For weeks the country has been suffering from an almost financial panic. When the inflated, speculating Knickerbocker Trust Company's bank of New York failed, the country became frightened, so insecure is our financial system. Governor Gillett has well expressed the cause in his message to a special call of the California legislature:
“The country generally is very prosperous, our state is particularly so, and there is no reason why this prosperity should not continue. Legitimate business never was better. The farmers in every state have been blessed with large crops for a number of years, for which they have received good prices. All the wheels of industry are turning, trying to supply the enormous demands made upon them. All labor is employed at the highest wages ever known, and the merchants have been enjoying a large trade. There is no poverty in the land, yet in the midst of plenty, and apparently on a most solid basis and with more money in the country and a larger per capita than we ever enjoyed before, the nation finds itself in the throes of a money panic.
“It is quite evident that there must be some cause for this condition of affairs, and it is found in the extravagant living, wild speculation, the effort to get rich quickly by giving nothing for something, the frenzied finance of the stock and bond manipulators of Wall Street, and the attempt dishonestly and by misrepresentation to float all manner of enterprises upon a sea of water. These are the things which have been mostly, if not entirely, responsible for the present financial stringency, and it is only the unparalleled prosperity, distributed among the masses, that saved us from financial ruin.”
The Government has come to the relief of banks by issuing certificates of indebtedness to the amount of $100,000,000, and floating $50,000,000 in Panama bonds. It is hoped that the sale of these, together with the gold from Europe in payment of American products, will soon restore normal conditions. Until that time, clearing-house certificates, checks, and notes must take the place of money. This, it has been well said, is not a people's panic, but a banker's panic.
United States Treasury Building, Washington, D. C.
