CHAPTER LXI.
A REMARKABLE CHAPTER OF HISTORY.
Any review of the advance of this country during the past fifteen years,
forms a record of the most wonderful progress ever made by any nation in
such a short period. A record of the development of the country’s
resources through a resistless energy that seems destined to control the
markets of the world, reads almost like one of Grimm’s famous tales, for
after numerous trials, and the surmounting of many obstacles, the fairy
wand is turning what we will into gold.
One of the effects of the Vanderbilt boom of 1885 is to be found in the
enormous mileage of new railroad construction in 1887, namely 12,000
miles. It may have looked at the time excessive, but it has turned out
to be a fortunate anticipation of the great business strides made since
that time. As far back as that year, our exports of manufactured
articles began to show an appreciable increase.
The year following will always be memorable as the time of the great
blizzard which tied New York up so effectually for several days. As a
direct result of the exposure to its severity, the country lost in
Roscoe Conkling one of the most picturesque figures in American politics
and a man of unblemished reputation. He was taken from the arena of
affairs too soon to allow his participation in the presidential campaign
of that year.
My own experience at the time has impressed the memory of the great
storm strongly upon my mind. I had gone to Newport accompanied by Mrs.
Clews to inspect some improvements then being made at my summer home,
and in returning we came across the bay in the regular boat for the
purpose of taking the noon-day train which ran from Boston to New York.
When we were about half way over the bay, a vicious squall struck us and
we began to doubt if we should ever reach the shore again. Finally,
however, we did manage to land, and connected with the belated train.
Progress of course was slow, so slow in fact that the next morning saw
us only as far as New London, whence further movement was out of the
question. Many of my readers will recall the railroad ferry over the bay
from New London. The last train previous to ours had been started
across, but the violence of the tempest had compelled the pilot to give
up the task and return. With more incoming trains, New London was soon
congested by the sudden increase in population, and accommodations of
any sort were at a premium. We were for a time at a loss as to where we
could go, but fortunately succeeded in inducing the manager of the hotel
there to install us in the private apartments of the proprietor, who had
the day before started with his family for Florida. He spent the ensuing
four days upon the railroad, between New London and New Haven, banked in
by a snow drift six feet high, while we enjoyed the hospitality of his
apartments during that time. I am sure that we could not conscientiously
complain of the exchange. Telegraphic communication with New York was
completely shut off. As our children had remained in the city, we were
naturally anxious to know of their welfare and relieve any anxiety they
might have as to our safety. There remained but one means of
communication, and that a wire to Boston, whence messages could be
cabled to Liverpool, and back to New York, and that is the way we got
word to and from the metropolis. That was a rather circuitous way, but
it was effective.
[Illustration:
_John H. Clews._
]
Mr. Cleveland’s renomination and accompanying free trade talk, disturbed
the markets more or less from the date of his nomination in 1888 up to
the time of General Harrison’s election. The latter’s entrance into the
White House started the entire business of the country going, and
through his wise management, we were brought to a very high point of
prosperity, the last year of his term being, up to that time, one of the
most prosperous in our history. One of General Harrison’s most signal
achievements was in the exchange of reciprocity treaties, which was
managed in such a masterly manner by his resourceful Secretary of State,
Mr. Blaine.
In the middle of General Harrison’s term, occurred the greatest
financial shock the world had experienced in the last quarter century,
or since the panic of 1873.
The suspension of the great firm of Baring Bros. of London in the fall
of 1890 proved a demoralizing force from the effects of which finances
did not thoroughly recover for several years. The direct cause of the
failure, as is now well known, was over-commitment in Argentine
enterprises. Through the representations of an agent of theirs who had
visited the country, everything bearing the name of Argentine was
colored a most rosy hue, and the investments of that great house and its
following were enormous. The inevitable reaction from such inflation
found them with an immense load of these securities unmarketable, and
they were forced to suspend. The assistance rendered in rehabilitating
the firm has been signally successful. Through the efforts of Mr.
Lidderdale, Governor of the Bank of England, that institution took over
some seven million pounds sterling of the congested obligations of the
firm. By the wise, patient, and sagacious management of these former
unmarketable properties the bank was finally enabled to realize enough
therefrom to pay up all the arrears of the firm.
The liquidation of American securities by British holders which was
consequent upon their failure was enormous in volume and extended over
several years.
The year 1890 was further noteworthy as marking the birth of that
unfortunate compromise of the silver agitation known as the Sherman
silver-purchase law, which was to bring about such direful results
within a brief three years. After the shock of the Baring panic had
subsided, the beneficial effects of the McKinley tariff law began to be
felt and with increased exports, largely of grain, in the succeeding
year, together with ample protection for home industries, we were
ushered into 1892 under very auspicious circumstances.
Bountiful crops again provided a basis for what developed into a
wonderfully prosperous year. During the year, Jay Gould (largely through
the aid of his son George), by one of his characteristic strokes,
succeeded in obtaining control of the Union Pacific system, while Mr.
Huntington was thinking the matter over; but his personal control was
not to last very long, for in December of that year, Mr. Gould died,
after a career of great activity and venturesomeness, which has
elsewhere been reviewed in this book.
[Illustration:
_J. B. Clews_
]
The Democratic party still clung to their idol, and Mr. Cleveland was
renominated for the presidency in 1892, and by one of those inexplicable
turns of public opinion which foolishly wished a change of
administration in the midst of prosperous times, he was elected, and
returned to Washington the following March, be it said, enjoying the
confidence of the great majority of the people. Almost from the time of
that election, the Wall Street markets were depressed, the fear of free
trade measures being the basis of distrust. Late in the year, the
Treasury’s stock of gold began to show signs of diminishing, and with
the exception of a few rallies, one notably in the following January,
prices continued on the downward course. Co-incident with the decrease
of gold reserves arose reports of a disposition on the part of the
Secretary of the Treasury to interpret the word “coin” in our Government
obligations as allowing the redemption of the bonds in either gold or
silver at the option of the Government. The effect of any doubt or
question upon this most important subject could only result in
unsettling confidence; of which Addison speaks as the “high priest in
the temple of trade.” For the first time in very many years, our
Treasury operations showed a deficit, and things were going from bad to
worse. The first great smash in prices occurred in May, when the famous
Cordage Trust went to pieces. At the same time, Sugar stock and the
remainder of the then few industrial shares took part in the sharp
decline. The gold reserve had by the middle of the year reached
alarmingly low figures, so that the pressure of public opinion compelled
the calling of an extra session of Congress for the purpose of repealing
the silver purchase clause of the Sherman law,—which had proved to be a
veritable “Old Man of the Sea” upon the back of the country, threatening
to throttle business interests everywhere.
The Congressional procrastination, and obstructive tactics in the Senate
worked havoc with trade and finance, and when relief finally came in the
repeal of the silver purchase clause, the vitality of the patient had
sunk so low, that it was a matter of years before returning health, in
the form of confidence, brought back our native buoyancy and push. It
became necessary early in the following year to issue $50,000,000 worth
of bonds in order to keep the gold reserve from getting too near the
vanishing point. Tariff agitation, which had been started by President
Cleveland’s message to Congress in December, 1893, upset all the
calculations of business men, who hoped, after a disastrous summer, that
the tide had turned. But, no sooner was the fear of a silver deluge
quieted, than revenue reform brought on another period of anxiety and
delay. Fortunately when that distorted measure (with its 640 Senate
amendments) which bore the name of the late William L. Wilson, a man of
deep thought and the highest integrity, did become a law in the
following year, it was not burdened with an income tax.
There are those who argue, probably to their own satisfaction, that this
latter is an equitable form of taxation, but it has always appeared to
me as putting a premium on idleness by taxing thrift.
[Illustration:
ROSWELL P. FLOWER.
]
Another issue of $50,000,000 bonds was necessary before the year was
out, and in spite of this replenishment, gold exports to pay our debts
to Europe for securities sent back to us by the ream, continued in such
volume as to render a further issue imperative in the following
February. This will be remembered as somewhat unique in our Treasury
operations, being in the form of a purchase of 3,500,000 oz. of gold,
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.
[Illustration:
J. PIERPONT MORGAN.
]
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
in many other ways were princely, but perhaps his memory is greener in
the minds of those who, through his great private charity, were lifted
above want.
These great latter day fortunes have not often failed, in this country,
in being administered by men whose conception of life, and of duty
toward their fellow men has turned the duty into a pleasure. This is a
very great tribute to American citizenship and should not be forgotten
or lost sight of by our sometime critics.
The passage of the Currency bill in March, 1900, undoubtedly did much to
increase Europe’s faith in our monetary stability and, furthermore, the
result of the Presidential election of 1900, the triumph of the party of
sound money seems to preclude the recurrence of any attacks upon the
financial honor of this country. There has been a campaign of education
going on in this country ever since the advocate of the free and
unlimited coinage of silver at the ratio of 16 to 1 first promulgated
his doctrines. The benefit to the people of this knowledge of public
affairs is clearly apparent. They will have none of false theories and
suicidal experiments, they will not go after false financial gods, they
will not bow the knee to the Baal of repudiation and confiscation.
While the modern method of commercial development is open to criticism
in some respects, still I take it that the evils complained of are not
those of very existence but are rather those of circumstance, and are
open to correction by the will of the people. How often have we heard
that these combinations stifle competition—but for how long? Does not
their existence excite competition? Furthermore, their management calls
for the very highest ability and creates a keen intellectual competition
which cannot fail to be of educational value at large. It remains for
ensuing years to provide correction for those defects which are bound to
appear in any new and untried system.
We end the century that almost covers our national existence with a past
record and prospects unparalleled. We enter the new century full of
faith in our institutions, that have stood severe tests even in our
short life, and full of hope for even greater national achievements. We
are fast taking the lead in the affairs of nations as well as in the
affairs of commerce and finance, and have need of great steadiness of
character, and fixity of national honor, which now seems assured for all
time. It augurs well that we begin the twentieth century, which displays
such vistas of greatness, at peace with all the world.
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