The evening world. Newspaper, July 31, 1914, Page 3

BY DECLINE Losses Fall ath OF WAR SWEPT ANAY MILLIONS IN UNITED STATES OF SECURITIES Not on Speculators Alone, but} on Every Owner of Stocks and Bonds of This Country. Euyopes plunge into war bas already cost America millions of dollars in depreciation of stock prices. confiict were heard on Thursday, The first rumblings of the Austro-Servian July 23. Just one week later, on Thurs- day, July Je, the New York Stock Exchange witnessed the lowest prices fouched in many years, The striking differences between prices of twenty leading stocks at the beginning of war ru jors and the low level of just one week later are @hown graphically in this table of comparisons: wily ah, July 90. haw Omaig. Copyer tv's cL bs ‘Am, Beiter . mM ! Atchison... ! Maltimore & On Caw, Pacific aN Conpolidated « u Geer) Klectric 2%) reas Northen pt beat Vat, Harvester i only open market, 4; United States wholly removed from the scene of conflict. Some of the Principal economic causes and effects | Notiveable at thin time are as follows: Heavy sales of Europe's holdings | of American securities in New York, whieh for several days has been the Closing of foreign | exchanges rendered sale of securities | U% lof any kind at home imporstble, and uy | dumping ‘on New York followed. | iz | One hundred millions of American Heal | gold have been drawn to Europe to | ‘) been a v ee ay TWO FORMS OF LOSSES ARE PRECIPITATED., 1 These exceptional declines have} Precipitated two forms of losses, The “1 first is the shrinkage in capital of | every owner of stocks and bonds, While not feeling direct loss of money @t this time, yet each stuckholder’s | investment depreciated in value! Just so much as the market prices have fallen. An immediate effect will be experienced by persons having s«-| curities deposited collateral for loans, as they are liable to be called upon for additional security or reduc. of the luan io correspond with! lower stock values. t The second, though tortunately) Jamal, lose fulls upon the speculator | aRo bas been carrying stocks on} margin. The past year of depres- “Mlen In stock markets and succession ‘$f collapses in bigh finance cuorpora- fons had the effect of driving the Pablic 0 completely out of the specu-! lutive market that only professional traders have been in the slump of the last week. Their ability to jump quickly from one side to the other| Was kept them afloat even in times of violent fluctuations. VARIETY OF COMPLICATIONS HAS BEEN CAUSED. While the menace of impending war has been the general cause of these declines in stocks, yet there hus rlety of complications, all and to damage the financial mmecter)t7 of 8 a country like the reinforce the finances of belligerent nations. trade balance, most of it was direct purchase of gold at prices profitable to American sellers, War interferes with America's for- Kn trade, which is of immense im- portance to many industrial concerns. In case of general war, European in- | dustries and commerce would be so paralyzed that only foodstuffs, cloth- ing, shoes and a few necessiti would be bought in this country by those nations who now are our best forelgn customers. This condition ac- counts for the decline in securities like those of the International Har- Vester Company, which has large t in Russia and the Balkan states, HOW AMERICA WILL BE AD- VERSELY AFFECTED. Many lines of American mercantile industry which deal in foreign made goods have already begun to feel the! indirect effects of war through cur- tailment of international commerce. Wheat prices have risen in America because war means destruction of agriculture, ‘The Balkan states and Southern Russia are the best grana- ries of Europe, and promise now to be the centre of war's ravages, Prices of have fallen in America because Europe ordinarily takes the larger part of our cotton crop for manufacturing its own fab- rics, War means interference with the cotton mills and a decrease of their output, consequently lessened demand for American cotton. cotton NEW YI YORK STOCK EXCHANGE CLOSES AND ALL LEADING CITIES FOLLOW Fe a cst var from Firet Page.) Exchange |9 closed, which may |» for two or three weeks unless European war conditions Improve. So trading in stocks has been absolutely halted for the time being. The leading banks in the Clearing House Association have come to an W agreement, without concerted actton, that last night's closing figures shall rule as the price of stocks held as collateral for loans. Such a setting of standard prices was necessary, Big ‘banks are in agreement that Stock Hxchange borrowers shall not ‘be preased if their collateral is accept- ‘able, Small banks closed down on ‘many borrowers this afternoon, but the larger banks took care of the equeesed brokers. Sterling Cable Exchange on London reached to-day the unprecedented fig- ‘ure of $6.50 for a pound aterling as against the normal exchange rate of $4.88 for one pound. Very little money wan transferred at the rate quoted, and that only for urgent ne- thes. ‘The drain upon the gold supply has peen checked. Two causes contrib- uted. The refusal of American bank- ‘era to sell gold abroad and the almost prohibitive insurance rate. The closing of the Stock Exchange was made necessary by the fact that ers had nothing but orders to fa. "Noboay wanted buy. Had the doors opened there would have been ‘am avalanche of securities dumped ‘en @ market absolutely without sup- sport -and values would have tumbled “Gizastrously. As it was four houses went under and others are tottering. Fifteen minutes befo.» the opening hour of 10 o'clock the governors were hastily summoned by telephone to a Weeting and after brief discussion iasued the following announcement: ‘The Governing Committee de- clded thi: the Exchange be closed URE Gurtiier notion and that ” $e eae eT deliveries be suspended until fur- ther notice, Announcement to this effect was made from the rostrum of the ex- change just at the opening hour and @ tremendous shout of approval went up from hundreds of brokers gathered on the floor. Not since the panic days of 1873 has the Exchange been closed on account of financial stress. Then it closed from Saturday, Sept. 20, to Sept. 30. When President McKinley was shot in September, 1901, the Exchange closed for one day, but that was as much on account of tribute to the stricken Executive & protective measure to save @ sudden slump tn security values, Immediately following the an- nouncement to-day of the Stock Ex- change’s action, the exchanges in others cities followed sult. After one hour and twenty of trading and @ heavy break in prices the New York Cotton Ex- change closed ite doors at 0 o'clock to-day until Tuesday, The Coffee Ex: ange did not open, the managers deciding to suspend until Monday. The Consolidated Stock Exchange opened at 9.30 J'clock but did no business and closed at 10 o'clock, Immediately on report of the big exchange's action. It w. &@ meeting of bankers at the offices of J, P, Morgan and Com- pany that the decision was reached to close the Stock Exchange. When the gloamy news of war came over the cable there was a quick summons from the house of Morgan for a conference of finance leaders. In the gathering were J. P. Morgan and H. P. Davison, his partner; Frank A. Vanderlip, President of the Na- tional City Bank; A. B. Hepburn, Chairman of the Chase National Bank and Francis L, Hine, Presi- dent of the First National Bank. ‘These men were in close communica- tiop with the Governors of the Stock While part of this sum was | THE EVENING WORLD, ee SULY 31,. 1914, Troops Cheered by Vast Crowds as They March Through Austrian Capital on Way to the Front $500, 000, 000i vent a financial pantie. The President and Secretary Mc of the New York Stock Exchange as The Preside ferred with the President on this sub; Exchange and after a long discus- sion it was decided that the strain! upon credits might reach a danger: | Joux degree if the Exchanges were | open. While it is understood that there was some opposition to the closing «f the Exchange, it is learned that a majority of the men whose advice was sought decided that as a pre- cautionary measure the action should be taken, No definite pertod for keeping the Exchange closed has been set. Stock Exchange houses have notified their offices not to make deliveries for received stock until further notice. MR. HEPBURN EXPLAINS WHY ACTION WAS TAKEN. A. B. Hepburn of the Chase Nation- al Bank issued the following state- ment: “With exchanges closed all over the world there was no course open to the New York Stock Exchange but to follow suit. Otherwise we should be keeping open market where all the world could sell and utilize the resulting credit in taking our wold. “For Instance, Canadian Pacific, said to have 67,000 stockholders, and to be owned mainly on the Continent of Europe, has been selling by the ream here for many day. Although {t has suffered a shrinkage in v it nevertheless sells now for good prices, about 160, Tuere certainly is no reason why the ownership of Can- adian Pacific should be transferred from the Continent of Europe to ew York at this time. “We cannot furnish a market for | International securities, and should not at a time like this, The closing of the Exchange, under the circum- stances, was wise.” ter a meeting, gave out the following statement Tt was the opinion of the com- mittee that the business nd financial conditio, of New Ye and the entire country was sound, but that the situation in Europa justified extreme prudence and self-control on the part of the United States, The closing of the Stock Fx- change was & wise precaution hy reason of the dispositio of all Europe to make It the market for whatever It wished to sell, In thin country thre was no occasion for any serious interruption of the regular course of business, either financial or mrcantile. Enormous selling orders had ac- cumulated in brokerage houses over) night, and the margins of speculative accounts had been wiped out almost to the last penny. three days t! During the last The Cleariig House Committee, at- | sbrinkage of values of eccurities has been eo great as to up-! burgh Stock Mzchange was closed to- ¢) to a n Treasury Ready to Meet Crisis Here WASHINGTON, July 3i.—Secretary of the Treasury McAdoo Issued a Statement saying the Treasury Department will help as far as it legiti- mately niay in New York or clsewhere during the present situation, Following a conference he had with the President, an official statement was issued stating that the United States Government was prepared to pre- | The Treasury will stand ready to come to the rescue of any section of the country whose banks needs funds. Five hundred milifon dollars in printed Treasury notes are in the | vaults here ready for immediate circulation. Adoo endorsed thé temporary closing a “wise move,” t and Secretary McAdoo today prepared to rush organi: zation of the Federal Reserve Board. Adolph C. Miller, a member, con. Ject to-day, —__. | i set both apeculative and commercial j conditions, The most critical situation was in the loan market. The great | banks of New York Jend millions of | dollars every day to finance stock market operations, taking the stocks and bonds over as collateral. In or- {dinary times loans are me to at from 60 to 80 per cent. of the market value | of the collateral, Tho slump in prices during the past | few days has compelled banks to call for additional collateral and reduction of the amount of loans, This has forced brokers and Investors to sncrl- fice part of their securities in order to protect those they wished to hold, The dumping of European markets on the New York Exchange was at its height yemterday. The squeeze of American brokers followed and threat- ened to develop to such an extreme to-day as to cause widespread finan. cial disaster and many failures. ‘The strain of standing against all the world could no longer be endured, The governors appointed a commit- tee of five members to arrange for deliveries and to confer with bankers regarding fixing prices of collateral on loans now that the exchange ja closed, Tht committee consisted of President H. G. 8. Noble, 8. F. Streit, FE. G. Groesbeck, H. H. Pomeroy and D, G, Geddes. They asked the banks not to call any loons during the day or while the exchange was closed, It is necessary to fix on some det- injte prices for securities during the | intertm | so that collateral on loans may be carried. During the panic of 1473, Irresponsible brokers met in the Fifth Avenue Hotel and on the Wall street curb during the closed period jand continued to buy and sell. They | forced down prices still further and in 'some instances quoted cent 50 oper Home banks used these prices squeeze brokers on collateral The Board of Governors In in favor of restricting all outside or private purchases or sales of recurition by Jany member of t) cxchange during | the closed period, Brokers refrained sales over the counter to individual customers. YORK’'S EXAMPLE. BOSTON, July 31.-The Governing Board of the local Stock Exchange decided not to open the Stock Ex- change to-( This action followed the receipt of news that the New York Stock Exchange would be closed. PHILADELPHIA, July 31,—Follow- ing the decision of the New York Stock Exchi not to open for buai- ness to-day, the governors of the Philadelphia exchange also decided to remain closed. PITTSBURGH, July 31,-~‘he Pitta Rates. Amalgamated Copper . American Can pf....... American Car Foundry pf. . American Smeiters . . . American Smelters pf... . Canadian Pacific..... Consolidated Gas Great Northern pf. . Lehigh Valley... New York Central . Northern Pacific . Pennsylvania Reading . neasdraane Southern Pacific . Union Pacific 8. vv. U. Steel... Stec! pf. Tawa waarane Yields of the Leading Stocks Based on the Closing Prices These figures are based on closing prices of Thursday, July 30. Nields. 122 80 98% W's 110 8475 M3ty 51% 106% day until further notice, CHICAGO, July 31,—The Chicago Stock Exchange was closed to-da BALTIMORE, July 31.-Tne Balti- more Stock Exchange was closed to-day until further notice. INDIANAPOLIS, July 31.—The lo- cal Stock Exchange was closed tu day, Business will not be resumed until the New York Exchange is re- opened. ST, LOUIS, July 31.—The stock board of the Merchants’ Exchange of St. Louls was closed to-day, but it was announced the Grain Exchange would be open WASHINGTON, July 31, — The Washington Stock Exchange was closed fosday indefinitely, L ROIT, July 31.--The Detroit Stock Exchange was closed to-day | until further notice, COLUMBUS, O., July 31.—-Following | the action of New York, the Columbun Stock Exchange did day. | BAN) FRANCISCO, ‘The, San Francisco Stock Exchange closed | temporarily to-day CLEVELAND, ©, July 31,—Omcers! of the Cleveland Stock Exchange, | which deals in local securities, decided to-day not to close with New York,| Ci i ago id other exchanges, NATI, July 31-Th Cin clnnael Stock Exchange was open as| usual to-day. The local exchange is} a very small affair, however, and| membera say the present crisis will not in any way affect tt FXOHAN COTTON EXCHANGE | CLOSED BECAUSE | OF HEAVY SLUMP. under the last oficial Exchange pricey | to) this morning even from making cash! OTHER CITIES FOLLOW NEw! The brief session of the New York | Cotton Exchange, lasting only one hour and twenty minutes before trading Was suspended, proved dis- | astrous to prices and caused lonses to many traders. So great was! the fall on account of the European | war scare that the exchange decided to close until next Tuesday Th heavy | clines of the last two days| were mild compa he tobog- ganing of prices t Theres was an attempt by larg port the market a considerable advan: the firat half hour, ‘Then came gloomy war news from Burope and the bot- jtum fell out of the market. August eutton m 11,05 to 9.60, a drop of 145 points, while December ran down the scale for 196 points, ‘This was too | much for the market to withstand | and closing of the doors wan ordered Higher prices were made for benefit of the closing quotations tk to sup: first and some| ry were scored in to-day until was the first tim notice, in ite history that the exchange cloned during « session, Violent fluctuations shook the market from the ‘outset, There was a range of 120 to 134 points, and when trading ceased prices were 0 pointe dows, ~ IN EXCHANGE CLOSES ITS DOORS; BIG CITIES FOLLOW. LO. LONDON, July 31.—The Stock Ex- change was closed to-day until further notice, by order of the com- mittee. This is the first instance in modern times when it has suspended all business. The committee also an- nounced that the settlement due on Aug. 18 has been postponed until Aug. 27, and that the consola set- tlement due on Aug. 6 bas been put over until September, Stocks which have yet to be delivered for the ac- count just closed must, however, be paid for. Tho stock exchanges of Liverpool, | Manchest Glasgow and Edin- burgh also were ordered closed. ‘The chief reason for the unprece- dented action of the London stock Exchange Cominittee was the fact | that the system of credit had practi- cally broken down and It was Irppos- sible to carry on business in the or- jdinary way. This situation did not arise through over-speculation, but | because bankers could not collect margins which had been gradually shrinking while at the same time the Continent continued to pour stock into London, The Bank of England to-day jn- creased its rate of discount to eight! per cent. The banking situation hai become so abnormal that It ts under- stood the Hritish Cabinet at ita meat. | ing discussed the probability of tak Ing measures to prevent a posible | panic, The Hank of England was to- doy charging ten per cent, for week ly advances—an unprecedented rate. | Scenes in the city to-day were un- | like any since the great Gurney Rank failure for $55,000,000 In 1865 when the government found it necessary to | suspend the bank act ao that the Rank of England would not be com- —__ : For pelled to pay gold for its notes, tate rose to ten per cent. notes waiting to have them changed Into gold, At the other front of the bank, which Is not far from the Stock Exchange, drays were di | turn to be loaded with gold and sil- vor | London were getting in exchange for | Bank of England notes held by them. | Was also understood that in | means | slightly more than 25 france. A Cab- | terma of pa: | Per cent. to-day. VIE jing Dur- Ing the Indian mutiny in 1857 the Bank act also was suspended and the U.S HAS SHPPED $122,750 GL ABROAD THS YEAR France Has Taken Largest Share—$22,000,000 Now + at Sea in Two Ships. | - Shipments of gold since the begim- ning of the year aggregate $122,760,008. Of this amount, $32,850,000 have beem sent to London, $1,000,000 to Berita and the balance to Paris. Kleven millions of gold were sent to Europe to-day on the American liner St. Louis, the record shipment. About $7,000,000 will be shipped by the Yeeanle of the White Strr Line to- morrow, But further export of the yellow metal was suddenly checked by closing of the Stock Exchange aad the refusal of Insurance brokers to quote any reasonable figure for im surance. Analety was expressed in insurapes circles for *the safety of the North German Lloyd liner Kronprinsessia Cecilie, which sailed Tuesday with $10,600,000 of gold. She is now in mild- Only in case France or Eng- land should become involved in the general Furopean war would she be subject to attack, as the German fleet has the Russian fleet bottled up im the Guif of Finland. The St, Le being an Americaa liner, is neutral and not subject to The main entrance to the Hank of England was besieged by holders of dozens of two-horsed n up waiting their which the banks throughout ‘The opinion wae general that the Rank act would be suspended. It the bank Waa prepared to insti one pound notes | take the place of sovereigns If the Bank Act, which was passed 1844, should be suspended, it that the Rank of England practically will suspend specie pay- ments and that it will have authority to Issue notes without the usual gold backing. Fifty brokers informed the Stock Exchange committees that they would be compelind to default on account of the postponement of the Paris settioment, and It is believed another fifty would have gone to the wall If the market had not been closed i PARIS, July 31—Gold was at 1% per! cent, premium here to-day, English} sovereigns were selling at 28 francs each instead of the normal rate of {net counoll is to be called to-mor- row to consider an extension of the ent for obligations fall- ing due. The apprehensions of the smaller tradespeople here have gone to such an extent that many of them refune to take the new Government frane and 5 franc bills, ont stores are doing about only half their usual business owing to the lack of small change. Managers of large neerns remark that the mail hi runk to a third and even to a quar- ocean: Depa molestation, The consigners of the ter of itm usual proportions. ‘Transactions on the Bourse to-day| old in this old-time vesse: are a8 were fewer and the quotations were | follows: almost without significance. The pri- vate discount rate was 4% per cent. Three per cent. rentes were quoted at 7h france % centimes for cash. Noth- Ing was quote for the account, ERLIN, July 81.-—The rate of dis- count of the Imperial Bank of Ger- many was raised from four to five Lasare Frorea Bankers Trust ‘Company Kidder, Pe , July 31.—The bank rate here was to-day advanced to 6 per cent, ‘OPENHAGEN, uly —- 31.—The bank rate here Is'to be raised to six Farmers’ Loan and Trust Co. National Bank of per cent, to-morrow. COHN SOF os8e 3 BRUSSELS, July” 31. ituan'| HRpOTeE Neticonl Pani. .5+- aie 1,000 people ‘besciged the National | Hard & Hand... Do Hank this morning to withdraw their balances; but by midday the run had] ‘Tota ......0+...0. greatly subs —— $10,000,000 IN GOLD SENT TO NEW YORK 2 BY THE PARCEL POST. PHILADELPHIA, July 381.—Aa- CHICAGO, July 31--At the opening | other shipment of $19,000,000, im gold of the Roard of Trade to-day the firat|coin, waa sent to-day by parcel post salen of wheat showed changes not|from the United Stat Mint here to to excead two and a quarter cents as|the Sub-Treasury in New York. TY psec! edgy edge Leal pia bat gold weighed 37,800 pounds, cents at the openini er e primary changes. were downward. A similar shipment wae mate yap: terday, when the experiment of All members of the Board of Trade to-day succeeded in squaring their|the parcel post for @his service was “Mw made for the firat. time. accounts on time at the Clearing House, One of tho largest houses in —— VERA CRUZ NEUTRAL IF GREAT WAR COMES, —_—_—— WHEAT PRICES DECLINE AGAIN IN CHICAGO MARKET the trade offered assistance If any were needed to settle outstanding transactions in the July delivery of whe WINNIPEG, July 41, -- October WILSON WILL DECLARE. wheat, which sold on the curhat $1.06 this morning and later on the floor of| y 4 : qj the rain exchange at $1.0, an ad-| WASHINGTON, July 31. —~ Veem vance of 6 cents over last night's|Crua undoubtedly will be declared @ close, sold down to 95% within an|neutral port under the neutrality hour after the opening of the €x-} proclamation President Wilson will change to-day. issue In the even of a general Bure. pean war. Restrictions on giving refuge an@ supplies to foreign ships there will apply the same as Le ann York or any other American pot German, British and prench ships already there probably would be ore petea EO FLYING SQUADRON SENT BY RUSSIA TO SEIZE VESSELS. ROME, July 31.—A Salontea dis- patch this evening reports that a fly wquadron consisting of three Runsinn crutsers and two destroyers ia speeding toward the Bosphorus with | the objective of selzing any veasels | flying the flag of either Germany or Austria, tmmediniely w war in declared. MONTENEGRIN RIN ROYAL YACHT FLEES FROM AUSTRIAN DESTROYERS. ATHENS, July 31.—The Montenegrin royal yacht Delgara was almost captured to-day by the Aus- trian fleet blockading Antavart, The yacht was approaching the port, but when she sighted the block- ding fleet turned and fled, She was | wHITe ROCK MINERAL SPRINGS © puraued by Austrian destroyers, but 100 BROADWAY. NY. arrived safely at Corfu Greee SPECIAL ANNOUNCEMENT In view of the uncertainty of the present European situation we havé decided to postpone the sailing of the S. S. Vaterland from New York, Amerika from Boston August Ist, and Imperator from Hamburg Constipation The Delicious Laxative Chocolate Ea Len neiaves coneiipetion. inggted i hearse cod aa Sens, Se hver , Toe 28e. and 0c. at July 31st. For the same reason we have also ordered the S. S. President Grant, which sailed from New York yesterday, to return. Due notice will be given of the eventual sailing dates. Hamburg American Line ‘