CHAPTER XXXII
THE PANIC OF NINETY-THREE
In the year 1893 there was one great controlling feature in our market that was to culminate on July first.
For years the commodity in which we dealt had been duty free. The McKinley Tariff Bill imposed a duty of four cents per pound, to go into effect on July 1, 1893, for a period of two years. It was the one senseless clause in an otherwise excellent bill and had been inserted as the only means of securing the necessary votes in the Senate. The sole object of the clause was to influence the speculative value of shares in a certain corporation which is now in the hands of a receiver.
When this corporation was first organized I subscribed for some stock and was in its first board of directors and its vice-president. If there was to be a new source of supply of the commodity I dealt in so largely, it was important I should know of it. As soon as I became satisfied that it was nothing but a scheme to make money by the sale of stock, I resigned and disposed of my holdings to one of the promoters at a profit of eight dollars per share.
Efforts to have the clause repealed had been unsuccessful, and as the duty was certain to be imposed, we thought it wise to import largely prior to July first. Others did the same, and when that date arrived the stock in New York was very large. We held on our own account about one-third of the entire stock and in addition a very large quantity which we had sold to our customers for delivery in July.
Of course, our purchases had been made of our London friends, and during this period our remittances were unusually large, running into several millions. An incident of our correspondence at that time was a postscript in one of their letters calling our attention to the fact that the letter from us, to which they were then replying, had been underpaid in postage and cost them six pence. They requested us to see to it in future that our letters were properly stamped. Think of that, from a concern with whom we were doing a business of millions!
Early in July came the panic. It seemed as if over night all the money in the country had disappeared. In Wall Street fabulous rates were bid for money. Banks and bankers said they had none. Where was it?
When the stock market collapsed and values had depreciated hundreds of millions, money was found by the large insurance companies and the powerful factors of Wall Street to pick up the bargains in shares, but it was some time before merchants could get it. Meanwhile, this class all over the country, after a long period of good times, were caught by the panic with their lines greatly extended. Great houses rating "a million and over" had no actual cash. Property?—Lots of it. Solvent?—Absolutely so, but they could not pay their obligations, nor take deliveries on contracts that required payments against delivery.
Our sales for July delivery amounted to nearly a million of dollars; less than fifty thousand was taken according to contract. The rest we had to carry and our bankers had to carry us. We shall never cease to be grateful for the generous help they gave us in that critical period.
Under these financial conditions it was only natural that all merchandise markets should be greatly depressed.
Our market was weak at eighteen cents, although not a pound could now be imported below twenty-two cents. The large stock seemed to hang as a wet blanket, but as a fact most of it was concentrated in three strong hands. We were the largest holders. I called on the other two and told them it was absurd to sell at the ruling price, and if they would assure me we would not have to take their stock—in other words, if they would hold it off the market—we would buy the floating lots and advance the price close to the importing point. I further offered to give them an equal share of the purchases if they so desired. They asked how much I thought we would have to buy? To which I replied, "Not over five hundred tons."
The agreement was made on the basis of an equal division of the purchases. Slowly but steadily we raised the price, and when the end we sought was accomplished we had bought four hundred and ninety tons. The operation and consequent advance in the market made a difference in the value of our holdings of seventy thousand dollars.