was taken by the banking hierarchy, and was a welcome indication of a desire to check irregularities; also it was followed by reassuring statements to the effect that the trouble had been confined within a ring fence, &c., and though it must have given depositors in other banks matter for serious thought, and must certainly have contributed to the mistrust of their bankers which set the American public hoarding, it did not arise from, or immediately provoke, panic-stricken action among the general body of depositors.

The run on the trust company was a different matter. For it was an open declaration by the public of want of confidence in an important depository of the public's money, and of a consequent desire to get the said money out of the trust company's hands, a desire which was so persistent that it finally forced the company, after a very gallant stand, to put up its shutters and own itself insolvent. It should be noted that an American trust company is quite different both from an English trust company and from an American trust. An English trust company is chiefly concerned with investing its shareholders' money, claiming to be able to earn them better rates of interest than they can get on their own account, by means of its expert knowledge and the large scale on which it operates. An American trust may be defined roughly as a combination of businesses with a view to diminishing competition and establishing monopoly; but an American trust company appears to be chiefly a bank, calling itself by another name in order to evade the severe restrictions imposed by the American banking laws. It does not issue notes, which is perhaps the most important of a bank's functions from the American point of view; but it does everything that we mean by banking on this side, that is to say, it takes money on deposit, lends it out again, and, when solvent, meets cheques drawn on it, and pays cash on demand.

The strictness of the American banking law, which compels the banks to keep a reserve of cash equal to 25 per cent. of their deposits, and makes them liable at any time to inspection by a Government official to see that they have got it, and also restricts them in the matter of investing funds in real property, imposed galling fetters on the soaring spirit of American enterprise, which tends to unfit those in whom it is strongly developed for performing the humdrum functions of banking. And American enterprise, in very characteristic fashion, exclaimed, with Falstaff, Shall resolution be thus fobbed, as it is, with the rusty curb of old Father Antick the law?' and proceeded to evade old Father Antick by

developing banks under the name of trust companies. Being less restricted, the latter were able to compete with the banks with much apparent success, and it is likely enough that when the run on the Knickerbocker Trust set in, and all the other trust companies began to take measures for mutual protection, the New York bankers felt a certain satisfaction in the misfortunes of their insidious rivals, and would have welcomed the crisis if it would only have exposed the weakness of the trust companies and the dangers of allowing depositories of public money to invest it except under strict regulation, and then stopped.

But the crisis was not so obliging and discerning. The run on the Knickerbocker Trust lent itself to headlines and the picturesque fancy of the descriptive reporter, and all over the Union the fact was very loudly proclaimed that in the centre of American finance a large number of depositors preferred to take care of their own money instead of leaving it with an institution which had, till then, borne a high reputation. And the disease was immediately pronounced to be highly infectious. The run spread to the banks, and spread all over the country, and in a very short time the legal minimum of 25 per cent. of cash to deposits had been encroached upon. The financiers made reassuring statements and uttered the most optimistic sentiments in interviews, but in vain; pulpit eloquence was invoked in order to allay apprehension and stop the run, but depositors thought they knew more about banking stability than their spiritual pastors and masters, and continued to take their money out of their bankers' hands and put it away in safe deposits or under the domestic mattress.

The banks resorted first of all to the old plan, tried in former crises, of issuing Clearing House certificates-that is to say, of paying their debts to one another in paper, thus setting free their whole stock of currency to meet their customers' demands, and it was hoped that this measure would suffice to tide matters over until public confidence was restored. But public confidence refused to be restored, and as the crisis had arisen-after the manner of crises-at the most inconvenient moment that it could have chosen, at the time when the normal demands for currency for moving the crops made money scarce, and as the arrangements of the American currency system made it impossible to expand the supply, and as the Government did nothing for some time to relieve the situation, the banks finally adopted the simple but very effective expedient of refusing to part with cash except as, and in what

quantities, seemed good to them. And a premium on currency was thus established-that is to say, if anyone wished to be paid in legal tender cash, instead of in bankers' cheques on the Clearing House, he had to take so much less than the face-value of his demand. In other words, the whole American banking system went into a state of temporary default. The whole machinery of exchange broke down, defaults and receiverships were rife all over the country, and the United States relapsed into a condition of economic savagery, such as existed in the days when banking was

not.

In the meantime the American executive had taken no step that indicated any appreciation of the gravity of the crisis. The Secretary to the Treasury had, it is true, deposited all his funds that could be spared with the banks, in order to assist them; but this power, as we have seen, was normally exercised in times of ordinary pressure, and nothing was done in the direction of any extraordinary measure to provide for an extraordinary emergency. In fact it may be said that the American Government, and the whole American people, sat down quietly and tamely under a state of affairs in which the custodians of the people's cash calmly refused to part with it when asked for it by its rightful owners. It is a truly astonishing spectacle, and one that can only be explained and interpreted by an American. After a time the executive did at last decide that something ought to be done, and made that famous issue of bonds, borrowing money that it did not want, so that the banks might have a bigger basis for note issue; but even then it soon repented itself, and stopped the operation before it was half completed. The President also made an appeal to the people which might have had some effect if it had been uttered a few weeks earlier; but, as it was, fell as flat as the magnates' interviews and ghostly counsel from the pulpit. And so the crisis was left to drift along to its conclusion; and now the telegrams, from the jerky and disconnected statements of which most of our information about the crisis has to be derived, say that the American banks have had a very prosperous half-year, and are expected to declare high dividends. This profitable result of general default is a pleasing finishing touch to an episode which has been humorous in many of its aspects.

Exigencies of space prevent any description of the effect of the American crisis on the money markets of the world, all of which it strained with more or less severity. The United States, having

abandoned banking for the time being, consequently required an inordinate amount of pocket money, and the premium on currency made it a profitable transaction to import enormous amounts of gold. London, as the great free market in gold, was pulled on to an extent which forced it to raise its Bank rate to 7 per cent., and the result of this measure was that gold poured into it from other centres, and at the end of the crisis the Bank of England's reserve was stronger than at its beginning. It was a remarkable and very gratifying demonstration of London's power and predominance in the international money market. The fall in the prices of securities which accompanied the consequent stringency was quite moderate, thanks to the drastic thoroughness of previous liquidation, and provided a favourable opportunity for investors, which was readily taken by those who were fortunate enough to have any spare cash available.

HARTLEY WITHERS.

224

FISHERMEN'S SORROWS.

OUR fisherfolk are a race apart, their character scarcely intelligible to those of us who have lived among them, and to the average seaside visitor as obscure as that of the okapi. They are commonly represented, by those whose knowledge of them is limited to the encounters of a summer holiday, as more eloquent grumblers than even the farmer. I have known the latter rail eternally at the skies, though to him a week of drought may mean later ripeness in the orchards and a night of rain may mean an acre or two of spoilt crops. The fisherman, to whom a week of calm may mean starvation and a night of storm death by drowning, rarely grumbles at the weather at all. Not his is the impatience of poverty that marks the landsmen of all trades, but rather the equal mind which inspires a dumb and dogged patience that the wise and wayward alike laugh at in those who fish to pass the time, but that even fools are moved to admire in those who fish to feed their young.

We are also told that these fishermen are thriftless, never laying by for a rainy day. Thriftless! Many a Cornishman of my acquaintance earns an average weekly wage through the year of thirteen shillings. On this dole he may have to keep a family of six children, hale, hearty, and growing almost visibly out of their raiment. The whole sum is handed over every week-end to the goodwife, who, with a knowledge of finance that would not disgrace a Chancellor of the Exchequer, pinches and contrives to such purpose as to feed and clothe them all, pay the rent, keep the breadwinner's pipe alight, and avoid falling into debt. How in the name of Samuel Smiles she those who call her thriftless explain. is for those who know happiness. comes easily by his means, and the leave no relish for dissipation.

does so much on so little, let The truth is that extravagance The thriftless man is he who agonies of the fisherman's toil

The fisherman is exactly what his environment has made him. Only the pauperising interference of the philanthropist, or the cheaper charity of trippers, can mould his character on other lines; sap his spirit of independence, and undermine the fearless honesty of his nature. Life is a cruel riddle for him, so he is dour. He is