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Full text of "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. 

ey il 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 ^ J U( ^g e 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 voun g 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 g enera lly 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 j n res traint 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- r y s t an( j s j n 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 pres umed 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 P O ^ C 7 ^ 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 g ard 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 Durin g the earl 7 da 7 s 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 o f 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 suc h 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 onl y 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 o f 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 underta ken 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 quarre i w ^ t h e 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 j us t 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 Ver 7 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 ur g e( 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 cnuse tts, 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 f or a ll 

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 y 2 


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. & 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 o f 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 automobile 4 s 
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 

P raise - 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