604 



PANICS, FINANCIAL, OP THE NINETEENTH CENTURY. 



while he lingered. One feature in 1882 was the 

 panic in Paris, resulting from the collapse of the 

 Union Generale and of other similar concerns. 

 This crisis caused an advance in the Bank of 

 England rate of discount to 6 per cent, and 

 started a drain of gold from New York, which 

 continued until August. The requirements of 

 the English Government for military operations 

 in Egypt in July brought the Bank of England 

 reserve down to 9,712,012 by Nov. 8, and a 5- 

 per-cent. discount rate was maintained from 

 Sept. 20 to the end of the year. Foreign bankers 

 were under engagement to supply Italy witli 

 gold at the time and after the crisis in Paris, 

 and they arranged to procure part of the gold 

 from New York, materially contributing to the 

 large shipments hence during the summer. In 

 1883 the market began very sensibily to feel the 

 effect of the construction of many new railroads 

 and of theconsolidations and combinations during 

 the previous two years, and the floating of vast 

 amounts of new stocks and bonds upon which 

 dividends or interest could not be earned. The 

 public held the mass of these securities, but they 

 did not realize their danger until after Septem- 

 ber, 1882, and many were lulled into security by 

 the phenomenally large railroad earnings in the 

 winter of 1882-'83. 



Panic of 1884. The panic of 1884 began on 

 May 5, when the Marine National Bank sus- 

 pended in consequence of the speculations of its 

 president, James D. Fish, with the house of 

 Grant & Ward, which for months had been carry- 

 ing on a series of operations upon a fictitious 

 basis, but which, it is claimed, were conducted 

 solely by Ferdinand Ward without the knowl- 

 edge of his partner. The markets were recover- 

 ing from the shock of the bank failure and the 

 disclosures regarding this firm, when there came 

 news of the defalcation of John C. Eno, Presi- 

 dent of the Second National Bank, involving 

 about $4,000,000. These events created a very 

 distrustful feeling, and from the fact that Mr. 

 George I. Seney, President of the Metropolitan 

 National Bank, was understood to be an exten- 

 sive operator in stocks, deposits in that institu- 

 tion were withdrawn, precipitating its failure, 

 on the 14th, together with that of Nelson 

 .Robinson & Company and six other brokerage 

 firms. As an indirect result, of the panic, the 

 Erie defaulted upon its interest. The financial 

 depression that followed the crisis lasted until the 

 end of J une, when a recovery began, and before 

 the middle of July the immediate effects of the 

 panic had disappeared, the banks of the city be- 

 came stronger, and confidence was partially re- 

 stored. This trouble was in no sense a com- 

 mercial crisis. The coinage of standard dollars 

 under the act of Feb. 28, 1878, had resulted in 

 the accumulation at the end of January of $123,- 

 474,748, and the certificates then in circulation 

 against these dollars amounted to $110,137,051, 

 making the currency redundant. Then followed 

 as another disturbing factor the decision of the 

 United States Supreme Court in the Juilliard 

 legal-tender case, finally settling the constitu- 

 tionality of legal-tender paper money, which de- 

 cision served to call the attention of the public 

 to the fact that, as said by the " Financial 

 Chronicle," " all reliance upon any constitu- 

 tional inhibition to do anything whatever with 



the currency which Congress may have a whim 

 to do must be abandoned henceforth and for- 

 ever." Early in April the House of Representa- 

 tives passed the bill providing for the redemp- 

 tion of the trade dollar. A sharp fall in grain 

 and provisions in March was followed by bank 

 failures and suspensions of private banking 

 firms in the West, the former being mainly due 

 to speculations by managers of the institutions, 

 but the decline in grain did not encourage the 

 export movement; gold continued to move to 

 Europe in moderately large amounts, and the 

 net shipments for the year up to the end of 

 April were about $31,750,000. On the an- 

 nouncement of the suspension of the Metropoli- 

 tan National Bank the Clearing House Associa- 

 tion decided to issue loan certificates under 

 regulations similar to those adopted in 1873, and 

 the first issue was $3,820,000 to the Metropoli- 

 tan Bank on May 15 and the last June 6, when 

 there were outstanding $18,640,000 out of the 

 total of $24,915,000. The decline in stocks 

 which followed the panic continued until the 

 end of June. The grain crops of the year were 

 abundant. The yield of wheat was estimated 

 by the Bureau of Agriculture at 512,763,900 

 bushels against 420,154,500 in 1883, while that 

 of corn was placed at 1,795,000,000 bushels, 

 an increase of 244,461.537 over 1883, and the 

 cotton crop indicated 5,900,000 bales, or 200,000 

 more than that of the previous year. But these 

 large crops brought a shrinkage in prices, and in 

 London wheat fell to the unprecedented figure of 

 31s. 6d. a quarter. The panic of 1884 may be 

 regarded as an incident following the decline in 

 stock values from the culminating point in July, 

 1881, and the crisis was precipitated by the ex- 

 posure of financial frauds of almost unprece- 

 dented magnitude. 



1885 to 1889. Little progress was made in 

 1885 toward substantial recovery until June, 

 when the negotiations for the settlement of the 

 West Shore troubles began to be felt, and 

 prices improved. On the announcement in Au- 

 gust of the sale of the South Pennsylvania to 

 the Pennsylvania Railroad Company, and of the 

 foreclosure of the West Shore and its lease to 

 the New York Central, the market advanced, 

 and the rise was stimulated by the formation of 

 a pool among the trunk lines for the mainte- 

 nance of rates. In 1886 the market was dull 

 and irregular, tending downward until the mid- 

 dle of May, influenced by labor strikes on the 

 Missouri Pacific and other roads in the South- 

 west, in Chicago, Milwaukee, and New York, 

 and the anarchist outrages in Chicago, May 4. 

 Leading staple products were very low, imports 

 largely exceeded exports, and gold flowed to 

 Europe at the rate of about $5,000,000 a month. 

 The year 1887 opened with depression, influ- 

 enced by the coal-handlers' strike, followed by 

 that of the freight handlers in this city. The 

 Interstate-Commerce bill and European war 

 rumors had some effect, and the market was 

 generally lower until the end of February. The 

 Interstate-commerce law went into effect April 

 5, but the operation of the long- and short-haul 

 clause was suspended for ninety days, and the 

 tendency of the market was upward until June 

 14, when there came a collapse of the corner in 

 coffee, followed on the next day by that of the 



