The first effect of the war was a general curtailment of newspaper advertising, a rise in the price of paper, and a greatly increased cost of the news of the day owing to excessive cable charges for foreign dispatches. Thus the newspapers suffered a rapidly diminishing revenue, and they found it necessary to discharge many of their employees and to reduce the salaries of others. With the Stock Exchange closed, naturally the salaried financial writers were among the first to feel this hardship.
Those whose services were retained throughout this crisis were confronted with divided responsibilities. It was their duty to interpret a mass of more or less fantastic rumors at a time when nerves were overwrought and points of view magnified and distorted. They wished to prevent the publication of anything of an incendiary nature, while at the same time a necessity arose for presenting to the public the news to which it was entitled. Placed in such a position there was a very natural impatience here and there to have the Exchange reopened, while now and then a tendency became manifested to publish certain news of the day which, while interesting to the public, tended to handicap the efforts of those bent only on reassurance and calm counsel. At times it became somewhat difficult to prevent the publication of some of these matters, particularly of the prices made in the so called "gutter" market which sprang up in New Street. And yet on the whole nothing could have exceeded the fairness and the spirit of coöperation of these gentlemen in this trying time. One newspaper even went so far as to cease the publication of a remunerative page of small advertisements having to do with dealings in outside securities. This was done at the request of the Committee without hesitation. Others coöperated in the suppression of advertising on the part of questionable people, while correspondents of out of town newspapers, both foreign and domestic, cheerfully acceded to requests to suppress all disturbing financial reports. In a word, the financial department of the whole newspaper press accepted the situation philosophically, bearing their losses without complaint and supporting without cavil the restrictive measures which it was necessary to employ.
This loyal conduct of the press and of the auctioneers was one of the great factors without which the critical days of the suspension of business could not have been successfully surmounted.
It will be remembered that in the morning of July 31st, the Governing Committee not only voted to close the Exchange but also declared that the delivery of securities should be suspended until further notice. The motive of this latter action was to prevent the possible insolvencies that were likely to be forced if purchasers were compelled to pay for their securities in the absence of a call money market. At the earliest moment that attention could be given to it the Committee of Five requested the Chairman of the Stock Exchange Clearing House to place before it the exact figures of the outstanding contracts. These figures when presented showed that there were stock balances open on Clearing House order amounting to $38,700,000 and Ex-Clearing House contracts amounting to about $61,000,000. Roughly speaking there had been about $100,000,000 of stock sold in the Exchange on July 30th, the delivery of which to the purchasers had been suspended by the action of the Governing Committee. Obviously a first great step toward clearing up the situation and preparing the ground for the ultimate reopening of the market was to get this great volume of contracts settled, so that if any failures were inevitable they would be disposed of beforehand.
It being probable that many of the purchasers of stock on July 30th were in a position to finance their purchases even in the midst of the crisis the Committee deemed it wise to offer every possible facility for the immediate settlement of contracts when the purchaser was in this position. They therefore issued the following notice on August 4th:
"The Special Committee of Five appointed to consider questions connected with the closing of the Exchange state that the resolution of the Governing Committee suspending deliveries until further notice does not mean that settlement may not be made by mutual consent wherever feasible. The Clearing House of the Exchange is prepared to advise and assist, and inquiries should be made in person there."
At the request of the Committee of Five the Committee on Clearing House at once undertook the task of assisting members of the Exchange in closing up these contracts and used its clerical force for that purpose, thus involving much careful and detailed work. They held daily continuous meetings, giving their personal attention in assisting members, and using a care that involved both tact and arduous labor. Through their efforts such extraordinary progress was made, in this complex and difficult task, that by September 22nd announcement was made that the delivery of all Clearing House balances had been completed with the exception of those of the few firms whose affairs were in the hands of receivers. These were settled shortly afterwards and at the same time the great volume of Ex-Clearing House contracts were also completely fulfilled.
This is one of the most extraordinary and gratifying experiences of the great crisis. In about seven weeks, at a time when money was unobtainable and the condition of panic was at its height, this huge volume of unsettled contracts was met and consummated by voluntary coöperation and without compulsion of any kind. In some few cases selfishness or indifference delayed action on the part of individuals, but these were all brought to a final adjustment by the influence and persuasion of the Committee.
This achievement not only reflects undying credit upon the members of the Exchange by showing both the sound condition of their business and their zeal to act for the general welfare, and creates a deep sense of obligation to the Clearing House Committee who for many long weeks worked unceasingly to overcome the difficulties that beset the path, but it justifies and confirms the wisdom of the New York Stock Exchange in adhering to the practice of daily settlements. In all the great European centers, where trading on the fortnightly settlement basis is in vogue, the restoration of dealings was terribly complicated by the herculean task of clearing up back contracts that extended over many days. In New York, when conditions so shaped themselves as to warrant reopening the Exchange, the back contracts of its members had all been settled up two months before. Had our system, like the European, involved "trading for the account," every additional day of back contracts added to the $100,000,000 worth of July 30th would have stood in the way of a final settlement, and the reopening of the market (which was long postponed as it was) would have been much further delayed.