The Panic of 1893

BY W. S. MORGAN

Hon. Thomas E. Watson, Thomson, Ga.

MY DEAR SIR—I have your letter containing communications from James R. Branch, Secretary of the American Bankers’ Association, New York City, and Jno. D. Reynolds, President of First National Bank, of Rome, Ga., in which they deny the authenticity of the Panic Bulletin published in my contribution to the March issue of your magazine.

I remember when the Bulletin was first made public I asked a friend, a president of the Citizens’ National Bank, of Fort Scott, Kan., a man with whom I was intimately connected in business for ten or twelve years, if such a circular had been issued. He replied that he had received a number of circulars covering the propositions therein contained, and that likely he had received that one. This incident, and the fact that the Bulletin had been published from time to time for years and I had not seen its authenticity questioned, and furthermore that its suggestions were in line with the events of that date, led me to believe that it was genuine.

However, the authenticity of the circular was not the subject matter of the article which provoked these denials. My indictment of the National Bankers was not merely for issuing the Bulletin, but for doing the things it suggested. Messrs. Branch and Reynolds have ignored the indictment and attacked the witness. But there are other witnesses that can’t be demolished.

After Mr. Cleveland had sent Henry Villard and Don M. Dickinson to Washington, in the winter of 1893, and failed to secure from the Fifty-second Congress the repeal of the purchasing clause of the Sherman law, the National Bankers began to show their hand.

It was seen that no ordinary pressure on Congress would secure the demonetization of silver. It was claimed that the Panic Bulletin was issued March 8, just four days after Cleveland’s second inauguration.

What was the program laid down in the Panic Bulletin?

1. The interests of the National Banks require immediate financial legislation.

2. Silver, silver certificates and Treasury notes must be retired and National Bank-notes, upon a gold basis, be made the only kind of paper money.

3. Bonds required to be issued as a basis for the bank-note circulation.

4. Pressure must be brought upon the people, especially in sections of the country where the free silver sentiment was strong. Circulation to be reduced, loans called in, credit refused and general distrust spread broadcast through the land.

5. Demand for an extra session of Congress to repeal the purchasing clause of the Sherman law.

This was the program laid down by the Bulletin. Did it agree with the action of the National Bankers? We shall see.

On the 11th of April, 1893, Grover Cleveland appointed Conrad C. Jordan to be Assistant Treasurer of the United States.

In this capacity Jordan had control of the Sub-Treasury at New York. The Sub-Treasury is the great business establishment of the Federal Government. It is one of the associated banks of New York City.

Jordan was a banker, the President of the Western National, of New York City, and was recommended for the position by the New York National Bank Presidents. He was the go-between—the link which connected the National Bankers with Cleveland and the Federal Government.

His nomination was confirmed on the 15th day of April, and on the 20th he was in Washington with his bond and conferring with Cleveland.

From that hour things moved with wonderful rapidity.

Jordan left Washington on the 21st, arrived in New York at 5.30 in the afternoon, went directly to the Chase National Bank, No. 15 Nassau Street, where he met Henry W. Cannon, President of the Chase National Bank, and J. Edward Simmons, President of the Fourth National, two of the most active and influential of those who controlled the associated banks and who constitute the “New York National Bank Ring.”

It must have been an important meeting, for that night Cannon left New York for Washington on a midnight train, arriving in Washington Saturday morning, April 22, and while there had interviews with Grover Cleveland. On the morning of April 22 Jordan was sworn into office, and his first act, official or semi-official, was to arrange for a meeting with certain National Bank Presidents in the afternoon.

I can give you the names of most of the National Bank Presidents who met Jordan that afternoon. The meeting was said to be informal, and its proceedings were carefully guarded. But it was of such importance that Jordan went to Washington on a late evening train to make a report of its proceedings.

It was generally believed at the time, and there is little doubt of its truth, that Jordan was simply given the office to mask his character as confidential agent between Grover Cleveland and the New York National Bank Presidents.

After a conference with Cleveland on Sunday morning, April 23, Jordan and Cannon returned to New York, arriving there late in the evening. Before leaving Washington Jordan wired certain National Bank Presidents to meet him at a private house uptown.

What happened at that meeting we can only surmise. I mention it to show the connection between the National Bank Presidents and Grover Cleveland.

The next morning, April 24, Jordan was at his desk. One of the first things he did was to notify the National Bank Presidents and officers of trusts and other companies to meet him that day at the Sub-Treasury. This also was a dark-lantern meeting, and no one would give out the proceedings. But what followed shortly afterward, and the action taken by those who attended that meeting, justifies the belief that that convention was called for the purpose of arranging a concerted attack upon the national industries, agriculture, commerce, property and social order of the American people—the assault to be directed by the New York National Bank Presidents—as the swiftest and surest means of forcing Congress to repeal the silver law—to give the country Cleveland’s “Object-Lesson.”

Nine National Bank Presidents met John G. Carlisle at the Williams House on April 27, presumably to complete the arrangements for the attack. No doubt Cleveland had approved the conclusions reached on the 24th, and sent Carlisle to sanction them.

Carlisle’s meeting with the Bank Presidents that day was, as you know, a subject of much newspaper comment. The meeting was said to have been one of “effusive cordiality,” and, in view of the events which quickly followed, there is little doubt but what it partook of the nature of “two hearts that beat as one.”

It was there that the National Bankers proposed an issue of bonds. But Carlisle, like a young girl, although keen to marry, intimated that it was “too sudden.”

This was the last of the series of meetings between the Government officials and the National Bank Presidents preceding the panic.

Everything was now ready to give the country the “Object-Lesson.”

Within the next forty-eight hours the worst financial calamity that ever befell the people was to break upon them.

At this time there was nothing in the industrial situation to precipitate a panic. Prices had been low for several years, and there was none of the spirit of speculation which usually precedes a panic.

Cleveland himself volunteered to say: “Our unfortunate financial plight is not the result of untoward events, nor of conditions relating to our natural resources, nor is it traceable to any of the afflictions which frequently check national growth and prosperity. With plenteous crops, with abundant promise of remunerative production and manufacture, with unusual invitation to safe investment and with satisfactory assurance to business enterprise, suddenly financial distrust and fear have sprung up on every side.”

Thus the people and all those engaged in industrial and productive enterprises are exonerated.

Who are the guilty persons?

The men who did just what that Panic Bulletin describes.

The bankers who demanded the practical demonetization of silver; who demanded a special session of Congress to secure it; who called in their loans and reduced their circulation; who demanded and secured the issue of bonds, and who now demand the retirement of the greenbacks.

Messrs. Branch and Reynolds and other National Bank advocates may be able to repudiate the Panic Bulletin, but they cannot successfully deny that every feature of the program it contained was carried out in detail by the men who practically control the National Bank system.

Four days after the Williams House meeting at which Secretary Carlisle was present, the New York banks began to call in their loans with brutal vindictiveness.

We are not left to conjecture the effect of such a policy on the New York Exchange. By the 5th of May the strain had become intense. The New York Tribune of May 6, referring to the condition of the market, said: “The enormous losses of the last week, the utter demoralization of the buying power in the market and the practical paralysis of credit, promised a liquidation that, unless stayed, would have swept them all off their feet.”

On May 7 the same paper said: “The effort of the Administration to bring the South and West to a full realization of the inevitable consequences of compulsory purchases of silver bullion has brought distress and perhaps ruin to many innocent persons—but there is no reason to suppose that it will be relaxed.”

Within ten days from the time of the Williams House meeting between Cleveland’s Secretary of the Treasury and the National Bank Presidents the panic had spread from the Atlantic to the Pacific, and for forty days it continued with unabated fury. On the 9th of May several Western banks were forced to close their doors.

“There is no lack of pressure,” said the New York Tribune on the 22d of May.

On the 6th of June—six weeks after the Williams House meeting—the New York Sun, in its money article, said: “The Presidents of the New York National Banks think that the so-called “Object-Lesson” has been carried far enough. They see nothing to be gained by a further shrinkage of values and unsettling of credits.”

It is useless for me to detail the results of the panic.

From May 9 to 30, inclusive, sixty banks were forced to suspend, and fifty-eight of them were in the doomed section—the South, West and Northwest.

From the time of the Williams House meeting, April 27, to December 30, 1893, a period of eight months, more than fifteen thousand bankruptcies and suspensions had occurred. Over six hundred banks had been driven to the wall, and the loss to the country in round numbers was seven hundred and fifty millions of dollars.

But the National Bank Presidents had won their fight. They had carried out the program laid down in the Panic Bulletin, an extra session of Congress had been called and the purchasing clause repealed.

That the “Object-Lesson” was intended for the West and South is evidenced by the records. Out of 169 banks failing from March 5 to August 4, five only were in Eastern States, forty-eight in Southern and 151 in Western states—Dunn’s Report.

Dunn’s Report for July 21, 1893, says: “A large proportion of the suspended Colorado banks and mercantile institutions will pay in full and resume business, inability to borrow money on or sell ample collateral alone being the cause of the Denver banks closing their doors.”

No doubt the panic reached proportions not at first intended by the National Bank Presidents and threatened their own financial standing, as Mr. Branch suggests is the case in time of panics. But they had a remedy, no doubt decided upon beforehand. While they refused credit to the Southern and Western banks, they issued Clearing House certificates to the extent of $63,152,000 to themselves, an act which was in violation of the law.

There is so much evidence obtainable to the effect that the National Bankers are guilty of every count in the indictment contained in the Panic Bulletin that a book could be filled with it.

In a speech in the United States Senate August 25, 1893, Senator David B. Hill, referring to the bankers, said: “They inaugurated the policy of refusing loans to the people even upon the best security, and attempted in every way to spread disaster broadcast throughout the land. These disturbers—the promoters of public peril—represented largely the creditor class, the men who desire to appreciate the gold dollar in order to subserve their own selfish interests, men who revel in hard times, men who drive harsh bargains with their fellow-men regardless of financial distress. It is not strange that the present panic has been induced, intensified and protracted by reason of these malign influences. Having contributed much to bring about the present exigency, these men are now unable to control it. They have sown the wind, and we are now all reaping the whirlwind together” (Congressional Record, Vol. XXV, Part I, p. 865).

August 8, 1893, Senator Teller said, in a speech in the United States Senate:

“It is the height of folly that this is a panic caused by distrust of the currency.” On the 29th of the same month the Senator from Colorado, referring to the Williams House meeting of Secretary Carlisle with the New York National Bank Presidents, said: “It is a most remarkable interview; it will go far to support the charges which I am not going to make on my own authority, but which I am going to make upon the authority of others, that this panic is a bankers’ panic, brought by the action of the New York banks, and brought about for distinct purposes, which purposes were practically avowed on the 27th of April. The same things have been reiterated by the financial papers, and the policy is still continued up to the present hour. It had two objects in view. One was to secure from the United States a large issue of bonds, and the other to secure the repeal of the much-abused Sherman law.”

The records show that the bankers accomplished both of these objects. They secured the repeal of the purchasing clause, and afterward the issue of $262,000,000 in bonds.

In the same speech Senator Teller said: “There are many banks in the West, and some that I know of, which shut their doors because they could not draw the money that they had on deposit in New York” (Congressional Record, Vol. XXV, Part I, p. 1022).

In its issue of August 20, 1893, the Chicago Inter-Ocean said:

“When the future historian tells the world of the great financial panic of 1893, he will say: ‘In the winter and spring months of that year the New York bankers and financiers sowed the wind, and in the summer months reaped the whirlwind.’

“We know of no arrangement of words that can more graphically describe the action of the New York financiers and the results of that action. Colonel Ingersoll, early in the season of disturbance, properly called this a ‘bankers’ panic.’ Nor are the New York bankers alone to blame. Those of Boston and Philadelphia come in for their share.”

But it is useless for me to continue to pile up testimony to further sustain my contention. Whether the Panic Bulletin is a “canard” or not, its suggestions were carried into effect. The bankers opposed silver, and, for the purpose of having the law providing for its issue repealed, they precipitated the panic and used the methods described in the Bulletin to accomplish their ends. They are opposed to greenbacks, and if necessary will, I have no doubt, precipitate another panic in order to have them retired. And it all goes to show that the control of the currency should be taken out of their hands.

W. S. Morgan.

Hardy, Ark.