324 



FINANCIAL REVIEW OF 1884. 



a hopeful view were encouraged by the evi- 

 dence of commercial stability generally dis- 

 played, the weak houses having, one after 

 another, succumbed to pressure from natural 

 causes, while the survivors, by the practice 

 of strict economy and by conservative man- 

 agement, had firmly intrenched themselves so 

 as to withstand almost any shock. The manu- 

 facturing industries were also upon a solid 

 foundation, as is shown by the fact that so 

 few failures among them occurred during the 

 year. Neither merchants nor manufacturers 

 had been expanding their business, credits had 

 been curtailed, stocks of goods reduced, and 

 there appeared to be a general understand- 

 ing patiently to wait for positive indications 

 of a permanent improvement in the demand 

 before taking any decisive step. The result 

 showed the wisdom of such a course, and, al- 

 though the failures of the year involved lia- 

 bilities amounting to $240,000,000, most of 

 them were financial, and many the direct re- 

 sult of stock speculations. Clearly, therefore, 

 this was not a commercial crisis. Those who 

 observed that the depression in industries and 

 trade began to be felt when tariff reforms were 

 first agitated by Congress, and who recalled 

 the fact that at least one of the panics had been 

 brought about by changes in the revenue, re- 

 garded it as probable that the next crisis would 

 result from such legislation ; and this may have 

 contributed to the depression in trade, which 

 was one of the underlying causes of the panic. 

 Those who felt that the stability of our cur- 

 rency depended upon the suspension of the 

 coinage of the standard silver dollar, claiming 

 that compulsory production of $2,000,000 of 

 these per month would, at no distant day, and 

 perhaps suddenly, change the metallic basis 

 from gold to silver, watched the progress of 

 silver coinage with anxiety, and regarded it as 

 almost certain that the next panic would be a 

 currency crisis. But while the coinage of the 

 silver dollar may have aided, it did not actually 

 produce the catastrophe, for the flurry in Feb- 

 ruary, caused by the suggestion that the Treas- 

 ury might soon be compelled to ask the banks 

 to accept silver certificates, had only a tempo- 

 rary effect upon the markets. The panic was 

 due to a variety of causes, none of which 

 was entirely controllable. It may be said to 

 have been the natural result of the inflation, 

 which began with 1878 and ended by the mid- 



dle of 1881. The shrinkage" in stocks and 

 bonds, which continued for two years and a 

 half, not only embarrassed the vast army of 

 speculators, but it crippled banking and com- 

 mission houses who had been carrying a large 

 portion of the load as collateral on loans, and it 

 caused such losses among capitalists and pro- 

 moters of railroad enterprises as to make them 

 unable or unwilling to revive or reorganize 

 their properties when these were almost on the 

 verge of bankruptcy. By far too many of the 

 banks at the opening of 1884 were loaded with 

 comparatively dead assets, which they were 

 holding in the hope of ere long being able 

 to convert into cash. That this is true is 

 shown by the revelations following the col- 

 lapse of the Metropolitan and some other 

 banks of the country. The utter disregard of 

 the rights of stockholders of railroad corpora- 

 tions as shown in the almost unprovoked wars 

 between rival lines and among pools, was a 

 remote contributing cause of the panic, for it 

 created such an unfavorable impression abroad 

 as to induce the return of vast amounts of 

 our securities, thereby increasing the burdens 

 upon capital at a time when the load was 

 almost insupportable. The faith in the bank- 

 ing system of the country and in the machinery 

 provided for the periodical and unannounced 

 investigations into the condition of the banks 

 was rudely shaken by the disclosures attending 

 the management of the Marine, Second Na- 

 tional, and Metropolitan banks. This shock 

 precipitated the crisis. Perfection is impossi- 

 ble in any system, but obvious errors in bank- 

 management can, and doubtless after this recent 

 experience will, be corrected. The New York 

 associated banks are, so to speak, the bulwark 

 of the entire banking system of the country. 

 Their methods of management must be care- 

 fully scrutinized, not only by the Government 

 officials, but by the association and rules estab- 

 lished and enforced, which will promptly ar- 

 rest any irregularities or faults of administra- 

 tion, to the end that confidence in individual 

 banks may be as unwavering as it is in all the 

 institutions when associated for mutual pro- 

 tection. 



The following tabular survey of the econom- 

 ical conditions and results of" 1884, contrast- 

 ed with those of the preceding year, is taken 

 from the " Commercial and Financial Chroni- 

 cle": 



