immediate reserve a cash fund amounting to only six per cent. of their deposits, it followed that the Eastern "reserve agents" would be drawn upon in enormous sums.

On the New York banks the strain was particularly violent. During the month of June the cash reserves of banks in that city decreased nearly twenty millions; during July, they fell off twenty-one millions more. The deposits entrusted to them by interior institutions had been loaned, according to the banking practise, in the Eastern market; their sudden recall in quantity forced the Eastern banks to contract their loans immediately. But in a market already struggling to sustain itself from wreck, such wholesale impairment of resources was a disastrous blow. In the closing days of June, the New York money rate on call advanced to seventy-four per cent., time loans being wholly unobtainable.

We have seen that the inflation of credit, during 1892, had been heaviest by far in the interior. The early withdrawals by depositors in the country banks were only a slight indication of what was to follow. In July, this Western panic had reached a stage which seemed to foreshadow general bankruptcy. Two classes of interior institutions went down immediately-the weaker savings banks, which in that section were largely jointstock enterprises, and a series of private banks, distributed in various provincial towns, which had fostered speculation through the use of their combined deposits by the men who controlled them all.

In not a few instances, country banks were forced to suspend at a moment when their own cash reserves were on their way to them from

depository centers. Out of the total one hundred and fifty-eight national bank failures of the year, one hundred and fifty-three were in the West and South. How wide-spread the destruction was among other interior banking institutions may be judged from the fact that the season's record of suspensions comprized 172 State banks, 177 private banks, 47 savings-banks, 13 loan and trust companies, and 16 mortgage companies. The ruin resulting in the seaboard cities from the panic of 1893 was undoubtedly less severe than that of twenty years before. But no such financial wreck had fallen upon the West since it became a factor in the financial world.

During the month of July, in the face of their own distress, the New York banks were shipping every week as much as $11,000,000 cash to these Western institutions. Ordinarily, such an enormous drain would have found compensation in import of foreign gold, and, in fact, sterling exchange declined far below the normal gold-import point. But the blockade of credit was so complete that operations in exchange, even for the import of foreign specie, were impracticable. Banks with impaired reserves would not lend even on the collateral of drafts on London.

So large a part, indeed, of the Clearing-House debit balances were now discharged in loan certificates that a number of banks adopted the extreme measure of refusing to pay cash for the checks of their own depositors. Charged with such refusal in the press and on the floor of the United States Senate, the banks simply intimated that they had not the money to pay out. This was not far from general insolvency. Long continued, a situa

tion of the kind must reduce a portion of the community almost to a state of barter; and in fact a number of large employers of labor actually made plans in 1893 to issue a currency of their own, redeemable when the banks had resumed cash payments. On the 25th of July, the Erie Railroad failed, the powerful Milwaukee Bank suspended, and the governors of the New York Stock Exchange seriously discust a repetition of the radical move of November, 1873, when the Exchange was closed. The very hopelessness of the situation brought its own remedy.

Relief came in two distinct and remarkable ways. Large as the volume of outstanding loan certificates already was, three New York banks combined to take out three to four millions more, and this credit fund was wholly used to facilitate gold imports. At almost the same time, the number of city banks refusing to cash depositors' checks had grown so considerable that well-known moneybrokers advertised in the daily papers that they would pay in certified bank checks a premium for currency. This singular operation virtually meant the sale of bank checks for cash at a discount. Checks on banks which refused cash payments were still good for the majority of ordinary exchanges, but they were useless to depositors who had, for instance, to provide large sums of cash for the weekly pay-rolls of their employees. Being unavailable for such purposes, the certified checks were really depreciated-like paper money irredeemable in gold. Through the money-brokers, therefore, these depositors paid in checks the face value of such currency as was offered, plus an additional percentage.

This premium rose from one and a half to four per cent., and at the higher figures it attracted a mass of hoarded currency into the brokers' hands. The expedient was not entirely new; it had been tried under similar circumstances in the panic of 1873. But in 1893 it was applied on an unusually large scale, and it had the good result of helping to keep the wheels of industry moving. Its bad result was that it caused suspension of cash payments in the majority of city banks; for, of course, when a premium of four per cent. was offered in Wall Street for any kind of currency, it was out of the question for the banks to respond unhesitatingly to demands for cash by speculative depositors. Most of the banks cashed freely the checks of depositors where it was shown that the cash was needed for personal or business uses; but other applications they refused.

Panic, in short, had ended, but not until the movement of liquidation had run its course. The record of business failures for the year gives some conception of the ruin involved in this forced liquidation. Commercial failures alone in 1893 were three times as numerous as those of 1873, and the aggregate liabilities involved were fully fifty per cent. greater. It was computed that nine commercial houses out of every thousand doing business in the United States failed in 1873; in 1893, the similar reckoning showed thirteen failures in every thousand.

THE COLUMBIAN WORLD'S FAIR

(1893)

BY E. BENJAMIN ANDREWS1

The idea of celebrating Columbus's discovery of the New World long anticipated the anniversary year. New York was appealed to as a suitable seat for the enterprise, and entertained the suggestion by subscribing $5,000,000, whereupon, in 1889, Chicago apprized the country of her wish to house the Fair. St. Louis and Washington appeared as competitors, but the other three cities unanimously set Washington aside. St. Louis showed little enthusiasm. Thirty-five citizens of Chicago, led by a specially active few of their number, organized Chicago's energies with such success that on appearing before Congress she had $5,000,000 in hand and could promise $5,000,000 more. The commodiousness of the city as well as its position near the center of population and commerce told in its favor. Father Knickerbocker was not a little chagrined when his alert and handsome cousin persuaded Congress to allot her the prize. The act organizing the Exposition was approved April 25, 1890. A National Commission was appointed, under the presidency of Hon. T. W. Palmer, of Michigan. An executive committee was raised, also a board of reference and con

1 From Andrews's "History of the Last Quarter Century in the United States." By permission of the publishers, Charles Scribner's Sons. Copyright, 1895, 1896.