was universally expected, and the checks themselves, still being good for all banking transactions and exchanges through the New York clearing house, were as good as cash for the most of ordinary purposes. Therefore the "premium" on currency never rose exorbitantly high.

But did this operation check individual hoarding of money? Obviously not. Withdrawal of funds from banks which refused cash payments ceased of course; but withdrawals from other banks were doubled. The logic of the bank restriction, therefore, pointed, if sound, to nothing short of general suspension. Nor was this all. A large part of the regular and individual bank depositors of money were driven away at once. The chances that a man with $100 currency will deposit it in bank, when the bank announces that it will not return the money on demand, and when the currency may be "sold" for $102 in Wall street, are certainly small. The argument that the banks were forced to refuse cash payment, because of the premium in Wall street, utterly confuses cause and effect. Of course, after the premium was offered, there was a chance that a depositor would withdraw his $100, sell it for $102 in Wall street checks, withdraw the $102 against this check, sell it again, and so on ad infinitum. But this ignores the fact that the bank restrictions caused the currency premium. Had the banks all continued to pay cash, no premium would have been possible. It is astonishing that anyone should question this. What Wall street broker in his sober senses would pay a $102 check for $100 currency when he could get $102 money by presenting the same check at bank?

Hoarding was certainly increased by the bank restrictions. Deposits of cash in banks almost wholly ceased, and domestic exchange was completely blocked. The experience of August proved beyond dispute the effect of the Wall street premium. This premium undoubtedly brought to sight great quantities of previously hoarded currency. But no sooner had this money been exchanged and again disbursed than it vanished once more from sight. No one who passed that month in New York City will dispute this. So completely, under the bank restrictions, did paper money disappear that by the middle of August business of every kind was being done with specie, and people who in years had never touched a gold piece for their common uses were making daily payments in eagles and double eagles. This money came not from the "purchases" from currency hoarders, but from the European gold importations. By the end of August practically all the banks had resumed full pay

a For obvious reasons it is very hard to arrive at any trustworthy estimate of the amount of money thus brought into the market. The Wall street firm which did the largest proportion of the business estimates the amount of money which changed hands during the currency premium at $15,000,000; but this, though based on personal experience, is largely guesswork. Some uptown retail stores sold their daily receipts of currency, a fact pretty publicly proved by the vigor with which other retail houses, in their advertisements at the time, boasted that they had regularly deposited their cash receipts in bank. There were, moreover, many sales of large blocks of currency, chiefly gold certificates, in lots as high as $100,000, which had evidently been locked up in safe deposit vaults. It was a striking incident that on the death, several months before the panic, of a well-known New Yorker, a man of wealth and financial reputation and a bank director, his executors found in his safe several hundred thousand dollars in gold certificates. The hoarding in New York was largely, and perhaps chiefly, speculative; in the interior, where it had far more serious effects, it was a natural result of the deposit and savings bank failures.

ment to depositors. But for a long time hardly any paper currency was paid; and how little the Wall street purchases contributed to the recovery the bank exhibits show. From August 5 to September 2, a period covering the existence of the currency premium, the specie holdings of the New York City banks increased by $10,930,700. But holdings of legal tenders increased only $1,785,800, and deposits only $1,064,900.

a The net gold import during July was $5,776,401; during August, $40,622,529. Much of this gold was, however, ordered by Chicago and Boston capitalists and shipped direct to them. Still more was imported by Wall street exchange bankers and sold by them at a premium to savings banks, corporations, and business houses. The restriction on bank payments to depositors was the reason why no gold, except that ordered personally by bank officers, was deposited in the banks.

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At a meeting of the Clearing House Association, held October 26, 1907, to consider the disturbed state of financial affairs and to take such remedial action as might be possible, the undersigned clearing-house committee, with the president of the association, were appointed to act as a loan committee with power to associate with them such other bank officers as they judged necessary.

It had been hoped that the crisis imminent for a week previous might be successfully met without the necessity for the issuance of clearing-house loan certificates, in spite of the urgent application for assistance from several banks, members of the association. Such assistance had been given through joint action of many of the banks who advanced cash to the applying banks, receiving participating receipts for their several payments and the clearinghouse committee holding the collateral security at the clearing house.

Public apprehension grew so rapidly, however, and the drain upon all the banks so severe that it was soon evident that no inferior expedient would suffice to make effective the aid which it was apparent must shortly be solicited by other members of the association, and the committee then determined to recommend the appointment of a loan committee.

The committee was unanimously appointed at noon, October 26, 1907, and forthwith proceeded to issue loan certificates, blank certificates and proper stationery having been stored at the clearing house for such an emergency. Under the terms of the resolution creating the committee, the following bank officers were appointed as

associates of the committee: Messrs. James G. Cannon, vice-president Fourth National Bank; Henry P. Davison, vice-president First National Bank; Walter E. Frew, vice-president Corn Exchange Bank; Gates W. McGarrah, president Mechanics National Bank; Albert H. Wiggin, vice-president Chase National Bank.

To these gentlemen was assigned the duty of passing upon the collateral offered for loans, and certifying to its sufficiency before the issuance of certificates.

The assistance rendered by the members of the associate committee materially lightened the labors of the loan committee, and the systematic methods employed in handling the mass of collateral pledged for certificates insured the transaction of the business of the committee without delay or complication.

Eleven million two hundred and thirty-five thousand dollars in certificates were issued to take up the participating receipts given for loans advanced from October 19 to October 26, and the interest due for such advances was included in the first distribution of interest on the 15th of the following month.

Until near the retirement of all but a small portion of certificates issued, your committee met on the morning of every business day and frequently after noon, at least three members always being present and generally all of the committee. The date of the first issue was October 26, 1907.

The date of the first cancellation was November 14, 1907.
The date of the final issue was January 30, 1908.
The date of the final cancellation was March 28, 1908.

Gross issue, $101,060,000.

Maximum amount outstanding was $88,420,000, December 16, 1907.

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