HOW THE PANIC OF 1907 WAS STOPPED
How The Panic of 1907 Was Stopped Before the House "Steel Trust" Investigation Committee, Colonel Roosevelt Presented the Following Statement Explaining How the Steel Trust was Permitted to Absorb...
...This note runs as follows: "'THE WHITE HOUSE...
...Frick informed me that as a mere business transaction they do not care to purchase stock...
...Application has been urgently made to the Steel Corporation to purchase this stock as the only means of avoiding a failure...
...These companies were on the fighting line, and it was to the interest of everybody to strengthen them in order that the situation might be saved...
...If I were on a sailboat I should not ordinarily meddle with any of the gear, but if a sudden squall struck us and the main sheet jammed, so that the boat threatened to capsize, I would unhesitatingly cut the main sheet, even though I were sure that the owner, no matter how grateful to me at the moment of having saved his life, would a few weeks later, when he had forgotten his danger and his fear, decide to sue me for the value of the cut rope...
...How The Panic of 1907 Was Stopped Before the House "Steel Trust" Investigation Committee, Colonel Roosevelt Presented the Following Statement Explaining How the Steel Trust was Permitted to Absorb the Tennessee Coal and Iron Company in Order to Arrest the Panic "IN THE FALL of 1907 there were severe business dis-I turbances and financial stringency culminating in a panic which arose in New York and spread over the country...
...Practically half the workmen so disabled were still suffering some degree of disability at the end of five years after the accident...
...He stated that the legal situation had not been in any way changed and that no sufficient ground existed for prosecuting the Steel Corporation...
...A recent elaborate report by the Imperial Insurance Office shows that, in a year, almost one workman out of every hundred meets an accident that causes death or disability extending for thirteen weeks or longer...
...4, 1907...
...that they are aware that the purchase will be used as a handle for attack upon them on the ground that they are striving to secure monopoly of the business and prevent competition—not that this would represent what could honestly be said, but what reckless and untruthfully may be said...
...The damage actually done was great, and the damage threatened was incalculable...
...The Secretary of the Treasury did various things, some on his own initiative, some by my direction...
...he will give the people the benefit of the doubt and act in any way whieh their interests demand and which is not affirmatively prohibited by law...
...The word 'panic' means fear, unreasoning fear...
...I at once went over, and as the Attorney General, Mr...
...Bonaparte said that my answer was the only proper answer that could have been made, having regard both to the law and to the needs of the situation...
...To stop a panic it is necessary to restore confidence, and at the moment the so-called Morgan interests were the only interests which retained a full hold on the confidence of the people of New York, not only the business people, but the immense mass of men and women who owned small investments or had small savings in the banks and trust companies...
...Frick and Gary were waiting at the office...
...If one out of a hundred German workmen is killed or seriously injured in industrial accidents during a year, we wonder what the workmen's accident rate is in this country, where we take much less care to prevent industrial accidents, where the pace is generally faster and where hordes of raw immigrants, inexperienced in any sort of factory employment, are annually drawn into some of the most hazardous industries.—Saturday Evening Post...
...My Dear Attorney General—Judge E. H. Gary and Mr...
...Furthermore, I believed that the action was emphatically for the general good, that, it offered the only chance for arresting the panic, and that it would probably arrest the panic, as it did...
...In my judgment I would have been derelict in my duties, I would have shown myself a timid and unworthy public officer, if in that extraordinary crisis, I had not acted as I did act...
...In every such crisis the temptation to indecision, to non-action, is great, for excuses can always be found for non-action, and action means risk and the certainty of blame to the man who acts...
...Before the close of the interview, and in the presence of the three gentlemen named, I dictated a note to Mr...
...But if the man is worth his salt he will do his duty...
...H. C. Frick, on behalf of the Steel Corporation, state there is a certain business firm (the name of which I have not been told, but which is of real importance in New York business circles) which will undoubtedly fail this week if help is not given...
...The press contained full accounts of the visit to me of Messrs...
...Washington, Nov...
...It was necessary for me to decide on the instant, before the Stock Exchange opened...
...I answered that while of course I could not advise them to take the action proposed, I felt it no public duty of mine to interpose any objections...
...But I fully understood and expected that when there was no longer danger, when the fear had been forgotten, attack would be made upon me...
...The danger was too imminent and too appalling for men to be willing to condemn those who were successful in saving them from it...
...During those days both the Secretary of the Treasury and I personally were in hourly communication with New York, following every change in the situation and trying to anticipate every development...
...Frick and Gary had proposed and exactly what I had answered—so that there might be no possibility of misunderstanding...
...Next morning, while at breakfast, I was informed that Messrs...
...1JTHE COMPULSORY ACCIDENT insurance system of Germany embraces ten million workmen...
...It was the obvious duty of the Administration to take every step possible to prevent appalling disaster by checking the spread of the panic before it grew so nothing could check it...
...Hon...
...For several days the Nation trembled oa the brink of such a calamity, of such a disaster, as you gentlemen doubtless remember...
...Root, who was also a lawyer, to join us, which he did...
...At the time the relief and rejoicing over what had been done were well-nigh universal...
...The Knickerbocker Trust Company had already failed, and runs had been begun or were threatened respecting two other big trust companies...
...From the best information at my disposal I believed (and believe) that the addition of the Tennessee Coal and Iron Company's property would only increase the proportion of the Steel Company's holdings by about 4 per cent., making them about 62 per cent, instead of about 58 per cent, of the total value in the country, an addition which by itself, in my judgment (concurred in, I may add, not only by the Attorney General but by every competent lawyer with whom I talked), worked no change in the legal status of the Steel Corporation...
...Charles J. Bonapaprte, Attorney General.' "Mr...
...I was intimately acquainted with the situation in New York...
...They further informed me the policy of the company has been to decline to acquire more than 60 per cent, of the steel properties, and the acquisition of the property in question will not raise it above 60 per cent...
...It was a matter of general knowledge and belief that they or the individuals prominent in them held the securities of the Tennesse Coal and Iron Company, which securities had no market value and were useless as a source of strength in the emergency...
...But they feel that it is immensely to the interest of every responsible business man to try to prevent a panic and general industrial smash-up at this time, and that they are willing to go into this transaction because it seems the opinion of those best fitted to express the judgment in New York that it will be an important factor in preventing a break that might be ruinous: and that this has been urged upon them by the combination of the more responsible bankers in New York who are now thus engaged in endeavoring to save the situation...
...But they asserted they did not wish to do this if I stated that it ought not to be done...
...and events moved with such speed that it was necessary to decide and act on the instant, as each successive crisis arose, if the decision and the action were to accomplish anything...
...The proposal of Messrs...
...Frick and Gary, and heralded widely and with acclamation the result of that visit...
...Morgan and his associates, were of course, fighting hard to prevent the loss of confidence...
...The Steel Corporation securities, on the contrary, were immediately marketable, their great value being known and admitted all over the world—as the event showed...
...Thanks largely to the action of the Government, the panic was stopped before, instead of being merely a serious business check, it became a frightful and nation-wide calamity, a disaster fraught with untold misery, and woe to all our people...
...But I wish it distinctly understood that I acted purely on my own initiative and that the responsibility for the act was solely mine...
...Every step I took in the matter was as open as the day, and was known in detail at the moment to all people...
...Late one evening I was informed that two representatives of the Steel Corporation wished to see me early the following morning, the precise object not being named...
...Among its assets are a majority of the securities of the Tennessee Coal Company...
...Bonaparte, had not yet arrived from Baltimore, where he had been passing the night, I sent a message asking the Secretary of State, Mr...
...Bonaparte setting forth exactly what Messrs...
...Incidentally I may mention that when I was in Birmingham last spring every man I met, without exception, who was competent to testify informed me voluntarily that the results of the action taken had been of the utmost benefit to Birmingham, and therefore to Alabama, the industry having profited to an extraordinary degree, not only from the standpoint of the business, but from the standpoint of the community at large and of the wage workers, by the change in ownership...
...Frick and Gary was that the Steel Corporation should at once acquire the Tennessee Coal and Iron Company, and thereby substitute among the assets of the threatened institutions (which, by the way, they did not name to me) securities of great and immediate value for securities which at the moment were of no value...
...Judge Gary and Mr...
...Sincerely yours, THEODORE ROOSEVELT...
Vol. 3 • August 1911 • No. 33
