendous sensation. The utterances of
the President at this juncture were espe-
cially vehement. It may not be entirely
just to assume that this vehemence was
the result of, let us say, a guilty con-
science or of a fear of other more damag-
ing disclosures. Suffice it to say that the
actions and utterances of both Mr. Roose-
velt and Mr. Harriman were of such a
nature as to fully convince the world that
the fight was a personal one; that if either
of these gentlemen could obtain an ad-
vantage over the other by any safe means,
however reprehensible they might be,
53

there would be little hesitancy on the
part of either. The public apparently
sided with and upheld the President in
this quarrel, but there were some demands
for full publicity with regard to the al-
leged campaign contributions.

Formidable Now a personal quarrel be-
Foes tween the Chief Executive and
a, man recognized to be one of the great-
est, if not the greatest, railroad genius
that this country has ever produced, who,
by his remarkable ability has been able
to extricate from the throes of bankruptcy
what is to-day the most powerful rail-
road system in the world, was a serious
matter. So long as the President did
what he did as the result of pure mo-
tives, for the purpose of benefiting his
fellow-citizens, it was bad enough; but
what might not a Chief Executive ac-
complish once his mind had become biased
by feelings of personal resentment and
possibly hatred?

The Date ^ ^or *ne benefit of the fu-
Fixed ture historian who shall record
all of these remarkable occurrences, after
the smoke shall have left the mouth of
the cannon, it should be thought not amiss
to endeavor to fix the date when the pop-
ular mind was seized with the enormity
54

of what was about to happen, we think
that no mistake will be made if the Har-
riman episode shall be said to mark the
awakening of the public mind in this re-
spect.
The Silent '^ne ^ ac^ that a^ ^he Ver7 mo~

Vote ment when the struggle be-
tween these two men was at its height
there should have been a violent break in
the securities of the country, lends plausi-
bility to the statement that this was the
beginning of the end. This break in
stocks has gone into history as the March
panic of 1907. There was the same smart
recovery in quotations that usually fol-
lows a sudden disturbance in the financial
equilibrium. It is reasonable to suppose
that, although the financial powers both
in this country and in Europe realized
the seriousness of the situation, they were
willing and anxious to hope against hope
that their fears might not be realized, and
that after all it might be merely a pass-
ing nightmare. That great number of
American citizens not numbered among
the rich of the population, not prominent
in social, commercial or political life;
that portion of the population which the
politican looks to as the " silent vote,"
so important in numbers that they have
55

more than once and probably, if the truth
were known, almost always, cast the de-
ciding vote; those men in business and
professional life whose common-sense and
sagacity^ may always be relied upon in
crises such as this, whose shrewdness and
foresight enable them to conduct their
business affairs to their own advantage;
this great body of men must also have
viewed with grave forebodings the strug-
gle which appeared to have just com-
menced. This struggle, between a man
known to be of violent temper and rash
instincts, and possessing all the power
with which the President of the United
States is clothed, and a man, one of the
foremost citizens of the country, who rep-
resented probably as intimately as any
other the powerful financial interests of
the country — this quarrel, charged as it
was with personal animosity, could not but
chill the hearts of these men with fear as
to the outcome.

Bankrupting Although they have been said
a Nation to constitute the " silent vote "
of the country, it is natural to assume that
they gave voice to their apprehension in
their daily conversations, thus communi-
cating to their weaker and less far-sighted
brethren the possibilities involved in the
56

situation. Was not Roosevelt doing ex-
actly that thing which Baron Rothschild
had said was capable of bankrupting him?
Had Rothschild failed, the whole world
would have been bankrupt. If men like
Harriman, Morgan and Rockefeller fail,
the same result is achieved.

VIII

THE CONFIRMATION

A Natural ^ *s related that when the
Schemer President occupied the posi-
tion of Assistant Secretary of the Navy,
his fevered imagination was constantly oc-
cupied with new and impossible schemes
which were often, in the regular routine
of business, laid before the McKinley cab-
inet. Very often these schemes were pre-
sented and personally urged by Roosevelt
himself, and it is said that not only were
they uniformly rejected, but rarely failed
to create amusement among the more ex-
perienced statesmen before whom they
were brought.

. It is natural to suppose that

dent's Volatile the President's volatile and

Disposition effervescent nature should be

attracted by what is fantastic and unreal

rather than by the sober realities of life.

57

That he is fond of what is spectacular
and sensational has often been asserted
and can hardly be denied. It would, there-
fore, be quite reasonable to suppose that
he would be considerably affected by the
inflammatory writings and utterances of
speculators of the Lawson type. It hardly
reflects to the credit of the mass of the
people that expressions emanating from
sources such as these should not only re-
ceive so great publicity, but should be
accepted by a large number of otherwise
sensible people as if they were the prophe-
cies of a mighty seer.

Lawson himself has admitted
Lawson's

Recent what was long common knowl-
Confession edg^ not Qnly among those f a.

miliar with the details of the financial
world, but among the sagacious and think-
ing members of the community, namely,
that his chief object in all this has been
self-advertisement and self-aggrandize-
ment. It was doubtless assumed by him
that it would be a fitting time to make
such a disclosure, after the woful miscar-
riage of his flamboyant prophecies, upon
his return from Europe, and the apparent
inaccuracy of his statements made at that
time, that he had entered into an agree-
ment with the financial powers of the coun-
try to create a bull market.
58

A Modern ^ mav ^e urge(l w^h some
Don Quixote show of reason as an excuse
for the President's attitude, that his mind,
in common with those of others not well
acquainted with the real situation, had be-
come inflamed by publications of the Law-
son type and that he felt himself called
upon to right the tremendous wrongs under
which it was alleged that the people were
suffering. In view of what is known of
the President's nature, it is not difficult to
believe that spectacular utterances such
as these would influence him to a greater
extent than the more sober assertions of
those whose sincerity and whose knowledge
of the situation could not be questioned.

The recovery in stocks which
The July J

Rally in proceeded slowly after the
Stocks March panic was short-lived.
A greater and if possible more significant
event was destined to occupy the attention
of the public and to carry to the mind of
the intelligent citizen the conviction that
his forebodings with relation to the out-
come of the Harriman episode were soon
to be realized. During the month of July
the stock market gave every indication that
the public mind was rapidly resuming a
normal condition in its attitude to sound
investment securities.
59

The Standard Then occurred the awful con-
Oil Case firmation of the worst fears
that had been entertained with respect to
the struggle which was being carried on
between the forces of the Administration
and the railroad and industrial interests.
For some time past an action had been
pending in the Federal Court of Illinois,
based upon allegations made against the
Standard Oil Company of Indiana, that a
rate for the transportation of oil had been
accepted from the Chicago & Alton Rail-
way lower than that which had been pub-
lished and which had been enforced against
other shippers. Some time previous to
this the President had taken it upon him-
self to severely criticise a Federal Judge
in Chicago, who had rendered a decision
against the Government in an action
brought against the so-called Meat Trust.
This criticism on the part of the President
has been severely condemned in many
quarters. It is the duty of the citizen not
only to obey but to respect the law of the
land. The private citizen may, indeed,
criticise an adverse judgment against him
and may privately indulge in invective with
respect to the judge who tried his case;
but when the President of the United
States gives way to hasty criticism of the
60

judiciary, his action can hardly be con-
sidered to foster that respect for the law
which it is the duty of every citizen to
observe, for how would it be possible to
reprimand an individual for offences of
which the First Citizen of the land, the
President of the United States himself, is
guilty? How shall the laws be enforced,
if the President himself, the servant of the
People and their great exemplar, to whose
charge is confided the enforcement of the
law, rebels when a judicial decision is ren-
dered against him?

Dead Letter ^n tne present instance, how-
Laws ever, the President could have
no cause for complaint. The defendant
company was mulcted in the sum of about
$30,000,000 for offences, many of them
committed long before, under a law which
little attempt had ever been made to en-
force, and which therefore it was excus-
able to believe might, to an extent, be dis-
regarded or evaded. In a case where the
Government has been lax in the enforce-
ment of a certain law, even the meanest
person is entitled to clemency. The ex-
cuse of laches on the part of the Govern-
ment would, of course, be of no avail, but
it might at least be urged as an extenu-
ating circumstance worthy of being taken
61

into consideration in the meting out of the
punishment. Such, however, was not the
case; the corporation was mulcted in the
maximum amount of the penalty for each
offence. It has been claimed that certain
evidence was thrown out which, if ad-
mitted, would have established the in-
nocence of the defendant, and the case
has been appealed and a stay of execu-
tion granted under supersedeas proceed-
ings.

The Famous The sensation caused by the
Fine publication of the sentence
would indicate that the public was stunned
by the enormity of the fine, which has been
characterized by one of the keenest and
most experienced observers as one of the
atrocities of modern times. The effect on
the stock market was very much the same
as when the executioner turns the first cur-
rent onto the victim in the chair. A quiver
ran through Wall Street; men rubbed
their eyes and wondered if they were
awake. The quiver rapidly developed
into a full-grown nervous chill, and one
break rapidly succeeded another until
there was practical demoralization.
Fine the Administrative action had also
Railroad been contemplated against the
Chicago & Alton Railroad, if it was pos-
62

sible to bring this corporation to the bar
of justice. If tried, the railroad naturally
would be considered equally guilty and
would be fined in the same amount. This
would mean approximately $60,000,000
paid out of the treasuries of two large
corporations, one industrial and the other
a railroad, into the treasury of the United
States.

The distrust and lack of con-
A Humorous

Attorney. fidence which had commenced
to assume dangerous propor-
tions at the time of the Harriman epi-
sode, now were epidemic in the commu-
nity. The ground was shaking under
men's feet. The rumblings of the angry
volcano grew every moment more threat-
ening; the dark clouds were assembling
overhead. It is little wonder that men's
hearts grew sick with fear, and that no
one dared venture a guess as to what
would be the outcome. Some stilj enter-
tained the faint hope that the President
might be counted upon in some way to
re-establish confidence. At about this pe-
riod the Napoleonic Attorney-General
gave forth various flippant interviews to
the newspaper men. That a situation as
serious as the one through which the com-
munity was then passing should be treated

in such a vein as this horrified the coun-
try, and bitter criticisms were launched at
the doughty if too humorous Bonaparte,
speech The President was booked to
Making deliver a speech to a gather-
ing of Puritans in Massachusetts, and
some hope was entertained that it would
be of a reassuring nature. In the mean-
time, the stock market continued in a
nervous and at times panicky condition,
and wonder was expressed that no fail-
ures of importance were occasioned by the
tremendous fall in values. The President
was busy dictating speeches at Oyster
Bay for deliverance during his tour of the
West. The matter was not of importance.
Wall Street was suffering the conse-
quences of its own misdeeds.
Wall street Wall Street did not represent
a Mob the country; it was not the
heart of the Nation from which all of its
arteries emanate that feed it with life and
vigor; it was not a sensitive barometer of
conditions as it had always been consid-
ered, representing the public estimate of
the value of the securities of the entire
country! No, it was a disorderly mob of
unprincipled speculators who for years had
been engaged in a wild debauch and who
were now having a severe headache !
64

The President lifted no helping

Defending *

the Honest hand. His speech in Massa-
Rich Man cnusetts, as well as his speeches
in the West, contained nothing that might
be calculated to relieve the situation. On
the contrary, there were reiterations of con-
tinued violence against the corporations.
It is true that in those speeches the Presi-
dent stated that he would defend the hon-
est rich man in the same way that he
defended the honest poor man. It does
not seem to have occurred to the President
that the honest rich man does not require
his active defense until he is accused of
something; he does not seem to have im-
agined that it is not one of the prerogatives
of the President to defend either rich men
or poor men until they are attacked, and
then his duty is to render such assistance
to preserve the peace as it may be in the
power of the Government to give. The
honest, law-abiding citizen of the United
States does not require the President to
defend him. If he is haled before a mag-
istrate or brought into a court of law, there
exist laws under which he is entitled to
offer his own defense. But these speeches
smacked of the same arbitrary tone which
characterized former utterances of the
President.

65

Hunting As already stated, the situation
Bear grew more strained as the days
went on, but the President paid no heed.
He left the country in its distress and
went hunting bears and bob-cats and 'pos-
sum, in which occupation he was moder-
ately successful. It was the first time that
the country, in its hour of distress, had
been deserted by its Chief Magistrate. It
was the first time in the history of the
country that any Chief Magistrate had
displayed the hardihood to enjoy himself
on a sporting expedition at a time when
the means of sustenance were being rudely
swept away from thousands of his fellow-
citizens during one of the most acute, if
not the most disastrous, panics of modern
times.

IX

THE CRISIS

Aside from the causes already
Regulating

Railway mentioned which have combined
to destroy confidence was the
vicious legislation enacted by Congress
known as the Railroad Rate Bill, an act
which placed in the hands of the Adminis-
tration or its officers the power to regulate
railroad rates. This was known as the
66

President's pet measure. It was a sample
of the legislation he had been constantly
trying to secure for the purpose of enlarg-
ing his power. Before the bill was passed,
a considerable argument was had as to the
necessity or desirability of introducing a
clause providing for the possibility of re-
vision by the courts of the decisions of the
Commission provided for in the measure.
It is very unlikely that even if such a pro-
vision had not been inserted, the railroads
would have been deprived of their consti-
tutional right to submit to a Court of
Equity the legality of the Commission's
findings.

Pernicious The enactment of this measure
Legislation created increased fear as to the
lengths to which the Government might go
in its attacks upon the railroads. The
power to regulate rates is so far-reaching
and might be so damaging in its exercise,
that another good and sufficient cause is
here found for the depreciation in the
value of railroad securities. It is not at
all likely that any Commission appointed
by Mr. Roosevelt would attempt to enforce
rates of freight that would be confiscatory,
or that would seriously damage the inter-
ests of the railroads. However, as has al-
ready been pointed out, the net return of
67

four per cent, on the modest capitalization
of American railroads, upon its f ace, dem-
onstrates how absolutely superfluous was
this class of legislation. Moreover, the
bill placed a powerful weapon in the hands
of the President which might be used to
tremendous disadvantage under other ad-
ministrations.

It has been argued that to give
Government

Ownership to the Government the power
Disastrous of fixing railroad rates for all

practical purposes places the railroads in
the hands of the Government, and this
naturally caused alarm among the large
class of people who still refuse to believe
in the desirability of Government owner-
ship of railroads. Indeed, if we may judge
from the methods employed in the conduct
of the business of the Post Office, such an
event would be very disastrous to the Gov-
ernment itself from a pecuniary if from
no other standpoint. Due to the lax meth-
ods of the Post Office Department, it has
recently been shown that under the system
employed for the issuance of money-or-
ders, postmasters are able to issue money
orders for larger amounts than are shown
in their reports to Washington and to put
the balance in their pockets. Just how
long the aiFairs of a railroad could be

conducted under methods of this nature it
is not difficult to guess.

The There is a difference of opinion
Outlook as to what course the commer-
cial and financial affairs of the country
will take, now that the acute crisis is past.
It is, however, difficult to share the opti-
mistic views that have been expressed in
some quarters, that matters will be read-
justed promptly and the business of the
country go on uninterruptedly. The dis-
turbance has been too real, and the vio-
lence of the decline too marked to permit
us to subscribe to this opinion. For the
mere purpose of comparison, it is inter-
esting to study the table recently published
by the New York Times, in which the de-
clines in the principal securities of the
country, which have taken place in the
brief period of twelve months, are com-
pared with those which occurred from
1892 to 1893, as follows:

RAILROADS.

Decline
from

Decline
from

1892

1906

High,

Low,

to

High,

Low,

to

1892.

1893.

1893.

1906.

1907.

1907.

Atchison ....

110%

83

— 27 %

Bait. & Ohio.

125 %

78

—47%

Can. Pac

94 %

66

—28%

201%

153

— 48%

N. J. Cent...

.145

84

—61

239%

160

—79%

St. Paul

. 84%

46 %

— 38%

199 %

100%

—99%

Northwest . .

.121%

84%

—37

240

130

—110

St. P. & Om.

. 54%

24

—20%

198

107

—91

Del. & Hud..

.149%

102%

— 46%

234%

126%— 108%

Lackawanna

.167%

127

— 40%

560

400

—160

Gt. Nor. pf. .

.144

100

—44

348

108

—240

111. Central. .

.110

86

—24

184%

118

—66%

Lo. & Nash . .

. 84%

39%

—44%

156 M

92%

—63%

Mo. Pacific. .

. 65%

16%

— 49%

106 %

48

—58%

N. Y. Cent..

.119%

92

— 27%

156 %

96 y2

—59%

New Haven .

.255

188

—67

204%

133 %

—70%

Nor. Pacific .

232%

100%

—32

Pennsylvania

147%

113%

—34%

So. Pacific . .

. 41%

17%

— 23 M

97%

63%

—34%

So. Ry. pf . . .

103

37%

—65%

Un. Pacific. .

'. 50%

15%

—35

195%

100

—95%

U. S. Steel. .

50%

21%

—28%

U. .S. Steel pf

113%

81%

—32%

Am. Sugar. .
Cons. Gas. . .
Gen. Elec...
Nat. Lead . .
Nat. Lead pf
Pullman. . . .
West. Union
West. Elec..

INDUSTRIALS.
114% 61% —53 157
128 108 —20 181%
119% 30 —89% 184
51% 18% —33% 95%
99% 48 —51% 106%
200% 132 —68% 270
100% 67% —33% 94%
78% 20% —58% 176

97 —60
74 —107%
89% —95%
35 —60%
80 —26%
137 —133
65 —29%
34 %— 141%

In many cases the high prices of 1906
were the highest prices recorded following
the depression of 1893. The stocks in
which the highest prices were recorded
in other years than 1906 and the date on
70

which the record prices were reached are
shown in the following table:

Chicago & Northwestern 271 Apr., 1902

Chicago, St. P., M. & 0 225 Jan., 1905

Delaware & Hudson 240M Oct., 1905

Louisville & Nashville 159 M Aug., 1902

Missouri Pacific 125^ Sept., 1902

New York Central 174% Nov., 1901

New York, N. H. & H 255 Apr., 1902

*Northern Pacific 700 May, 1901

Consolidated Gas 238 Apr., 1901

General Electric 334 Apr., 1902

National Lead pf HIM Feb., 1905

Western Union 100 M May, 1901

Westinghouse Electric 233 Sept., 1902

Pennsylvania 170 Sept., 1902

U. S. Steel 55 Apr., 1901

*|Cash sales at $1,000.

The country consumed four

Comparison •?

with years, after the panic of 1893,
other Panics in ^-establishing its credit and
reconstructing its industries. It cannot be
denied, however, that the present situation
is not analogous in many of its more im-
portant features with the situation that
existed in 1893. On this subject, one of
the prominent banking firms in New York
has published an interesting comparative
table of the conditions existing in the

panics of 1884, 1893 and 1907, as follows:
1907. 1893. 1884.

Money in

country $3,134,688,149 $2,179,005,361 $1,487,245,838

Of which

gold.;. 1,482,969,710 636,000,000 545,000,797

Exports ... 1,881,000,000 831,030,785 724,964,852

Imports . . 1,434,000,000 866,400,922 667,697,693

Iron out-
put,

(tons). . 25,307,191 7,124,502 4,097,000

71

1907. 1893. 1884.

Cotton
crop,
(bales) . 13,000,000 7,549,817 5,706,165

Corn,
(bush-
els) 2,540,000,000 1,619,496,131 1,795,528,000

Wheat,
(bush-
els) .... 632,000,000 460,267,416 512,765,000

Railroad
gross
earnings $2,346,640,286 $1,208,641,498 $770,684,908

Populat'n 86,429,000 67,306,000 54,911,000

Capital The foregoing table, giving
Alarmed the figures relating to condi-
tions as they existed prior to the acute
stage of the present panic, shows that the
amount of money in the country when the
table was compiled was one-third larger
than it was in 1893 and the amount of
gold more than twice as large, while the
value of the foreign trade of the country
and of our staple crops has enormously
increased. The fact that there is no ap-
parent reason to be found in the condi-
tion of the country's business at large, for
the extraordinary crisis through which we
are passing, is sound evidence of the other
fact that this panic has been occasioned
not by industrial or commercial conditions,
but by the frightening of capital.

Among the more important
French . . .

Confidence in opinions as to the possibilities

American of the future is that of Lazare

Weiller, one of the foremost

financiers in France, who is well acquainted

72

with commercial conditions in the United
States. His opinion was published in the
New York Times as follows:

" We may expect a spasm or two in
the process/' said Mr. Weiller, " but the
general belief prevailing among the large
bankers here is that now is the time to
buy. I fear it will be a long time before
American securities will again find a ready
market here; but American stocks and
bonds already in French portfolios cer-
tainly will be undisturbed.

" It is a curious fact that while America
needs money so badly, France has more
than she knows what to do with. It is
certain, despite the shock that has been
given to the confidence of investing classes
here, that much of this gold will find its
way to America in the near future.

" Moreover, so great is the confidence
of the great French bankers in Mr. Mor-
gan and Mr. Stillman personally, that
were they to come to France to-morrow
they could find $100,000,000 gold with-
out the slightest difficulty."

Significance is added to this declara-
tion, as Mr. Weiller is one of a coterie of
financiers who were entertained at a shoot-
ing party the day before by Baron Roths-
child.

73

Mr. Weiller speaks in glowing terms of
the standing and credit in Europe of lead-
ing American financiers; but then men of
this stamp are not usually classified as
" malefactors of wealth " across the At-
lantic. His criticism of Mr. Roosevelt's
methods, while guarded, is exactly what
might have been expected from # man
versed in diplomacy as well as finance.
Newspaper Having led the reader up to
Reports the distressing days of the
crisis itself, when maddened depositors
raged at the doors of banking institutions
during the week ending October 26, the
writer's sole remaining task is to present
without further comment and in chrono-
logical order the actual events themselves,
so that the reader may be furnished with
a concise history of this panic as culled
from the columns of the daily press. The
able co-operation of Secretary Cortelyou
with those financiers who labored through
the day and into the late hours of the even-
ing to avert a catastrophe that threatened
to engulf the whole nation, has been favor-
ably commented upon. The amusing let-
ter of President Roosevelt congratulating
Secretary Cortelyou and the financial lead-
ers of New York on their ability in avert-
ing a crisis throughout the entire country
74

has been taken ^ good-naturedly by those
who concur in the belief that the situation
was caused by the President himself. Up
to the present writing he has shown no
evidence of any return to sanity. It is
probably too much to expect that the leop-
ard should change his spots. He will re-
main in office until March, 1909- During
that time it is impossible to say what calam-
ities may ensue as the result of what he
has already done or what he may do in
the future.

On the 4th of March, 1909, anothei
person will assume the reins of govern-
ment. He will be a man of irreproachable
character, fully alive to the requirements
of the financial and business community,
an upbuilder — not a destroyer; in none of
his methods will he be spectacular; there
will be a return of dignity and official eti-
quette; none of his fellow-citizens during
his occupancy of the office will ever have
cause to fear that his investments may be
swept away and his home reduced to pov-
erty by reason of any executive act. He
will be a man worthy of the place which
has been honored by Washington, Lincoln
and McKinley, and, as he enters the White
House, he will turn to shake hands and to
say good-bye, in the name of the American
Nation, to Theodore Roosevelt.
75

MONDAY, OCTOBER TWENTY-
FIRST

From the N. Y. Evening Telegram

Wall Street this afternoon had impor-
tant topics for consideration in the follow-
ing developments in the banking situation:

Involuntary bankruptcy proceedings
brought against the brokerage firm of
Otto Heinze & Co., in which preferential
payment of $2,000,000 to the Mercantile
National Bank is alleged.

The resignation of the newly appointed
State Superintendent of Banks, Luther W.
Mott, who took the oath of office on Tues-
day last.

The election of seven new Mercantile
Bank directors to replace Heinze-Morse-
Thomas officials, whose resignations were
demanded by the Clearing House.

Banking circles are seeking the cause of
Mr. Mott's resignation. Despatches from
Albany state that Governor Hughes, who
has accepted the resignation, gives ill
health as Mr. Mott's reason for the sud-
den dropping of his new duties. At the
State Superintendent's headquarters in this
city no one would discuss Mr. Mott's ac-
tion. Mr. Mott had come to this city last
76

week and was in the midst of his first
examination of banking affairs when he
determined to quit. His letter of resigna-
tion was dated Sunday.

Acting for three creditors, the law firm
of Myers & Goldsmith filed a petition in
bankruptcy against Otto C. Heinze, Arthur
P. Heinze and Max H. Schultze, compos-
ing the firm of Otto Heinze & Co. Prefer-
ential payment to the Mercantile Bank is
alleged to have been in payment of a loan,
and further preferential payments are al-
leged to have been made by F. Augustus
Heinze, Arthur P. Heinze, and others in
anticipation of the suspension of the firm
from the Stock Exchange.

The petitioning creditors also allege that
the National Bank of North America, the
National Park Bank, the Empire Trust
Company, J. S. Bache & Company and
others got about $100,000 through prefer-
ential payments.

William Sherrer, manager of the Clear-
ing House, announced after a two hours'
session of the committee, that conditions
were " normal."

" The committee has been doing what it

promised to do," he said. " They passed

upon only collateral that might be offered

by banks which might need assistance, and

77

there was only one, the Mercantile, which
had a debit balance of $1,903,000."

Seth M. Milliken, successor of F. Augus-
tus Heinze as president of the Mercantile
Bank, said:

" Counting out the Heinze-Morse loans
the assets of the bank are $1.40 for every
dollar of liability and the loans in question
are of value."

In resigning as State Superintendent of
Banks Mr. Mott wrote Governor Hughes
that in accepting the appointment he over-
estimated the condition of his health.

He was appointed October 3 to succeed
Charles Hallam Keep, of Buffalo, who
served only a short time before becoming
a Public Service Commissioner, but his
oath of office was not filed until last Tues-
day.

Officials of the Mercantile, Hamilton
and Consolidated Banks and the National
Bank of North America were prepared to
pay off nervous depositors, but at none of
them was there any noticeable rush at the
paying teller's window.

William F. Havemeyer, new president of
the National Bank of North America, after
a busy day, which began at an unusually
early hour, said:

" We had one million in specie on hand
78

to meet all demands, but little or none of
it was used. During the day less than
$150,000 in deposits was withdrawn."

With the exception of the Mercantile
debit balances of a cluster of banks re-
cently in the public eye were not unusually
large. That of the Bank of North Amer-
ica was $850,000, of the Mechanics and
Traders', $430,000, and of the New Am-
sterdam National, $200,000. None of these
institutions would require assistance, it was
announced.

The Clearing House Committee met a
few minutes before ten o'clock, all mem-
bers being present when the banks made
their exchanges. The rare expedient of
issuing Clearing House certificates in or-
der to tide the embarrassed banks over
their difficulties would not be necessary, it
was positively stated, despite reports to the
contrary.

Encouragement among speculators and
investors was evinced on the floor of the
Stock Exchange immediately after the
opening. The trading was somewhat wild
and narrow, however, only fourteen stocks
being active for the first three-quarters of
an hour.

There was no run on the Mercantile Na-
tional Bank, at No. 567 Broadway. Only
79

a customary few persons were in line at
the paying teller's window. An official of
the bank said that the resignation of E. R.
Thomas as vice-president had been received
and it would be acted upon to-morrow by
the Board of Directors.

XI

TUESDAY, OCTOBER TWENTY-
SECOND

From the N. Y. Evening Telegram
DEVELOPMENTS IN BANK SITUATION

Stocks declined at the opening as fol-
lows:

American Smelters, 2%.

Amalgamated Copper, 3y±.

Atchison, 2%.

Brooklyn Rapid Transit, 2.

Great Northern,

Missouri Pacific,

Northern Pacific, 2.

New York Central, 11/4.

Smelters, 3^.

Southern Pacific, 2%.

Union Pacific, 2%..

Steel common, 1%.

Hundreds of depositors in the Knicker-
bocker Trust Company made a run on each
branch of the Institution.
80

At the Clearing House the following
debit balances were announced:

National Bank of Commerce, $7,000,-
000.

National Bank of North America,
$543,000.

Mercantile National Bank, $454,000.

Bank of New Amsterdam, $341,000.

Mechanics and Traders' Bank, $335,-
000.

Oriental Bank, $147,000.

Stocks broke violently at the opening of
the market, both here and in London, to-
day. The first public demonstration of
distrust was also shown in a remarkable
run on the Fifth Avenue headquarters and
on the Harlem and downtown branches of
the Knickerbocker Trust Company, from
the presidency of which Charles T. Bar-
ney had been forced out because of his
affiliations with Charles W. Morse.

The Clearing House Committee met as
soon as the market opened and soon after-
ward announced that the debit balances
of the Mercantile National Bank and the
National Bank of North America were
small. The debit balance of the National
Bank of Commerce, however, was $7,000,-
000. It was stated that this represented
81

the clearances of the Knickerbocker Trust
Company.

Despite assurances by some of the most
powerful financial interests that there was
no cause for alarm, the run on the Knick-
erbocker Trust Company caused anxiety.
At the main offices, Fifth Avenue and
Thirty-fourth Street, and the branches at
No. 66 Broadway, 125th Street and Lenox
Avenue, and at 148th Street and Willis
Avenue, hundreds of depositors were wait-
ing in line to draw their money as soon
as the opening hour came.

In Fifth Avenue scores of automobile4s
and carriages drove up to the great white
marble building, and handsomely dressed
women and prosperous-looking men ran
up the steps and besieged the paying tell-
ers. An endless stream of cash went
across the counters, assistants emerged
from the vaults bearing bundles of bills
of all denominations. All were rapidly
swept into the pockets of the throng with
bank books.

Joseph B. Brown, second vice-president
of the trust company, viewed the situation
with apparent; cheerfulness.

" We expected this run, of course," he
said, " and we are patiently meeting it.
We have $8,000,000 in cash in our vaults,
82

and we can get $10,000,000 more in a few
minutes should we need it. But we won't/'

The $10,000,000 referred to is under-
stood to have been guaranteed as available
by such powers in the financial world as
J. Pierpont Morgan and George W. Per-
kins in a meeting at Sherry's, which lasted
until an early hour, following the an-
nouncement of the National Bank of Com-
merce that it would not act as clearing
agent for the Knickerbocker Trust Com-
pany any longer.

That several hundred thousand dollars
had been withdrawn from the Knicker-
bocker Trust Company within an hour
after its branches opened was the esti-
mate of those who watched the payments.
The company's deposits total $60,000,000.

At No. 66 Broadway, Harry B. Rollins,
a director of the company, personally as-
sisted the cashiers and tellers. It was
understood that Mr. Hollins represented
also the large banking interests of Mr.
Morgan.

" There will soon be a reassuring state-
ment,'' he said. " We have all the money
we need. The company is perfectly solv-
ent. We shall meet the run patiently."

At this branch the line of depositors
drawing money stretched from the pay-
83

ing teller's windows in the rear of the
building along the corridor out to the
street. There were about two hundred
persons in line.

At the Fifth Avenue office at ten o'clock
there were fully a hundred persons in the
line.

When one of the tellers emerged from a
vault with bundles of bills estimated to be
at least $100,000, there was a great sigh
of relief from persons in line, and a
further assurance that all demands for
cash would be met.

At the Harlem branch two lines of de-
positors formed along 125th Street and
Lenox Avenue awaiting their turn to get
to the paying tellers. There was no ex-
citement among the crowd, although many
in it were nervous.

William J. Lewis, manager of the
branch, said that the bank had ample
funds on hand to pay all depositors, and
neither he nor other bank employes made
any effort to dissuade depositors from
withdrawing their accounts. Early in the
day the branch received $250,000 in addi-
tion to the amount in its own vaults. The
money was taken to the bank in an auto-
mobile. Shortly before noon the crowd in

84

front of the bank numbered about four
hundred persons.

The Bronx branch opened its doors
promptly and admitted a line of from fifty
to seventy-five depositors. The manager,
John Bambey, had his full staff of clerks
on hand and was himself in charge. Prac-
tically all of the depositors who appeared
were those with small accounts ranging
from $50 to $2,000.

The line about a quarter to ten o'clock
began to diminish, due, it seemed, to the
restoring of confidence by the appearance
of the bank wagons of the Central Union
Gas Company and a milk company, from
which were unloaded, in full sight of the
waiting depositors, big bags of specie and
bundles of currency. These were borne
by the messengers along the line to the
receiving teller's window.

In behind the paying teller there were,
contrary to custom, great bunches of
money piled high in stacks on the counter.
Some of the packages showed markings of
$5,000, $10,000, and one or two of $20,-
000. A rough estimate was that there
must be at least $150,000 to $175,000
showing.

" We are having more than the usual
amount of withdrawals," said Mr. Bambey,
85

" but they have been among the small-
er of the bank's four thousand depositors.
The amount withdrawn is, in fact, rather
a small percentage. In all, I suppose we
have had possibly one hundred and fifty
or two hundred withdrawals."

The members of the Clearing House
Committee held their meeting at the Clear-
ing House in order to be present when the
associated banks made their statements.

The National Bank of Commerce, it was
reported, had a debit balance in the Clear-
ing House to-day of $7,000,000. This is
the bank which notified the Knickerbocker
Trust Company that it would no longer
clear for it.

The Mercantile National Bank had a
debit balance of $454,000; the National
Bank of North America, a debit balance
of $543,000, and the New Amsterdam
National Bank a debit balance of $341,-
000. These three banks were assisted.

The Mechanics and Traders had a debit
balance of $335,000, and the Oriental
Bank a debit balance of $147,000.

Shortly after the noon hour, the Knick-
erbocker Trust Company closed the doors
of its main office and various branches and
all securities on the Stock Exchange suf-
fered a demoralizing break.
86

XII

WEDNESDAY, OCTOBER TWENTY-
THIRD

From the N. Y. Times of the 24th

After another series of conferences be-
tween Secretary Cortelyou of the Treasury
and the leading bankers of this city, pro-
longed far into the night, Mr. Cortelyou
announced at 1 o'clock this morning that
he had directed $25,000,000 of Govern-
ment money to be deposited in the banks
of this city to meet any further emergen-
cies which might arise.

At the same time Mr. Cortelyou said
that the public should reflect upon the real
strength of our banking institutions, and
if it should do so coolly there would be a
prompt return of the confidence which their
condition warranted.

Supporting Mr. Cortelyou's measures
and his view of the situation, John D.
Rockefeller announced his faith in the
soundness of underlying conditions, and
expressed his intention of doing his part
to the full extent of his resources toward
re-establishing confidence.

Referring directly to the position of the
Trust Company of America, Frank A.
87

Vanderlip at the same time said that the
trust companies of New York had united
to stand by the Trust Company of Amer-
ica, whose assets, he said, had been ex-
amined and found good in every way.

J. P. Morgan participated in the con-
ferences of which these statements were
the outcome, and bankers said last night
that it was largely through Mr. Morgan's
efforts that these results had been attained.

Here is Secretary Cortelyou's statement:

" I have said to a number of gentlemen
who have called on me to-day that any
statement to the public regarding the ex-
isting conditions here should be made with
the utmost frankness, that depositors and
others interested in banks might realize
that entire reliance could be placed upon
it. Those familiar with the facts have
known that the situation was made serious
largely because of the circulation of un-
founded rumors, and the unreasoning anx-
iety of many who thought only for the
moment.

" To pass safely through such a day as
this, one of most unnecessary excitement
as it has been, is the best evidence of
strength and support on the part of those
who have undertaken the difficult task of
re-establishing public confidence. Wher-
88

ever there is weakness — and it has been in
but a comparatively few instances — strong
and able men are rendering aid, and in
behalf of the Treasury Department I may
say that I believe it my duty to do, and I
shall do, in the largest way possible what-
ever may be necessary to afford relief.

" If the press of this city will continue
its co-operation, and if the public, on its
part, will reflect upon the real strength
of our banking institutions, there will be
a prompt return of the confidence which
their condition warrants.

" As evidence of the Treasury's dispo-
sition, I have directed deposits in this city
to the extent of $25,000,000."

John D. Rockefeller, who has taken an
active interest in the present financial situ-
ation, having arranged to lend very large
sums to a number of New York financial
institutions, said:

" I think that the existing alarm among
investors is not warranted, and I hope the
good common sense of our American peo-
ple will control the situation. Personally
I have absolute faith in the future of the
values of our securities and the soundness
of underlying conditions.

" Instead of withdrawing any of my
moneys from the banks, I am co-operating

89

with others in helping to meet that which
I firmly believe to be only a temporary
crisis. Every one having the good of his
country at heart should by word and deed
lend a hand now to re-establish confidence.
I propose to do my part to the full extent
of my resources."

Frank A. Vanderlip's statement was
made on behalf of the committee of bank-
ers brought together by J. Pierpont Mor-
gan. He said:

" Concerted action on the part of all
the trust companies of New York has
been agreed upon, and they will stand by
the Trust Company of America. The as-
sets of the company have been examined
and found good in every way. The run
upon the trust company to-day was unwar-
ranted, and all the trust companies will
stand by it and pour in all the money that
is needed.

" Secretary Cortelyou will see that all
the money that is required to support the
situation will be forthcoming. There are
no resignations from the Trust Company
of America, and no change in the man-
agement."

All these announcements, save Mr.
Rockefeller's, were made at the Hotel
Manhattan, where J. Pierpont Morgan
90

and James Stillman, President of the Na-
tional City Bank; made a hurried call upon
Secretary of the Treasury Cortelyou at
12.30 o'clock this morning, coming direct
from a meeting with the Trust Company
Committee at the Union Trust Company's
Fifth Avenue offices. Mr. Morgan declined
to say anything regarding his visit to Mr.
Cortelyou or to discuss the financial situa-
tion in any way, but said it would all be
told in statements to be given out later and
already printed here.

As the visit of Mr. Morgan and Mr.
Stillman to the Secretary at so late an
hour was unexpected, much interest was
aroused in the possible developments aris-
ing therefrom.

Mr. Cortelyou's statement to the public
was expected at midnight. Earlier in the
day he had said that his line of action in
the present crisis would be announced at
that hour, and twenty or more reporters
waited in the lobby of the Manhattan.

About midnight J. P. Morgan's Secre-
tary, Mr. White, hurried into the hotel
and engaged a room for Mr. Morgan. A
few minutes later Mr. Morgan and Mr.
Stillman entered the hotel and started up-
stairs. Mr. Morgan was asked if a state-
ment was to be given out.
91

" There will be one, but I have nothing
to say now/' he said as he and Mr. Still-
man entered the elevator.

Another few minutes passed and George
W. Perkins hurried in. The three men had
come from the meeting in the branch office
of the Union Trust Company. Upstairs
Mr. Cortelyou had been awaiting them.
Mr. Vanderlip arrived a little later, and
while the reporters were awaiting word
from upstairs Mr. Vanderlip called them
together and made the statement already
quoted.

Following the conferences at the Union
Trust Company's Fifth Avenue offices,
Oakleigh Thorne, President of the Trust
Company of America, said that it would
open for business this morning as usual.

With the Acting Superintendent of
Banks in possession of the Knickerbocker
Trust Company, after an all-day run on
the Trust Company of America which was
successfully met by the company, after
news had come over the wire of the closing
of the Pittsburg Stock Exchange as a re-
sult of the embarrassment of the Westing-
house Manufacturing and Electrical Com-
panies, arid after another sharp break in
prices had occurred on the Stock Exchange
here, where money rates rose to 90 per

92

cent., the financial community was actually
more inclined toward optimism last night
than at any time heretofore. This was
altogether owing to the confidence it placed
in the measures which one of the most re-
markable gatherings of financiers ever wit-
nessed in this city adopted yesterday after-
noon at a long meeting in the office of J. P.
Morgan & Co.

This assemblage of bank Presidents,
railroad Presidents, trust company Presi-
dents, and international bankers went into
session with Mr. Morgan and his partners
early in the afternoon, but long before
this there had been a decided turn for the
better in sentiment, owing to the entire
success which attended the Trust Company
of America in meeting one of the most re-
markable runs of depositors in the history
of Wall Street. The success was due not
only to the fact that the bank itself took
warning from an incipient run of Tuesday
afternoon and gathered in $12,000,000 in
cash, but also to the careful pledges of any
further assistance it needed which were
made by bankers headed by Mr. Morgan's
house late on Tuesday night, and an-
nounced at that time in order to make
clear the determination to support the
company in view of the withdrawals from
it late on Tuesday.

93

Among those who attended the confer-
ences at the office of J. P. Morgan & Co.
in addition to the members of the com-
mittee of trust company Presidents were
E. H. Harriman, H. C. Frick, E. H. Gary,
Thomas F. Ryan, Paul Morton, James
Stillman, Hamilton Fish, August Belmont,
W. A. Nash, Otto T. Bannard, many other
bankers, and the heads of many trust com-
panies.

The Committee named by these men rep-
resents the most powerful Trust Company
interests in the city. In their co-opera-
tion, it was generally admitted last night,
there is given every needed assurance that
the efforts inaugurated by Mr. Morgan
yesterday to meet the present situation will
prove eminently successful.

It was found impossible to obtain such
support as this for the Knickerbocker
Trust Company, when that company got
into difficulties at the beginning of the
week, but any company which can com-
mand the assistance of this Committee and
of the vast resources it represents will be
certain, it was thought by bankers last
night, to be safe-guarded against any pos-
sible demands that may be made upon it.

While nothing to this effect was an-
nounced, it is believed that efforts will be
made to make this a permanent organiza-
94

tion for uniting the trust companies at all
times when concerted action is needed. At
this moment it stands to the trust com-
panies exactly as does the Clearing House
Committee to the banks. These two cen-
tral bodies are expected to work together
and thus handle the entire banking situa-
tion.

The formal announcement following the
conferences at Mr. Morgan's office made
no reference directly to the assistance
which had been accorded yesterday to the
Trust Company of America, but it was
clearly understood in banking quarters last
night that it was under the auspices of
the Committee of Five, co-operating with
Mr. Morgan, that the pledges were made
to the Trust Company of America which
made it possible for leading bankers to
predict last night that the company's posi-
tion was assured. The success of the Trust
Company of America yesterday in with-
standing the demands made upon it was
regarded as an object lesson of the com-
pany's strong position and went a long
way toward reassuring the financial com-
munity not only of the company's solvency,
but of its ability, with the help at its com-
mand, to meet any and all demands which
might be made upon it.
95

E. H. Harriman, when he left the Mor-
gan offices yesterday afternoon, was asked
what comment he had to make on the situa-
tion. His reply was:

" This is the time for action — not for
words."

XIII

THURSDAY, OCTOBER TWENTY-
FOURTH

From the N. Y. Evening Telegram

Financial stringency has struck the city
government to such an extent that dras-
tic measures have been decided on in order
to keep the present administration on a
sound financial basis.

It has been decided that all registration
of contracts by the Finance Department
shall be stopped for a time, that all con-
tracts now under way for building shall be
held up for an indeterminate period, and
that the budget for 1908, instead of being
$145,000,000, as decided on Tuesday, shall
not be more than $138,000,000, the $8,-
000,000 over the present budget being en-
tirely mandatory increases.

The city found itself in such straits yes-
terday that instead of having $20,000,000
96

remaining of the recent bond sale, which
is necessary to run the city until spring,
less than half the amount was on hand,
and to get immediate ready money $1,100,-
000 was borrowed on special revenue
bonds from Mrs. Hetty Green, on the
Chemical National Bank, at five and a
half per cent.

City Chamberlain Quartin said there
was only $8,000,000 to $10,000,000 on
hand. The only way to get along, it has
been decided, is to hold up as many bills
as possible.

It developed that the city has $250,000
in the Knickerbocker Trust Company,
which it is unable to get. The Trust Com-
pany bought bonds for $600,000 "over
the counter " before the recent bond sale.
Arrangement was made that, if purchased,
the city should leave a portion of the
money in the Trust Company. The city
drew $350,000 recently, and on Monday,
having been advised of pending trouble,
tried to draw the remainder. The Trust
Company refused to allow the withdrawal.

When Comptroller Metz learned of the
financial straits of the city he began to
plan means to retrench. He was studying
the problem when a messenger from Mrs.
Hetty Green called and asked him if he
97

wished to sell any special revenue bonds.
The offer was accepted immediately and
$1,100,000 was taken.

J. Pierpont Morgan and his associates
sent $25,000,000 to the Stock Exchange
to be put out as call loans at ten per cent.

The stock market, in which call rates
reached 100 per cent., closed strong, and
prices advanced sharply.

The Trust Company of America con-
tinued to pay off excited depositors, and
the close of the second day of the run left
the company in a position to meet all
further demands made upon it.

Creditors filed a petition in involuntary
bankruptcy against the $25,000,000 South-
ern Steel Company of Alabama, of which
Moses Taylor, of this city, is president.

Standard Oil and United States Steel
put out an aggregate of $105,000,000 in
aid of market.

John D. Rockefeller instructed his
bankers and brokers to make all loans
at six per cent. This action was taken
to mean that the Standard Oil was pre-
pared to provide millions for relief.

George B. Cortelyou, Secretary of the

Treasury, deposited $25,000,000 with

New York banks, maintaining the supply

of money at the Sub-Treasury by heavy

93

shipments of currency from Washington.

Excited depositors withdrew funds from
the Lincoln Trust Company, Twenty-fifth
Street and Fifth Avenue, and the Harlem
Savings Bank, 124th Street and Third
Avenue.

Clearing House Committee refused to
make public debit balances of banks, fear-
ing that publicity might result in unwar-
ranted runs on solvent institutions.

Three Harlem banks, the Hamilton,
Twelfth Ward and Empire City Savings
Bank, with deposits which aggregate more
than $13,000,000, announced suspension
of payment on deposits under the ninety-
day notification clause of the banking laws.
All assert they are solvent.

J. Pierpont Morgan and his associates
this afternoon came to the rescue of a
badly demoralized stock market with a
$25,000,000 pool, which was put out at call
loans at ten per cent.

This vast amount of funds was available
early in the last hour of trading, when the
call loan rate was 100 per cent, and prices
were crumbling on all sides.

The immediate effect was to arrest the
heavy decline and start a feverish advance,

Mr. Morgan's $25,000,000 was offered
on the Stock Exchange following action
99

by John D. Rockefeller, which made him
prominent as a reassuring factor in a
greatly disturbed financial world.

He directed his bankers and brokers to
make all loans at six per cent., four per
cent, under the rate charged by the Mor-
gan pool.

Mr. Rockefeller's action was taken to
mean that he was prepared to lend the
weight of the Standard Oil millions to aid
in clearing a disastrous outlook.

This much-needed assistance came after
it had been announced semi-officially that
Standard Oil has $55,000,000 in cash
which is available for immediate use wher-
ever it is most needed. Of this total $30,-
000,000 already had been put out, it was
said, and it was stated that the United
States Steel Corporation had made $50,-
000,000 cash available.

Leslie M. Shaw, formerly Secretary of
the Treasury, now president of the Car-
negie Trust Company, called on George
B. Cortelyou, the present Secretary, at the
Sub-Treasury.

As he was leaving he declared that the
Trust Company of America could stand
any demands made upon it by excited de-
positors.

100

This company saw the end of the second
day's run, with plenty of cash still in the
vaults, its officials declared, and they as-
serted that during the day there had been
heavy deposits.

Mr. Shaw, discussing the trust com-
pany's position, said that four men, who
had pledged themselves to stand behind
the institution, would keep their word.

" Any one who would not give a reassur-
ing word ought to be shot. Decidedly, the
situation is clearing," said Mr. Shaw.

Edward H. Harriman, in the first public
statement he has made upon the general
financial situation, said:

" The foundation of our business enter-
prises is sound, and the fair treatment of
such interests, and big and quick action
on the part of the United States Treasury,
will induce the return of money to its
natural channels and relieve the situation."

Despatches from Birmingham, Ala.,
state that a petition in voluntary bank-
ruptcy was filed against the $25,000,000
Southern Steel Company of Alabama, of
which Moses Taylor, of this city, is presi-
dent.

Braving fatigue and in many cases
standing in line from the time chill winds
smote them in the early morning hours un-
101

til the closing hour this afternoon, thou-
sands of depositors in the Trust Company
of America, the Dollar Savings Bank and
the Knickerbocker Trust Company, not-
withstanding the fact that the last-named
had closed its doors and held out no hope
of early payment, continued their check
book raid on the vaults of those institu-
tions to-day.

Hours before the announcement that
three banks in Harlem had suspended pay-
ment to-day their depositors swarmed to
them, seeking their funds.

To add to the wave of popular attack on
financial institutions, more than five hun-
dred persons holding accounts with the
Lincoln Trust Company swept into the
doors of the company at No. 208 Fifth
Avenue as fast as a police-formed line
would permit.

Then, too, the Harlem Savings Bank, at
Third Avenue and 124th Street, was be-
sieged during the day by hundreds of
small depositors, who grimly refused to
be dissuaded from their demand that their
money should be transferred to their
pockets.

Five minutes before the closing hour the
crowd threw moderation to the winds and
tried to force their way into the Harlem
Savings Bank.

102

Twenty policemen drew their clubs and
by sheer force prevented their entry ex-
cept in regular line.

Women's clothes were torn, their hats
torn from their heads, and for a moment
it appeared that some of them would be
seriously injured.

The bank paid depositors steadily up to
three o'clock, and then an official an-
nounced that payment would be resumed
to-morrow at the regular time.

The closed institutions are the Twelfth
Ward Bank, with headquarters at No. 147
East 125th Street, and branches at No. 173
East 11 6th Street and No. 1927 Third
Avenue; the Empire City Savings Bank,
at No. 231 West 125th Street, and the
Hamilton Bank, at No. 215 West 125th
Street, and branches at No. 2301 Seventh
Avenue, at Third Avenue and 163d Street,
Seventh Avenue and 135th Street, No.
1707 Amsterdam Avenue, No. 765 Tre-
mont Avenue, in the Bronx, and another
at Williamsbridge.

Weary, haggard of feature, yet inspired
to endure all manner of discomfort in
order to get their hoards, women formed
a large proportion of the waiting lines.
They wanted no explanations — they sim-
ply wanted to get their money into their
hands.

103

The Twelfth Ward Bank, the Empire
Savings Bank, and the Hamilton Bank,
which did not even open for the day's
business, were the scenes of complaining
crowds in the early hours, who refused
to go away.

Down at No. 43 Wall Street, the
headquarters of the Trust Company of
America, where payments were resumed
promptly at ten o'clock, the scenes were
most turbulent, perhaps on account of the
large number of depositors, and also be-
cause of the proximity to the Stock Ex-
change and the presence of the crowds
in the financial district.

As the day wore on, however, the line,
although constantly growing, was orderly
and patient. Reassuring bits of news of
the situation were caught up and passed
along in a sort of spirit of freemasonry
which prevailed among the depositors.

At the Fifth Avenue Trust Company,
Forty-third Street and Fifth Avenue, de-
positors were still drawing out their funds
at noon. In line were about forty men
and ten bank messengers and some forty
women.

Vice-P resident Landale said that the
company is solvent and has ample cash

104

on hand to satisfy all demands. He ex-
pressed no fear of the situation, and said
that about a million and a half of dollars
had been drawn out.

So insistent was the crowd to get into-
the Lincoln Trust Company and draw out
their money that Mr. Louis Stern, vice-
president of the institution, came out and
made a short talk, asking that patience be
shown, and saying that everyone could get
his money.

By noon there were five hundred per-
sons in line in Fifth Avenue. Two police
sergeants stood at the entrance in the ave-
nue; the Broadway entrance was closed.

Frank Tilford, president of the Lincoln
Trust Company; George C. Boldt, of the
Waldorf-Astoria, a director of the com-
pany, and Mr. Stern went personally
among the depositors and endeavored to
reassure them.

Depositors who wanted to withdraw
$1,000 or more were given checks on the
First National Bank, instead of currency.
The smaller depositors were paid in cash.

At three o'clock the Lincoln Trust Com-
pany stopped business for the day, with a
crowd of three hundred depositors still
waiting. Payment had progressed rather
slower in the afternoon, but there was no
105

cessation, and the bank's officers said that
it had enough cash on hand to continue at
the same rate .for a week.

There were thirty-five messengers from
other banks. One of them had a check for
$300,000; the others were for amounts
ranging around $25,000. ,

A picture in a newspaper, labelled:
" The Harlem Savings Bank/' instead of
" A Harlem Savings Bank/' referring to
a concern in trouble, is the reputed cause
of a run on the Harlem Savings Bank,
which began at the opening hour and as-
sumed large numerical proportions this
afternoon.

About five hundred persons were in line.
Their demands were promptly met, the
bank having $300,000 in cash ready. The
average accounts were small, being from
$50 to $200.

Two hundred depositors were in line at
an early hour and caused so much disturb-
ance that the bank officials were forced to
appeal to the police. Marshalling the
crowd in a line, the reserves stood on
guard while the depositors filed through
the doors of the building to obtain tneir
money.

While the excitement was at its height,
before the arrival of the police, William E.
106

Trotter, president of the bank, elbowed
his way through the crowd and told the
depositors that there was no need for
anxiety.

" We have $300,000 in the paying tell-
er's cage," he said. " This is more than
we need. Every one of you can be paid
off with the amount we have on hand."

There were one thousand persons in line
when the doors of the Dollar Savings
Bank opened, prepared for another day's
run. The line extended around one entire
block. The rur was heavier than yes-
terday, and when some of the depositors
were admitted by a rear door in Willis
Avenue a small riot started, and it took
police night-sticks to restore order.

Isaac F. Hopper, president of the Em-
pire Savings Bank, said many depositors
did not understand that a savings bank
was allowed to keep on hand ten per cent
l>f its deposits only in cash. He said that
whenever the sum on hand exceeded ten
per cent, a bank was forced by the State
authorities to invest it.

Everywhere depositors gathered there
were scenes of sadness, but a touch of
humor sometimes appeared to relieve the
usual gloom.

107

Haggard faced men and women had in
many instances waited all night for a
chance to withdraw their deposits from the
Trust Company of America, afraid to go
to their homes and risk being so far back
in the lines that they would not be able
to get to the paying teller's window before
the close of the business day.

Some huddled in nearby doorways in
Wall Street and Broadway, seeking a fitful
sleep of an hour or so. At daybreak a
crowd of depositors was gathered in front
of No. 43 Wall Street, the office of the
Trust Company of America. Some of
them had been in line since ten o'clock
last night.

A similar scene was presented at the
Colonial branch, No. 222 Broadway. Many
of these had been disappointed in not being
able to get out their money before the close
of business yesterday and they were not
going to take any chances.

The run on the Trust Company of
America was continued and the paying tel-
lers at both the Wall Street offices and the
Broadway branch rapidly disbursed cash
for checks at the rate of about one deposi-
tor a minute.

Inspector Burf eind with fifty policemen
kept order in Wall Street. The crowd be-
108

came orderly when the Trust Company's
doors swung open and the paying began.

To the Colonial branch a great amount
of cash was taken in automobiles from the
Mutual Bank, at Broadway and Thirty-
third Street; the Union Trust Company,
No. 425 Fifth Avenue, and the Pittsburg
Trust Company. Bank officials also en-
tered the bank with huge bags of money
secured from other sources, and the sight
cheered the line of depositors.

Before midnight a line reaching from
the front door of the Colonial branch of
the Trust Company of America stretched
almost half a block down toward Nassau
Street. Eight hours before the doors of
the bank opened the crush had become so
great that the reserves from three police
stations were held in readiness to rush to
the scene in case of disturbance.

Throughout the night a crowd of deposi-
tors, mostly women, remained in the ro-
tunda of the main office of the Trust Com-
I , pany of America. More than a hundred
were inside the building, crowding the
place to its utmost capacity, while another
crowd far larger gathered outside. Coffee
and frankfurters were the only thing in
the edible line that could be bought, and
messenger boys and millionaires alike pur-
109

chased them from the vendors, who reaped
a harvest.

XIV

FRIDAY, OCTOBER TWENTY-
FIFTH

From the N. Y. Times of the 26th

The sagacious measures put into effect
through the hearty co-operation of Secre-
tary Cortelyou and the foremost bankers
of this city, headed by J. P. Morgan,
brought sterling results again yesterday,
these, including the meeting of the unmis-
takably waning demands upon the Trust
Company of America, putting an end to
the money stringency on the Stock Ex-
change, where prices shot forward in
token of its relief, and, most important
of all, the long stride toward the return
of public confidence in the city's banking
institutions, which Secretary Cortelyou
himself said on Wednesday night was so
completely warranted.

As a promise of further relief it was
made known last night that the National
City Bank has under way negotiations
for the importation on Monday of $5,000,-
000 gold from London. Another bank
110

plans to import $1 ,,000,000 additional.
These imports are being arranged without
Treasury aid.

At the end of the day Mr. Cortelyou ex-
pressed himself as so satisfied with re-
sults that he would have no statement
of any kind to make later at his hotel. He
added that he meant to take a " good long
walk in the open air " to enjoy his satis-
faction properly. These " walks " are
famous in Washington.

It was also announced that no other
conferences of importance were to be held
uptown, no reasons existing for the call-
ing of such conferences. All of this the
financial community considered a most
excellent indication of the easier condition
of affairs.

State Controller Glynn was in confer-
ence last evening with Secretary Cortel-
you at the Hotel Manhattan. Their talk
was reported to have had reference to the
part taken in the relief measures by Con-
troller Glynn, who has transferred a large
amount of State funds to this city.

Several small banking institutions, sev-
eral in this city, but a larger number in
Brooklyn, found it expedient to suspend
business temporarily, but this, as William
A. Nash of the Clearing House Committee
111

pointed out, was not disturbing, since
their action was due to a dearth of cash
and not assets, a fact which indicates
their solvency and consequent resumption
later.

Recognizing the wholly unreasoning at-
titude which a certain class — largely for-
eign— of their depositors might take, the
savings institutions of the city decided
to take advantage of the law which per-
mits them to require from sixty to ninety
days' notice from depositors intending to
withdraw accounts. The enforcement of
this rule against individual deposits will
be left, however, in the discretion of each
bank and it will probably not be applied
where depositors wish to withdraw $100
or less, the idea being to continue to pro-
vide promptly for the needs of small de-
positors while protecting these and the
depositories of the savings banks from
wholesale withdrawals of the larger ac-
counts.

Both the temporary suspension of busi-
ness by the small banks and the notice
requirement of the savings institutions
will work to relieve the money situation.
The demands of the banks included cease
absolutely, while the savings institutions
are saved from the necessity of with-

drawing their substantial deposits from
the powerful banks of the city to meet
senseless demands when the money is of
real use elsewhere.

The additional relief of the money situ-
ation promised as the result of a big
break in the foreign exchange market
early in the day, rates declining to a
point making importations of gold from
London profitable, was a matter of satis-
faction to the financial community. It
lies within the power of Secretary Cortel-
you to assist imports by making imme-
diate deposits of Government money with
importing banks equal to their engage-
ments. This step, adopted at the time of
the San Francisco earthquake by Secre-
tary Shaw, really saved the banks' inter-
est, otherwise lost, on gold in transit.
Exchange has declined to such a low
level, however, that we are now in a posi-
tion to arrange gold imports without
Treasury aid.

All these developments were the sub-
jects of discussion at various gatherings
yesterday of the men who have the situa-
tion in hand. There were two meetings
of the Clearing House Committee, the
usual morning session and a further gath-
ering in the afternoon, when the day's
113

events in the banking field were carefully
canvassed. It was decided to form an-
other money pool to relieve the demands
from brokers. Where $25,000,000 was
ready to hand on Thursday, however,
$12,000,000 was more than enough yester-
day.

Many bankers and business men visited
Mr. Morgan at his office in the course
of the day. The Trust Company Commit-
tee of Five met and then went over the
situation, arranging to meet any requests
made, and placing at the disposal of the
Trust Company of America, some $4,000,-
000. Secretary Cortelyou, who again
made his headquarters at the Sub-Treas-
ury, was kept informed of the results of
these conferences, and himself watched
carefully the course of affairs.

On the Stock Exchange prices displayed
some uncertainty in the fore part of the
day, but gained strength by noon, and
rose vigorously from that time until the
close. Brokers easily provided for their
wants from the pool money, especially
so because there was a combined effort
on the part of all Stock Exchange houses
to limit their business to strictly invest-
ment buying, and necessary sales and
marginal operations were frowned upon
to an unusual degree.

114

Not the least encouraging incident of
the day was the volume of orders which
poured in upon the banks from out of
town, particularly to buy the better class
of securities, obviously for investment.
One bank had more than fifty such buy-
ing orders and only three orders to sell.

Despite the assurances from all sides,,
many depositors of the Trust Company
of America and its branch, the Colonial
Trust Company, continued yesterday to-
display signs of timidity. All day long
there was a line of waiting men and
women before the doors of each institu-
tion. The lines, however, were much
shorter than those of the day before and
not to be compared with the crowd that
besieged the two trust companies on
Wednesday.

Oakleigh Thome, President of the com-
pany, said to a TIMES reporter after the
doors had been closed for the day that
about $2,000,000 had been paid out during
the day.

Of that amount, however," he added,.
" only $147,000 was paid in cash; the rest
went in certified checks on exchanges."

" How much did you pay out on Thurs-
day ? " was asked.

"About $9,100,000."

115

" What aid did you receive from outside
institutions to-day ? "

" Well, I got in all the money I could/'
replied Mr. Thome, smiling, and hurried
away.

George R. Sheldon, a Director, said soon
afterward :

" We have stood up for three days now
and we will stand up again to-morrow."

Accounts varied as to the amount of
aid given to the trust company yesterday.
A supposedly authoritative statement,
however, was that the Union Trust Com-
pany had turned over $4,300,000 through
the Sub-Treasury, and it was generally
understood that the Hanover Bank had
deposited the securities for the cash with
the Government. Whatever the amount
was, it was carried into the Trust Com-
pany of America offices at 39 Wall Street
early in the day in large bags. One of
these bags was so heavy that it took four
men to carry it, and they didn't appear to
have a very easy time. It was said to
contain $500,000 in gold, and this state-
ment was borne out by the fact that sev-
eral of those withdrawing large sums
during the day were paid in gold.

116

XV

SATURDAY, OCTOBER TWENTY-
SIXTH

From the N. Y. Times of the 27th

The further measures taken yesterday
looking toward the clearing up of the bank-
ing situation in this city included the deci-
sion of the Clearing House Association to
issue Clearing House Certificates, by means
of which balances between banks will be
settled without the use of cash, this being
left free for commercial purposes, and the
immediate engagement of $6,000,000 gold
in London and Paris, a supply which will
be added to at once by further importa-
tions.

President Roosevelt's congratulatory let-
ter to Secretary Cortelyou, made public
last night, with its declaration of the Presi-
dent's faith in the soundness of underlying
conditions in this country and of his con-
fidence in the ability of those in charge of
affairs in this city, was looked upon as an
important contribution to the measures of
the day.

At the Clearing House meeting steps
were taken which will undoubtedly end in
117

an offering of the privileges of member-
ship to trust companies and their accept-
ance by several of these institutions.

The Clearing Houses of Philadelphia
and Pittsburg have already decided to fol-
low the lead of this city in the plan of is-
suing certificates, and as other important
cities are expected to do so to-morrow, the
pressure upon all money markets will be
correspondingly diminished.

There was a notable waning of the
movement to withdraw deposits from
several institutions, particularly in the
oase of the Trust Company of America
and the Lincoln Trust Company, denot-
ing a return to calmness on the part of
depositors, and Superintendent of Bank-
ing, Clark Williams, said that several of
the State banks which suspended tempo-
rarily had already begun a movement
looking to their rehabilitation, if the legal
steps could be arranged.

The Stock Exchange accepted the bank
statement, showing a substantial loss in
reserves, only as indicating the extent of
the money relief extended by the banks
through the week. Business was again
restricted practically to a cash basis, and
brokers received thankfully a voluntary
reduction from 50 to 30 per cent, on the
loans made on Friday.
118

At the end of the day affairs had made
such satisfactory progress that the bank-
ers in charge of their conduct came to
the conclusion that night conferences up-
town were unnecessary. Several of the
leaders, along with Secretary Cortelyou,
who decided that things were in such good
shape here that he had better go back to
Washington and catch up with the work
that has been piling up there, made state-
ments summing up the situation as it ap-
pears to them.

Mr. Morgan urged the importance of
realizing that withdrawal of funds and
their hoarding were the things most to be
avoided at this moment. James Stillman,
President of the National City Bank, paid
tribute to the work of Secretary Cortel-
you and Mr. Morgan, which he said had
proved the soundness of Clearing House
banks, and Vice-P resident Vanderlip, of
the City Bank, told of the measures un-
der way to bring in gold, and urged a re-
turn to financial sanity.

Clark Williams, the State Superintend-
ent of Banking, made this statement re-
garding the State banks:

" The information reported to the State
Banking Department to-day indicates that
the improvement in financial circles is con-
tinuing. The general appearance of this
119

improvement is well illustrated by the fact
that the directors of various banking cor-
porations, which during the last few days
have announced their suspension, have to-
day reported to the Banking Department
that they desire, if they lawfully may, to
undertake to rehabilitate the various in-
stitutions."

Mr. Williams did not care to say what
institutions these were, in justice to other
suspended institutions from which he had
not yet heard of possible intentions for
rehabilitation.

Among bankers there was general praise
of the control which Stock Exchange
houses again exercised over speculation.
A determined effort was made by prac-
tically all the firms of standing to mini-
mize in this way the demands of the stock
market for money.

Actual trading was held down to some
235,000 shares, not much above the busi-
ness usually transacted on a midsummer
half holiday. Prices were steady and
closed, in many instances, somewhat above
the figures of Friday night.

One incident of the day on the Ex-
change which was well received was the
notification sent around to brokers by a
number of banks, including the First Na-
tional, that rates on loans made on Friday,
120

which usually carry over to Monday un-
changed, had been reduced from the 50
per cent, then charged to SO per cent. The
explanation offered was the more cheerful
condition of affairs. The issue of Clear-
ing House certificates was also liked on
the floor, and the feeling was general that
the situation was fast clearing up.

The bank statement was looked upon
as reflecting simply the freedom with
which the larger banks had dipped into
their reserves during the week to relieve
the pressure elsewhere.

Increased by $10,864,000 in loans and
$12,900,000 in cash represented the money
used for this purpose, and also the with-
drawals by out-of-town banks. The sur-
plus a week ago was $11,182,000, and the
decrease reported yesterday brought about
a deficit of $1,233,000.

A number of banks were below the 25
per cent, mark, but those banks which
dropped there in the work of helping out
in the week's programme came in only for

Praise- Bancroft

As a measure of precaution, the purpose

of which is to release for the use of their
depositors funds which the banks with deb-
its at the Clearing House have had to use
to effect the exchanges, the New York
Clearing House Association, at a special
121

meeting called for the purpose, decided
yesterday to issue Clearing House certifi-
cates for use among the banks.

This action was taken shortly before
noon yesterday at a meeting of the asso-
ciation which had been called by the Clear-
ing House Committee, which had met ear-
lier in the day.

Owing to the present scarcity of cash
it has been found inconvenient by the
banks to use their available funds for the
purpose of effecting the exchanges at the
Clearing House, and the step taken yester-
day is expected to go a long way toward
relieving this situation. These Clearing
House certificates will circulate, of course,
only among the banks, leaving the banks'
cash free for public use. The meeting of
the Clearing House Committee early yes-
terday was attended, not only by the mem-
bers of the committee itself, but also by
James Stillman, President of the National
City Bank, and by several other leading
bankers.

It was at this meeting that the advisa-
bility of issuing certificates was gone over
and the decision reached to submit the
question to the Clearing House Association
itself. Notices of the meeting were im-
mediately sent out, and shortly before

noon the association voted unanimously for
the Clearing House certificate plan.

Much favorable comment was heard in
the financial district regarding the deci-
sion to issue certificates. The practical
effect of these certificates, it was pointed
out, is to make the securities held by the
banks available for the settlement of the
Clearing House obligations. This, in ef-
fect, is the result of the issuance of certifi-
cates, for these are secured by the deposit
with the Clearing House of securities ap-
proved by the committee, and against
which certificates are supplied to the
banks to the extent of 75 per cent, of the
value of the securities deposited with the
Clearing House.

CHICAGO, Oct. 26.— At a meeting of
the Clearing House to-day it was decided
to issue Clearing House certificates. The
action was unanimous. It was stated that
the action was taken to prevent an undue
drain on the cash balances of the Chicago
banks involved, according to members of
the committee, who say. that none of the
Chicago banks has asked for or needs
assistance.

The meeting was attended by a com-
mittee from the Milwaukee Clearing
123

House Association, who informed the Chi-
cago bankers that similar action is to be
taken in Milwaukee to-morrow. ,

A committee consisting of J. B. Forgan,
President of the First National Bank; J.
J. Mitchell, President of the Illinois Trust
and Savings Bank, and E. A. Potter,
President of the American Trust and Sav-
ings Bank, was appointed to draw up the
new rule and official statement of the ac-
tion. The statement in part follows :

" Following the action of the New York
Clearing House Association, the members
of the Chicago Clearing House Association
met to-day to discuss the situation.

" In the interest of depositors and the
public, and as a basis of immediate gen-
eral assistance, the Clearing House re-
solved to issue Clearing House certificates
and also resolved that savings banks
should require from their depositors the
notice provided for in connection with
such accounts.

" The immediate result of the existing
stringency is due to conditions not local
to Chicago. The Clearing House banks
in New York City have concluded to issue
Clearing House certificates, while the
large savings banks there have also put
the rule requiring notice of withdrawals
124

in force. The Clearing Houses of other
cities in session have taken similar action.
While there has been no unusual demand
as yet upon the Chicago banks this course,
in view of the general conditions prevail-
ing elsewhere, seems the wisest to pursue.

" The effect will be that banks will be
enabled to adjust their balances between
themselves with certificates, while the
actual currency in the banks will be re-
served for imperative needs. * * *

" It is believed that this course is only
temporary and that the general situation
will soon clear so that normal conditions
will prevail. The Chicago banks are in
exceptionally strong position. No one
needs any relief; but if some such course
were not adopted the currency in this city
would be unduly drawn upon for other
communities."

ST. LOUIS, Oct. 26.— The St. Louis
Clearing House to-night decided by an
unanimous vote, to issue Clearing House
certificates.

The Mercantile, the St. Louis Union, the
Mississippi Valley, and the Common-
wealth Trust Companies, all members of
the Clearing House, concluded to require
depositors to give from thirty to sixty
125

days' notice for the withdrawal of sav-
ings deposits.

The action of the Clearing House has
two aims in view. The first is to take pre-
cautions against the concentration of de-
mands of outside cities and territories in
St. Louis.

The second is to assure the public of
St. Louis and environs that the local in-
stitutions are strong and united for safe-
guarding the interests of business insti-
tutions and depositors. William H. Lee,,
President of the Merchants' Laclede Na-
tional Bank and President of the Clear-
ing House, gave out the following state-
ment regarding the action of the Clear-
ing House:

CLEVELAND, Ohio, Oct. 26.— The re-
port from New York that the Cleveland
Clearing House Association would at the
request of the New York Clearing House
Association issue Clearing House certifi-
cates in settlement of balances between
the banks was stated to be without foun-
dation this evening.

Both Charles L. Murfey, President of

the Cleveland Association, and Thomas

H. Wilson, Chairman of the Clearing

House Committee, stated that no such re-

126

quest had been received, and that there
is no present necessity for issuing Clear- '.
ing House certificates. The situation here,
bankers say, is in such good shape that
they will not be needed.

CINCINNATI, Oct. 26.— W. D. Du-
ble, manager of the Cincinnati Clearing
House, said to-night that the Cincinnati
Clearing House was not to issue certifi-
cates so far as he was aware. The bank-
ing situation here is normal.

BALTIMORE, Oct. 26.— The Execu-
tive Committee of the Baltimore Clearing
House has under consideration the advisa-
bility of issuing loan certificates similar
to those issued by the New York Clear-
ing House. President Homer of the Bal-
timore Clearing House, beyond admitting
that the matter was under consideration,
declined to discuss it. Bankers say that
if the certificates are issued it will be as
a matter of convenience rather than of
necessity.

Special to the New York Times
PHILADELPHIA, Oct. 26.— Follow-
ing the action of the New York Clearing
House on Friday in authorizing the issu-
127

ance of Clearing House certificates, the
Philadelphia Clearing House to-day pur-
sued a similar method of protecting the
currency reserves of the local banks.

BOSTON, Oct. 26.— A meeting of the
Boston Clearing House Association has
been called for 9.30 o'clock Monday morn-
ing to consider the question of issuing
Clearing House certificates during the
present money stringency.

Boston bankers took the initiative, it is
understood, without a request from the
New York Clearing House, as was at first
reported. Though none of the members
of the association would commit them-
selves to-night, it was generally under-
stood among them that certificates would
probably be issued, though banks here as
yet experienced no acute stringency, and
are said to be in an exceptionally strong
position.

The Boston Clearing House Association
issued certificates the last time the New
York Clearing House Association resorted
to them in 1893. Several of the influential
bankers went to New York this afternoon
to get a better insight into the situation
there.

128