305aee57Full suspension, Books examined
Other: Direct large injections into stock market by Morgan and Rockefeller aided overall market but not sufficient to save Knickerbocker; trust companies' committee examined books.
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Fortunately, the bank depositors of New York city are not in the habit of giving way to unreasoning panic; a run on an institution of the sort, when it does occur, happens because there was plain and ample provocation for it -which was unhappily the case with the/Knickerbocker.
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ascribed to the clearings for yesterday for the Knickerbocker, and gave a measure of the burden which this bank was refusing to assume further. The run on the Knickerbocker was almost a matter of course, in view of the revelations over night and the announcement of the suspension of this company caused the stock market to stagger and sent a tremor of apprehension through the whole financial fabric. The convulsive period of the day's liquidation ran to conditions on the very verge of a panic. After that the market righted itself to some extent, and became quieter. This was partly due to a hope that the trust company would become able to resume with its supply of currency replenished. Advices from the country at large were reassuring indicating comparatively little disturbance of sentiment on account of the New York situation. These facts were gratifying to high financial authorities who were on guard, and had much to do with keeping down demoralization. Some inactive stocks sold out at sensational declines. Westinghouse Electric declined 31; Knickerbocker Ice, 31 1-2 points. Lack of sufficient market, and forced selling describes the general condition and accounts for the general severe decline of prices. Advices from Washington gave ground for confidence that deposits of government funds would be added to in New York on a liberal scale. The stock market gave Indications in the final hour of the day that the spasm of liquidation had spent the immediate force, the late rallies being well held to the closing. The feeling in financial circles is one of open question. as to how far the contraction of credit incident to the distrust now aroused may have to go: how far will necessitate further business contraction to meet the resources available. Bonds were weak. Total sales had a par value of $3,220,000. United States bonds were unchanged on call.
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New York, Oct. 23.-Credit, the mi der-the-surface foundation of all business, trembled for a time yesterday and before confidence could be restored New York's second largest financial institution had emptied its cash vaults under the pressure of the biggest run experienced here in a generation; a stock exchange firm had failed for $6,000,000; Wall street's principal securities had settled from $5 to $8 a share; call money had risen to 70 per cent, and local bankers, unable to stem the tide of distrust, has been forced to appeal for relief to the secretary of the treasury at Washington. All this was in the face of reassuring statements by the acting state superintendent of banks that the suspended bank was solvent, declarations by prominent bankers that there was no true basis for alarm, and assurances from Washington that Secretary Cortelyou would not hesitate to act promptly in any situation where legitimate business was threatened. Now that the first scare is over, and the worst of the future discounted, it is believed that local banking affairs will soon readjust themselves. Bankers not directly associated with the Knickerbocker were quite as anxious that its integrity be maintained, and many conferences were held last night with a view to putting the Knickerbocker on its feet if this could be accomplished without weakening other institutions. There was a meeting of the trust companies association after banking hours. at which a committee consisting of George J. Young, of the Windsor Trust company, Otto Bannard of the New York Trust company, and Clarence H. Kelley of the Title Guaranty and Trust company, was appointed to confer with the officials of the Knickerbocker, with a view to extending such assistance to the company as an investigation would warrant. The committee appointed by the trust companies association, made a cursory examination of the Knickerbocker's books last night. This was sufficient, Chairman George W. Young said. to establish the solvency of the bank. When the meeting of the directors of the Knickerbocker broke up, Joseph S. Auerbach, a director and counsel for the company. when asked what he thought of the prospects were for the bank opening, said: "It would be impossible to do it nnless we receive sufficient resources and I do not think that these will be on hand by morning. We are doing all that can be done. Tne Knickerbocker did not receive one dollar from outside sources vesterday. I don't know how the story that millions were to be placed at the disposal of the Knickerbocker originated. The officials of the bank did not expect assistance, and this may have been the basis of the story. At any rate We received no help from outside." The assignment of the firm of Mayer and company, brokers and members of the New York stock exchange, was said to be due to the recent depreciation in values of securities. The liabilities of the company were given at $6,000,000, and it is said that the assets may prove sufficient to offset the firm's obligations.
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JOHN D. TO THE RESGUE HIS FAITH IN THE FUTURE (Continued from page 1.) from the Trust Company and the industrial field. The sensitiveness of the market as a barometer of conditions might have left it open, supposedly to even more violent disorder in view of the seriousness of the news. As a matter of fact, there was considerable conspicuous fragments of the list of securities, which was but very slightly affected by the acute depression at other points. The failure of the Knickerbocker to open its doors today, and the new run precipitated on the Trust Company of America by its request for assistance from other institutions, offered surface evidence of trouble. Then came the announcement of the .closing of the Pittlburg stock exchange and the embarrassment, so reported, of
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Burly Financier Stems the Wild Market Panic. ROCKEFELLER ALSO HELPS Over $100,000,000 Thrown Into th Stock Maelstrom. SUPPORT PROVED EFFECTIVI Usurious Rate on Call Money Drop ped 90 Per Cent Inside of a Few Minutes. NEW YORK. October 25 The remova of abnormal and all but unprecedente conditions in the money market was th principal accomplishment yesterday 0 those bankers who are exerting utmos endeavors to restore financial condition to a sane and normal basts. The stock market was on the Verg of a panic when Morgan, responding L a piteous appeal. sent $25,000,000 to the ex change and turned the tide John D. Rockefeller distributed. $10, 000,000 through the Union Trust Com pany. Secretary Cortelyou deposited a Jarg part of $25,000,000 in New York banks. Nine millions more was drawn from th Trust Company of America, but it ha no difficulty. as possibly as much was de posited. The millions poured into the market re duced the rate at the close to 10 pe cent. The Hamilton, the Twelfth Ward and the Empire City Savings Bank, thre small banks in Harlem, suspended. Directors of the Knickerbocker ar working out a scheme to avoid Hquidation by forming a syndicate to guarantee pay ment in full to depositors. There was a run on the Lincoln Trus Company. which has no difficulty in meet Ing all demands. A petition was filed in the federal cour in Birmingham, Ala., asking that the Southern Steel Company, capitalized a $25,000,000. be declared bankrupt. A Napoleonic Coup. By far the most notable, even dramatte episode of the day was the emptying of millions of money into the stock ex change through a pool headed by J. P Morgan and other financiers, in order to avert a ruthless selling out of stocks hele by brokers, which was threatened be cause of their inability to obtain renewal of loans on which these stocks had beer carried. A remarkable condition brough about this extreme stringency in money which had gradually forced the interes ate up to an almost unprecedented figure Certain large interests of great financia resources had been charging what wa In effect, If not legally, usurious rate of interest on call loans. One institution that had been engaged in this practice was Itself a member of the clearing house and was severely criticised by other bankers for its action. on the groun that this added an unnecessary compli cation and strain to the money situation As a result of the criticlsm this Institu tion withdrew its support and declined t offer money on call on the stock exchange The effect of this was to run the rate to money yesterday up to 100 per cent, an when that figure W.IS quoted an extremel: sharp decline resulted in the stock mar ket, Union Pacific, a 10 per cent stock selling down to par. Notwithstanding the high rate for cal money that might have been obtained the National City Bank, John D. Rocke feller personally and other prominen money interests sent funds to the stock exchange to be lent at the normal rate of 6 per cent. These sums, however, were not sufficient to meet the demand. and for a time there was great confusion and hurried selling of stocks on the exchange Cheers for Morgan. At the time that excitement was at it height the announcement was made tha a pool had been formed, with J. P. Mor
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ENDING RECEIVERS' GRAFT The unanimous decision of the Appellate divisoin of the New York Supreme Court for the second district in the Knickerbocker receivership case is of interest to the whole country, says the Record-Herald. A movement for the elimination of graft and spoliation in receiverships has been on foot for some time, and one of the successful reforms achieved by Governor Hughes is an act simplifying, regulating and "standardizing" the business of liquidating or reorganizing the affairs of failed banking concerns. New York is not perhaps in need of additional instances of spoliation in receiverships, but the decision just referred to will give a needed impetus to the cause of honesty and economy in a sphere where these qualities are particularly desirable. In the Knickerbocker case three receivers were appointed, and they engaged counsel, of course, to guide their actions. When the time for fixing their fees came each was allowed $75,000, and a like amount was awarded to counsel. The Appellate division now reduces the amount to $20,000 for each claimant. The original amount, it says, "was SO grossly excessive as to amount to a spoliation of the assets of the trust company." Stockholders of a mismanaged or unfortunate concern suffer enough without having to fill the pockets of gentlemen with exalted notions of the value of their time and ability. Under the new receivership system in New York the superintendent of banks may appoint a deputy as receiver to liquidate and distribute the assets of a delinquent or insolvent bank or trust company. Such special deputy is entitled to no such enormous fees and lawyers' charges as have characterized the old system. This act has already been tested in the case of a Brooklyn bank which closed its doors on Feb. 1. At the end of forty-two days the receiver, a deputy of the superintendent, reports that the bank is ready to resume business, and the bill for administrative and other expenses is $1,200. This will sicken the beneficiaries of graft and spoliation, but it is a mighty god thing for stockholders, bondholders and investors. It is time that those Republicans who favor Heyburn's return to the senate wete sitting up and taking notice.
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IMPROVED CREDIT THE CHIEF TES It may help us to consider in whether the reserve bank system, \ Monday throughout the United States, State measures in Vermont and elsew of the basic principles underlying bar must begin in carefully distinguishin credit. Currency is merely the medium e were time it would be interesting to velopment of this instrument of tra as the standard of value among the pum" in America and seashells in and passing on through iron nails as tobacco as a legal tender in colonial ) ure of values in early Massachuset paper currency in South Carolina by on May 8, 1703, providing for bills oi 1705, with a tax of 4,000 English p Many of us have assumed that chief need whereas credit is the life and development. By credit we mea surance and action on the assurance borrowed will be paid. Our credit s) upon the honesty of the poor man from the rich man if he ceases to be the chief and most sacred asset of knows no other maxims as regards Credit in connection with banl ability to borrow. That credit is Burlington to build water works an provements it otherwise could not pi to buy land he else must forego, a m for himself, a number of men to buil wise would never help develop a g steamships to connect continents b: and even great nations to engage in tion like that now devastating not also part of the new. It follows that he who controls a State, holds the key to its progres well as to the industry, trade, comr every other form of activity in whic sity. It makes no diff rence to : whether the medium of exchange i of paper printed either as a goveri commercial check with the name of written at the bottom, or across tl something behind it which will help for individuals and communities. other precious metal locked up in vaults would command SO high a pr est that most people could not do bu Fear of the ability of a single men to control a nation's credits lay tion of the republican-democrats at tional career to the creation of th bank recommended by Alexander eralists; the killing of the first Ban 1911; the opposition to the second I created under Madison's lead at the the overthrow of this bank and the financial control by the democrats President Jackson, who stood for a the credit of the federal governme evolution of State banks following ous other developments, leading up twelve reserve bank system in ou central bank idea involved in the A In passing it should be noted been the real facts in the case, th financial panic beginning in 1907 ha the United States Steel Corporation Coal and Iron company, its chief ri squeezing the Knickerbocker bank should drop the stocks of that cono countable for the uprising of the A some system of banking and currer ize the financial power of the Amer The location of twelve reserve il zones throughout the United States son administration to this deman made an egregious error in not pro were in power. If this measure d parents, it will not only conserve trade and commerce, but it will al rency to meet all possible demands it of peace. The nation to-day enters upo currency system. The control of to a certain degree, with power in litical influence as the chief menac made to counteract that possibilit ad visory board representing regional board of control of seven members, al as the treasury and the controller of it Apparently an ample supply o the country is assured, for the bo or stated, can force loans to be made of needing additional funds. It has
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will will surely come when America timber." time have to turn to Germany for SMILED AT THE IDEA at the idea of our country but hav- the I smiled upon German timber, we were ing to rely insisted that at the rate Germany Kaiser our lumber resources supply availusing up have a greater Germans would soon we. I wonder if the for every have able than been planting a new destroyed tree on the one they have of Europe ruthlessly during the past few continent years of destructive fact, however, warfare! that the German respect. It is a stringent in this a tree are not permitted to cut first own premises commislaws One one's is very of the without tree down seon curing and the as consent the "red tape" authorities involved in in sion, to the German wearying, an appeal this kind is most resorted such matters applications of are not frequently fato. illustration of the Kaiser's was Another with our national problems at the time afforded miliarity financial in a remark panic he in made 1907, possible. which he said of our should never Farrar, have been your opera "Poor Miss tellinz me she singer, has been she had in your every penny failure. The Knickerbocker lost bank would caused that panic if we men who prinon mighty quick can tell go to in Germany, I of your had them have read that 11 suiyou. bank I presidents committed it! Eleven Just think of These things cide. presidents: you will bank should not be, Davis; these but panics continue to time have until you adopt from time to with a central banking system have." a such as we the federal rebank, establishment of country, one The bank system in this adopted serve important measures us sucof the President most Wilson, carried stress and under cessfully through the financial and shows how strain of the the world-war, Kaiser understood na- the thoroughly and requirements of our tional workings banking arrangements. IDEAS NOT so SOUND regarding SOME of the ideas he formed were not so Many institutions. however, based on intiour sound. knowledge although they and were constant investiga- opportunity United States. mate tion. He to learn never all overlooked he could an about the of our The Kaiser was The a harsh idea of critic a four-year reelection system. the President was naturally term to one who held It as to the rights of the pugnant for rulers. such Hohenzollern exalted would no. be tions too much to expect of a constitution which a mind to approve ruler's return to private the after provided for period the of four years at head life of declared the government. that with a was constant quite He of Administration it country to change question for this bad out of the policy. It was enough follow any even definite so far as but internal such affairs a sysconcerned, he said, he thought, for America ever to tem were made it impossible, take a prominent part in International can't expect politics. the nations as they of deal the "You deal with America the next change world to themselves, when mean the adopamong administration may foreign policy," tion of an can be nothing foreign policy of he declared. entirely "There new of a years nation stable whose about leaders the change every four FOR LONG TERMS the suited No doubt it better. would in have his held own office mind for at Kaiser's plans Presidents better still, any 20 or rate, 30 years if our at a stretch, have or, considered for life. Then exert whatever ence it worth he he while commanded believed he to might was in considerable, thought this country, would influ- in favor which of the with candidate Germany's he plans. It was the best fall worth in much effort President to secure who would hardly of a pro-German years at election hold office but a few conmost. party politics were a to the American of embarrassment as stant source He always seemed undecided an AmerKaiser. how he should receive to be to just prominence. If he happened the adminlean of same political faith as to do of the the Kaiser was afraid of offendmuch honor for fear too party. who him istration, opposing might not' win of as ing the next the election. and the if he administration. were the same party feared to honor him lest up more in the Kaiser resentment be stirred receive immediate Thus he refused to wl.en a America. two different occasions was in power. Bryan republican on administration CRITICIZES ELECTIONS our He criticised very strongly, too, election Instead methods. of discussing principles, your
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Recall 1907 Money Panic Wall Street Reminisces About Events Just 25 Years Ago Wednesday Special EVENING NEWS. NEW YORK Oct. During lulls trading the the betting on the election told of their favorite good luck seemed range all the from unclassified to rabbits' the oldsters that took in and the financial district quarter of a century ago. Twenty- years ago Wednesday street was clear away the wreckage the money of 1907. Just days earlier. following the suspension the Knickerbocker company, call 125 per In an ease the tension the house issued house certificates. This was adopted two days after the elder Morgan met the ket panic all the leading bankers and the president of the of bank credit was made available The credit was made available by the deposit of government funds by Secretary of Treasury Cortelyou, now president the Consolidated Gas company New York. It must be country then had no system and system tightened time when should have flowed The veterans their talk about money which this reviewer remembers, since many in the West 'scrip. which very difficult to get out that the present depression, far are concerned, is not comparable to that 1907 Indeed, some of these oldsters go far as credit the panic of 1907 with forcing revision the national banking and currency of that time eventually the Aldrich bill Federal Reserve They believe the state business and finance effecting farreaching not only here but in many parts of the world. generally do not look for now and day already they are talking which to follow the no matter who