Fifty years in Wall Street
which cost the Government $62,500,000. The famous syndicate which
undertook the delivery of the precious metal, agreed to do all in its
power by the further deposit of gold in the Treasury and as far as
possible, a control of foreign exchange rates to keep the reserve
intact. Its powerful aid unquestionably saved the people from many more
business disasters, by a bolstering up of confidence in the power of the
Government to pay its debts. The syndicate lived up to its agreement
fully, depositing in the month of August some seven and a half millions
of gold.
One scarcely hears mentioned nowadays the name of that poor fellow whose
fabulous fortune (on paper) finally proved too burdensome for his
uneducated mind. Barney Barnato was in his way a picturesque character,
and a most vivid illustration of the overthrow of mind by matter, when
the former is not in control.
The sharp break in South African shares in the London market during
October, of course exerted a sympathetic influence here; but worse
things were yet in store for us. Our President’s famous Venezuela
message to Congress in December, 1895, acted like an earthquake—which
shook the markets to their very foundations and engulfed hundreds of
millions of values before it subsided. The final outcome of the dispute
between England and Venezuela has to a very great extent vindicated the
former’s claims. Let us, however, look upon the whole matter as a step
forward for civilization in the advancement of the principle of
arbitration, the true solution of all international difficulties. In
1896, we did finally reach the end of our troubles, though not without
much worriment. A further bond issue of $100,000,000 to meet deficits,
brought that total up to $262,500,000 issued in two years. A rather
expensive administration, but “troubles come not singly, but in
battalions.”
The Presidential Campaign just past, with the same nominees at the head
of the respective parties, recalls the wild free silver talk of four
years ago. Panic and depression succeeding each other had left the
people almost hysterical. After Bryan’s nomination in July, gold
hoarding was the order of the day. Of course the effect of this on the
money and security markets meant, under the circumstances, another
downward plunge in prices. New York Central sold at 88, the lowest price
in the past fifteen years, and C., B. & Q. at 53, the lowest price in
nearly forty years, and all other stocks sold down in the same
proportion.
I have said that we reached the end of our troubles in 1896, but the end
did not come till the November election, which showed that William
McKinley, “the advance agent of prosperity,” had been elected President.
The nomination of William J. Bryan, hitherto a comparatively unknown
man, but who electrified the Democratic National Convention by his
specious eloquence, the eloquence of a political Belial, able, in the
Miltonic phrase, “to make the worst appear the better reason,” whose
famous phrase, “you shall not press down upon the brow of labor this
crown of thorns, you shall not crucify labor upon a cross of gold,”
swept the convention off its feet and made him the nominee for
president, was a blow that for a time seriously disturbed Wall Street
and commercial circles everywhere. Mr. Bryan called for the free coinage
of silver at the ratio of 16 to 1, and by his tireless activity in
stumping the country created a feeling of depression that reached the
pitch of panic and left the people almost hysterical with fear. But as
Martin Van Buren said on one occasion, “the sober second thought of the
people is never wrong and is always efficient.” The sober second thought
of the people carried the day. Crowds might flock to hear the orator,
but they voted with the party of prosperity and honor. The carefully
written speech of Mr. Bryan, a speech which, for once, he read from his
manuscript in the great Madison Square Garden meeting, did not deceive
the people; it fell flat.
With Bryan’s fiasco in this city, the clouds finally began to break. How
plainly the record of these four years shows the absolute domination of
the markets by Washington. And not of the financial markets alone by any
means, but of the whole business interests of the country, which finally
were well-nigh paralyzed by four years of increasing anxiety and wonder
as to what might happen next.
It is gratifying to turn away from that period of distress to the
succeeding years of prosperity. The vindication of the good sense of the
people in the election of William McKinley did, at last, turn the tide;
and for good and all, let us hope. With an unquestioned currency basis,
improvement became possible. We were greatly favored too, in the first
year of Mr. McKinley’s administration, by bountiful crops at a time of
shortage in Russia, France, and the Danubian Provinces. It was a great
year of prosperity for our farmers, who, through good prices, and the
exportation of some 120,000,000 bushels of wheat, were enabled to pay
off mortgages in wholesale fashion, and herein we see the beginning of
present good times. Furthermore our export trade showed great increase.
As was to be expected, there was a great rush of importations just prior
to the passage of the Dingley Tariff Bill in July, and a consequent
decline in revenues immediately thereafter; but the completed record of
its operation up to the present time is a splendid tribute to the wisdom
of its author. The Supreme Court decision in 1897 in what was known as
the Trans-Missouri Case, declaring all railroad pooling illegal, proved
somewhat of a shock to the market, but with improvement in business, our
roads soon found enough traffic before them to more than go ‘round,
without worrying about its division.
The year 1898 began very favorably with large gold imports and easy
money. Cuban affairs, which had begun to threaten late in the previous
year, finally culminated in the outbreak of war with Spain in April.
The condition of things in Cuba having become a reproach to the
civilized world, this Government, acting for the conscience of
Christendom, directed that the war which Spain was waging against the
Cuban revolutionists should cease, with all its indescribable horrors,
its barbarous cruelties to women and children, and as Spain did not heed
the warning, our Government intervened in the interest of common
humanity, an event which marked a distinct advance in the history of the
human race, for history makes no mention of any war waged on such a
scale in behalf of the cause of humanity. Certainly never was a war more
clearly justified or one which showed greater courage on the part of the
intervening nation, for there can be no doubt that more than one of the
Continental powers of Europe would have been glad to side with Spain and
would have done so, but for the emphatic negative of Great Britain.
Naturally there ensued a period of depression, but it was short-lived.
The ensuing months of activity and buoyancy surpassed anything of the
kind in our history. After the apprehension as to how the business world
would adjust itself to war conditions had passed away, business began to
boom all over the country. We were on our feet again with financial
health restored. That wonderful boom in the stock market, begun in the
summer of 1898 and lasting until the spring of 1899, will not soon be
forgotten.
It seems more like a dream than a fact that trade and commerce and
financial operations could swell to such well-nigh inconceivable
figures, revealing a degree of prosperity almost past belief, like some
marvelous good fortune of an individual in a Persian tale, favored by
good Genii, actual fact rivalling fancy or throwing it far into the
shade. In other words the oldest and most experienced merchants and
financiers in this country were astounded at the degree of solid
prosperity attained by the great Republic, the lion’s whelp, rivalling
or surpassing the strength of the old lion, the mother country across
the sea.
To the late Ex-Governor Flower belongs the credit of fearlessly taking
the initiative in that marvelous rise in values to which I shall revert
later on.
The formal close of the Spanish war gave fresh impetus to trading and
prices kept soaring well on into the spring of 1899. The year 1898 has
the distinction of marking the beginning of the greatest era of trade
combinations, those gigantic commercial engines, that the world has ever
seen. The capitalization of those inaugurated during 1898 and 1899
reached the fabulous aggregate of $3,500,000,000. The mind is staggered
by the possibilities of enterprise which such a sum suggests.
The tendency towards centralization in the railroad world was first
shown in the merger of the Lake Shore road with the New York Central.
The year 1899 was one of great prosperity, the greatest since we have
been a nation, albeit its close was marked by one of the worst
semi-panics the Street has ever experienced. In order to account for
some of the most important features of the panic of December, 1899, it
is necessary to take a glance backward at certain great financial events
of the year even as early as April.
In that month was formed the famous Amalgamated Copper Corporation, a
creation of the Standard Oil magnates.
The capital stock of the company was $75,000,000. The shares were said
to be subscribed five times over. Owing to its parentage, the stock
became popular, and was sustained at par for some time, but scarcely two
months had elapsed before a break of 25 per cent. in the price occurred.
This break was regarded as a rather suspicious circumstance, and was
supposed by the “knowing ones” to be a part of the deal. The Amalgamated
Company was a mammoth combination, comprised of large share interests in
over 30 companies, the famous Anaconda of Montana heading the list, and
being the most prominent
The panic fell most severely upon the copper companies, the shrinkage on
the share capital of which for the year is alone estimated at nearly
$200,000,000.
Besides this, the currency movement to the South and West had been
unusually large and prolonged, and finally tightness of money brought
about an immense drop in the entire stock market. But with general
conditions prosperous all over the country, such panics happily do not
leave lasting scars.
The last year of the wonderful nineteenth century has been a remarkable
one in our history. Since the first defeat of the silver agitators in
1896, our financial strides have been so rapid that it seems now a
question of but a short time when New York will be the financial centre
of the world. What a contrast between our position in 1900, and that in
1895, when we were knocking at the door of Europe with bonds for sale to
provide running expenses for our Government. To-day England finds it to
her interest to place $25,000,000 of her war loan with us, Germany asks
for $20,000,000 of American gold, Russia is seeking to borrow from us
and Sweden has not gone empty-handed away. And these accommodations have
been accorded without causing so much as a ripple in our money markets.
The source of such plenty is of course found in our wonderful increase
of exports. For ten months of this present calendar year, the trade
balance in our favor approximates $500,000,000, making, in the past
three years, the vast total of fifteen hundred million dollars balance
to our credit. There we see both the lever and the fulcrum with which to
move the financial world.
A little over a year ago occurred the death of Cornelius Vanderbilt, the
grandson and namesake of the Commodore. Here was a gentleman whose
charities were almost boundless. His gifts to the people through art and