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GEORGE W. BERGE, EDITOR AND PUBLISHER
Volume 18
Lincoln, Nebraska, January 4, 1906
Number 33
Standard Has Cornered Money Market
and May Precipitate Panic
Call money was loaned at 125 per cent on Wall Street last
Thursday. On Wednesday of last week Secretary Shaw was at the
sub:treasury in Xew York conferring with the "frenzied financiers."
Wall street now presents a situation that may well alarm, the
-thoughtful. The outsider, who is often .puzzled by the ways of
Wall street, is always treading on thin ice when lie attempts to
prophesy. . Nevertheless there arc some phases of the financial situ
ation so ominous that The Independent is compelled to make note
of them in the interest of its readers. The most mystifying feature
of the situation is the high price of certain stocks at a time when
there would seem to be, the best reasons for -a slump in securities
of all kinds.
Those who judge by the usual signs are looking forward to a
period of stringency approaching a panic and are unable to under
stand why the stock market fails to reflect the uncertainty in the
money market. Even the astute Thomas W. La vvson has been1 ut
terly deceived, if the published interviews with "him record his real
views. He admits that he is "short of" Amalgamated Copper, which
he predicted would soon be selling dirt cheap. At present it is
above; par. " Apparently the people have not accepted Lawson as a
true prophet. They are not selling, but buying. They arc relying
on Standard Oil to keep stpeks booming. But there, is grave danger
that they are hastening toward an abyss.
To the amateur observer it seems as if the Standard Oil
crowd were preparing, for another "drive" at the market. Prices
are altogether too high.; Watered securities are selling far above
their true value. On , only one theory should Union Pacific be
selling where it is," around 150. If the Union Pacific can make
sufficient profits to pay big dividends on its watered stock there is,
of course, no very good reason why the stocks should sell at a lower
level. If by extortionate freight charges the Union Pacific can
maintain its present rate of dividends, why should its stock be de
scribed as "watered?" Only hard times could prove that the stock
had been watered. Are these hard times near?
Amalgamated Copper has much the same staliis. lis owners,
being able to control prices of copper, are able in a great measure,
to decide what the profits shall be, and can, therefore, give tlie best
kind, of support to copper stocks. A panic, however, would have
the effect of reducing the demand for copper and tlie trust's profits
would decline, and so, too, would copper stocks.
The kings of finance either expect a panic or they do not. If
they do not, it is easy to account for. the high prices of stx-ks,' Prices
are high and profits are high; consequently securities are high. But
does such a happy condition of confidence exist among tlie Wall
street financiers as the high prices of securities appear to indicate?
It is extremely, difficult for an outsider to believe that the finan
ciers are confident. A condition bordering on panic ready exists.
Call money m loaned at ILTi per cent. Why i This question can
lie answered by explaining how money is obtained by Wall street
speculator.
In Tom Watson's magazine for dune, Mr. Albert (JritHu,
a financial writer, said :
"IUtwccn and 1901, as ofllcially reported, the increase In the vol.
umo of visible money was, in lnllllonH, $1,322,000,000, or $U.75 per capita;
but tho quantity of hocuocu8 money In use inert-OM-d $r.273.()OO.OiH
vr capita: th quantity of both kind then actual!) In uao being $107.6:1 kt
"capita. This hhows that four fifth of the IncrcuKo in the milium of v
(uk& conn!! merely of the right ulven favored people to draw check
on bank, to pay which no real money ha been rieKMltcil."
How then do tbo favored people obtain baiH, if they do not
1iHit real money? Tliey obtain it by pledging eeurities. And
yet, at this time, when securities are at a phenomiiay high ievoi,
tlie banks, trust companies and insurance companies lend call money
at from 50 to 125 per cent."
In the same article Mr. Griffin says:
"Less than one-tenth of the 'deposits' In' the banks are real money,
the others being mere promises of the banks to pay money to those who
have bought (with notes) the right to draw checks against them and it
is simply impossible to so regulate the system as to prevent it from fre
quently working disastrously. The use of hocus-pocus money and its evil
results have increased steadily from the beginning of the deposit banking
system. From time to time methods change, but every change increases
' the power and profits of the few and the helplessness of the many. The
gravest .of these changes began to be felt about a decade ago. Leading
. bankers had always used some of their hocus-pocus money for the pro
motion of their own schemes, but from that time the Rockefellers, Mor
gans, and others have been systematically getting control of the principal
deposit banking institutions, and using not only a rapidly increasing pro
portion' of their depositor's real money but also more of the hocus-pocus
money made possible by those deposits." " ; .
The Rockefellers and Morgans. are now wide awake. They un
derstand that a state of panic exists and that worse may be expected.
They arc making ready to cope with the crisis when it comes, while
"the little fellows still continue to call madly for money with which
to .buy securities that are fated to decline. The Rockefellers and
Morgans are getting their hands on the real money. Controlling
CO per cent of the banking institutions of the country, they have
. been able-to practically: "corner" real 'moneys and. are forcing out
siders to pay extortionate rates for small loans.
" If a full-fledged panic descends upon the country, the securities
held by the banks will be of small worth. Meantime most of the
. real money will be in the hands of the money kings. The banks
will not have the 'money with which to pay their depositors, while
the financiers who are nov raking in the money will cling to it as
the sole means of tiding them over the hard times.
It is likely that Secretary Shaw will come to the rescue of the
banks. He will probably carry out his scheme to increase the 'gov
ernment deposits in the national banks of New York and other large
cities of the east. This money belongs to the people, but is turned
over to the bankers so that they may be protected by subsidy against
the peril which they themselves have 'produced. This money might
now be used to build the Pauama canal. Instead it is being used
to assist a favored class in escaping the consequences of their folly,
or to strike nearer the mark, their dishonesty.
Whether the panic increases or diminishes, the Standard Oil
crowd is in a position once more to reap a golden harvest. Another
"drive'' at the market will force prices down. A panic would shako
the market to pieces, but the speculators by artificial means can ac
complish about-the same reMilt. A bear movement is now in order.
, Having filled their coffers while the stocks were on the up grade,
the Standard Oil financiers can overflow their coffers by a big sell
ing movement. In this way they will possess themselves of a great
portion of the country's real money and will hoard it carefully if
hard times come.
V v
Attacking the President
An organized attack on the president is under way and hi
friend jdiotild take warning. .Washington correspondent of news
pa jH'Ti which have Urn unfriendly to the ptvddrnt have received,
their order tmd are fending out eunuiugly-devixd article rep re
Hitting Mr. Ifoosovelt a a dictator. Almost any day we may see
headline like this, "Roosevelt Plan to U IVIifical I Jos ,f America,
ami may read Pitch Hmtenee a thtw: 4llf Wealthy M-i.tiro of the