Los Angeles herald. [microfilm reel], December 08, 1907, Image 54

About Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911

Image provided by: University of California, Riverside; Riverside, CA

                
OUR SPECIAL FEATURE PAGE.
*¦" '' the recent stirring events of the
I nanclal marts of tbe world, an lnstl
! tstics Bs<firs by HM* to all. but whose
real functions and powers but few are
Intimately acquainted with, ba* played a
most Important role and, together with
the efforts of two Individuals, In reality
saved this country from the most stupen
dous and disastrous panic In Its history.
The Institution referred to Is the New
fork Clearing House; the Individuals. J.
Plerpont Morgan, not only America's, but
to* world's foremost financier, and George
Brace Cortelyou, a man of middle age but
on* who has climbed tbe political ladder.
rung by rung, from the modest post of
stenographer to a Democratic President of
th* TJBlt«d States, to that of 9«retarv of
the Treasury, a member of the official
family of ths present Republican Chief
Executive.
To the average followers of financial
Rffairs the name of the New York Clearing
House i» associated only with weekly
bsnk statements, on which brokers trade,
and an annual statement of clearances,
balances and exchanges, whose figures
mount up Into the billion*. wnl<*b are only
useful to those employing statistic* in
presenting facts In the course of addresses
on the commercial greatness of this great
nation. Each and every banking day in
the year, tbe New York Clearing House
performs its functions and performs them
systematically and thoroughly. All In ac
complished in a staid, quiet and dignified.
but thoroughly bnslneßßllke manner.
There is little to Indicate In either the ex.
terior. or Interior of the substantial look
ing structure on Cedar Street, betweeu
Nassau and Broadway, of the great things
happening nearby. Yet In reality those
who conduct the affairs of this Institution
are the very pulse of the moey market.
Generations' ago when hank* were on
heard of our traders and merchants, as
well as those who did not engage in
"trade" were compelled to either hoard
or hide their savings for safe-keeping, or
else lug them around concealed about
their persons. This proved ' Inconvenient
aud hence plans were formulated for a
common place of safety for tbe placing of
funds In various communities and the con
summation of these plans resulted In tbe
chain of banks now scattered over tbe
world.
As banks grew in number the question
of clearing, or settling up. one with the
other, became dally more perplexing. As
tbe banking community became more
highly developed and thousands of de
positors were clearing their personal
deiji's ar'i creo'ts through tbe various
banks, the banks themselves began to
occupy the «.me relation to each other as
rngards tbe transaction of their mutual
business as their customers had occupied,
co h to the other a generation or two ago.
CHE ambition of vvefy American Is to
<pend s year, a short six months at
least. In tbe Latin Quarter. Most
Americans have all kinds of queer notlous
about the people who live ou t.ie other
sld» of tbe Belne. They ttiink of this
part Of Pails as a den of vine and frivol
ity. But those who lire there know bet
ter. They soon discover thnt crossing
the Seine Is like gotng Into another
world. This narrow blue ribbon wltb the
half-dozn or more bridges Is tbe dividing
line. Along tbe Seine Is a great row of
queer little bookstalls; on sunny days,
aud on Sundays more especially, great
crowd* of people throng tbese second
band book stores, where they buy stray
sheets of music and books slightly worn,
for s song.
This medley offers a variety of types.
First there Is the soldier noticeable for
bis gay glittering- uniform; out for a holi
day and willing to buy anything be tees,
so aoslons Is be to rid himself of the
money that barns In bl* pocket*, press
ing dose to him Is s little milliner car
rying s heavy hat box on her arm. Her
head Is quit* bare and she has only a
thin knitted shawl drawn across her
narrow back, In spite of the aotumn
ehflL Her eye rests alternately on tbe
sMUer asd tb* title of ths romances. Her
THE NEW YORK
CLEARING HOUSE
A. RICHMOND PARKMURST JR.
The check of each bank was a certifi
cate of Its own lndebtedney, good «o
long as the person to whom it was ten
dered believed thut the person who made
It bad the funds on deposit In the bank
on which It was drawn, and that 1" c
bank Itself was solvent. No matter how
readily the check was accepted, however.
It would have no value unless Its hand
ling meant that the actual cash was to
lim Its way Into the bands of tbe person
to whom the debt was due. So tbe banks,
with the savings and deposits of tbelr
customers stored safely away In tbelr
vaults, made their clearances over their
own counters and sent forth their own
messengers. In person, wltb cash to pay
those tbey owed, who would not come
forward to collect. Thus tbe necessity of
a clearing-house became hourly more man
ifest, until today its Importance Is sec
ond ouly to the banks themselves.
As tbe commerce of the country ex
panded It was found that the weekly
clearings ran Into billions of dollars, and
the weekly exchanges of credits Into hun
dreds of luiillous. For each bunk to keep
on hand all the cash needed to meet the
demands of all IU depositors, every day.
meant tbat practically all of the assets,
representing active accounts, must be
available at an Instant's notice, for It
would not do to delay a depositor or
creditor making demand for his money
longer than It required to brlug the cash
from tbe vaults to tne teller's window.
There was both danger and waste in
snch a system as this. The danger that
the bank*, compelled to keep so large
an amount of cash on hand, would have
THE DEAL
LATIN
QUARTER
Delia Austrian
cheeks flush as she thinks vow she
would like to have a certain novel; but
she remembers the one small franc In her
purse and she has not the courage to go
without her dejeuuer. She moves on and
tbe vacant place is filled by two men,
tiie one wears a threadbare coat and a
skull cap drawn down on bis head. B*
has more money In his pocket than hit
shabby appearance would indicate. But
much of bis time and spare money go lv
gathering old books. A very different
type is his neighbor. The short velvet
jacket, the black silk scarf, and the ltrgs
LOS ANGELES HERALD SUNDAY SUPPLEMENT
to shut down on their customers when
ever a stringency In the money-market
ensued, lest they cripple their own re
sources, and place themselves In n posi
tion of being unnble to meet all the de
mands made upon them. Tbe element of
waste lay In the necessity of keeping
snch a large sum of money lying Idle
In tbe vaults, thereby placing a tremend
ous limitation upon the Investments
which tbe banks could safely make wltb
profit to themselves from the funds
placed In their keeping by their custom
ers. It therefore remained, for them to
devise some means by which tbelr cash
outlay could be figured on a net, Instead
of on a gross, basis.
The system of banking by the old
method can best be illustrated by- tbe
employment of figures. Suppose tbat a
bank bad demands on a given day for
the payment of $75,000 over Its counter
by the presentation of checks by its de
positors or bearers of checks drawn by
depositors. Then suppose tbat Itti checks,
aggregating $500,000. are sent to other
banks by their depositors for collection,
and that checks on these same banks for
$450,000 are deposited with tbe first bank
for collection. Should the bank be mak
ing its own clearings It would bo com
pelled to keep on band for its Immediate
use. In addition to the $75,000 for over
the counter payments, the $500,000 re
quired for all of Its checks sent to other
banks for collection. In spite of the fact
tbat before tne any Is over $450,000 will
come In from these other banks, thus
making tbe net result of tbe day's op
erations a debit balance of but $50,000,
felt bnt Indicate that this young man is
an artist, who Is as particular about bis
appearance as be Is In selecting his
models.
Though the bookstalls attractive
they fill only a small part of tbe pic
ture. Tbe Seine Is thronged with small
passenger boats;- some carrying passen
gers, others are heavily laden wltb great
baskets of vegetables that are grown lv
tbe outskirts of Paris.
Before the Ecole dcs Beam Arts are
many art students waiting Impatiently
for the doors to open so they may com
as regards tbe rest of the banks, and a
cash requirement of but $75,000. It Is
needless to say that moderu business
methods, in which tb* elimination of
waste, and the saving of time, are the
chief essentials, would devise a tneaua of
overcoming a system so cumbersome! and
so uneconomic, and tbe present Clearing
House is the result of the Ingeuulty of
those who get to work to evolve thla sys
tem. Wltb tbe advent of tbe Clearing
House came a mutual confidence which
In reality Is based nj Information con
veyed from the bead of one bank to
another and so on until each is In posses
sion of facts bearing on tbe financial
needs and standing of tbe other.
With the advent of the Clearing House
its member* were in tbe habit of mak
ing, each to the other, a dally confession
of condition of tbe affairs of the banks
under each respective head. Business
grew apace and It was goon demonstrated
that a weekly confession greatly facili
tated matters, although tbe right was ex
tended to those In control of tbe Clearing
House to enter any bank, a member of
the association, and make a minute ex
amination Into Its physical condition nt
any time they so pleased or thought nec
essary; for the real purpose and function
of the Clearing House is to take from
each bank belonging to the Association a
statement of Its claims against other
bunks, members of the association of
course, to balance these statements, col
lect the balances due from the debit
banks, and turn the credits over to tbe
banks entitled to them.
The Clearing House has not been called
mence a long day's work. Not ull of tbe
art students are gathered here. Many of
the advanced pupils are on tbe way to
the Luxembourg Gallery to copy tbe
works of modern masters. Farther op In
the Rue Boneparte Paris presents a dif
ferent kind of picture. Tbe streets are
lined wltb small shops dealing In rare
books, engravings, prints and rare bric-a
brac. The streets are so narrow tbat the
houses appear to touch, In some places
It Is Impossible for a cart and auto
mobile to pass at once. There are many
kinds of queer looking shops In these
upon since 1593 to demonstrate its use
fulness In time of crisis until late lv 06
tober. when the eyes of the world were
focugsed on Wall Street and with bated
breath tbe financial giants of tbe Old
and New Worlds waited developments;
hardly during to hope tbat the banks
could weather tbe storm which broko
with all Its fury over "Tbe Street." Way
back In 1893 people were compelled to
draw heavily on the banks, cash balances
being reduced to that low ebb where only
Hiililclent funds were left on deposit to keep
their, accounts "alive." It was not tbat
the people distrusted the hanks that this
drain was made upon the Institutions, but
because they really needed every penny
they could lay their bauds on to meet
constantly growing obligations. With
withdrawals being made at such an
alarming rate, there was not a sufficient
sum of cash od hand at tbe disposal of
the banks to meet tbe demands of tbelr
customers. The bankers were face to face
with the most serious problem of tbelr
careers. If they failed Jo ni«*t these ob
lgatloDß they would Immediately be de
clared Insolvent aud forced to suspend;
yet their assets were far .aud above their
liabilities, tbe drawback lying In tbelr
inability to quickly realize on tbese as
sets without suffering a suvcro pecuniary
loss.
A group of men whose names In the
financial world were synonomous with so
lidity, solvency and conservatism, gath
thered in the office of the Manager of
tbe Clearing House and settled down for
action. These men constituted them
selves Into a committee, known as the
Clearing House Loan Committee. Its plan
was to eliminate entirely the exchange of
cash between banks in settling their bal
ances with each other, by means of n
system of Clearing House loans aud cred
its. If a bank had a debit balance of
queer looking street!, lln one window
are teen ;so • many ¦ loaves '-. of bread ' one
might Imagine : that the r people In . this
neighborhood ' subsisted ..' on ¦. bread . alone.
Far more Interesting If the great display
of spring 'b»t»:»howo Id • tbe shop win
dow - next '. door. . Though ~. they < are all
marked five ; trance , these , straw headgear
are trimmed with - every ¦' kind ' of, flower
grown' In a French garden. .-¦". . ¦•. i<. *„¦¦
Iv l'aris everytmng la put to some nse.
It Is not unusual to see this placard be
fore a butcher shop: "Occasionally a horse
or donkey for tale." Tbe matti look so
half a million dollars It would be re
quired to deposit 'with the Committee
good 'collateral on which a loan was
negotiated for this amount. If. on the
other hand, a bank had a credit totalling
this, or any other sum, the Clearing House
Committee . would immediately Issue Mi
that b«»k a certificate which carried with
It a pledge for this sum backed up by
the other associated banks. Thus It be
came possible for (be banks to make Im
mediate use of all thn funds on hand for
their, "over-the-counter" business, with
out having to cripple themselves by re
serving a large percentage of their cash
to settle up their obligations each day at
the Clearing Home. ... .¦ . ¦ , ; ,
Those who recall; the ' stringency that
existed for a time In 1893. i however, will
remember that not a bank Included In the
Clearing House Association ' suspended
payment for a second and the Impending
p*n!o trim wifely passed. • ' . ..' ;
The names of those men: H. W. Can
uou, president of the Chase National
Bank; T. D.Tappan, then president of
the Gallntin National: G. G. Williams,
then president of the Ch mlcal National
Bank; William A. Nash, • then and still
president of the Corn Exchange National
Bank: J. Edward Simmons, president of
the Fourth National Bank have ben
banded down In the annals of banking
history as . tbe real heroes and pioneers
of modern and sane banking methods,
which ' now form the bulwarks of the
solidity of tbe financial sinews of this
nation.
. Just such a crisis confronted our New
York banks a short time ugo. Money
was held at prohibitive premiums and
Trust Companies were falling by the
wayside at an alarming rate.. This was
solely due to the unprlnclpalcd methods
of a speculating clique, who were manipu
lating tbe funds in tbe vaults of banks
and trust companies controlled by them
for their own speculative purpose.*, to
tbe detriment and peril of hundreds of
other Institutions wboee methods were
legitimate. Money soared above the 100
per cent, figure and the scenes of "Back
Friday" were vividly recalled as . stocks
came tumbling at an alarming rate and
none could see the; end In sight. v -
Then it was that J. Pli-rpout . Morgan,
that Napoleon of finance, Jumped Into
the breath aid hurled millions upon mil
lions of dollars Into the vortex of the
financial whirlpool, and five minutes
thereafter muney | was jto be had at the
normal rate of Interest In such quanti
ties as to ease the situation until the
same band of conservatives, who met in
1b93, could again come together, .discuss
the sltuat on, and ' devise ways and
means of effectually restoring confidence,
and stem the flow of gold from - the
vaults of banks which were speedily . be
coming depleted by the , th nsands of
terrified depositors who ' were | pulling
their deposits out In millions.
j - Their ¦ first step was to peremptorily
expel Helnze aud Thomas and their as
fresh and the price* are so -noderate one
wonders where tbe profits are made, un
til some resident In tbe quarter explains
that much donkey and horse meat are Bold
In French butcher shops.
Tbe busiest of tbese thoroughfares lc
tbe Rue Vauglrard. By nine the roadway
Is so crowded with push carts It Is bard
for a driver to move his horse faster than
a walk unil to avoid running down pedes
trians. The air Is loud with the cries of
vendors offering their fruits, vegetables,
and fleli
Others carry great baskets of roses and
violets; some .ire taking them to the shops
aii'l others are offering them for a song.
The narrow pavements are all too small
for the old women lv linen caps and heavy
sabots starting out to do tbe marketing.
Some brush by showing they have no time
to spare while more stop to gossip before
a butcher or baker shop with some neigh
bor. A short way up the street Is a great
line of women. From n illHtanoe It Is Im
possible to believe <t can be nnythlng else
hut a run on a bank. Uut it is Monday
and tli* bargain hunters me busy buying
underwear, ribbons and shirtwaist* from
the large counters on the street.
Great crowds of students are gathered
before the Ecole de Medicine, they are
making it demonstration In the court
yard. The cries and threats are so alarm-
Ing It would seem they intend to demol
ish the building. The quarrel la about two
professors. The head professor bus dis
charged one of bia assistants and the
pupilß wish to have him reinstated.
By five o'clock most of tbe students
have left the Sorbonne and are hastening
toward tbe boulevard St. Michael. Here
tuev nice- Minn*. Marie, and Margott*.
who hare been workiug behind counters
or posing before artists all afternoon. But
happy Minne, Marie and Marqottn bavt* no
time for Be.rlous thought, they have thrown
all care to'thi. wind They are out for a
lark, and are proud of their fine togs.
Relaxation, not work. Is the keynote of
the hour. Oce art student In amusing
himself by making a rapid sketch of two
lovers which bt will call "Their First
Attempt." That beautiful gir> who comes
snunter'ng along witn an old man. old
enough to bo her father, is a high class
mode' and her companion Is a well known
painter. At a tabu Ik n gronp of imisi
'inns, drinking absinthe and discussing
Mi fcsenot's new opera Aphrodite. Fakers,
beggars, aud vagrauts in Rrer 4 numbers
give an added touch of color to the pic
ture. Some are hawking mechanical toys,
others are vending postal cards.
By eight o'clock tbe throng of men and
women who filled the boulevard St. Ml
cbael are beginning to scatter. Many co to
the Tivein dv Pantheon to see tbe crowds
gathering there nightly, and to eujor the
college songs snog by a half-dozen
America.! students. . Some prefer French
songs, and .bey go to one of the stu
dent's irons where there Is lively mimic
and laughter until late hour*.
The Moulin Rouge used to be the great
dancing place of the Quarter, bat Id the
Uut few years It has changed Its char
acter and Is practically a vaudeville hail.
Tbe dancers who used to frequent the
Moulin Rouge now go to Ball BulHer.
and tbongb there Is dancing every night,
Thursday Is the great night of tbe week.
To gain admission on Thursday on* must
go early for there is always a crowd of
pleasure seekers waiting to buy a ticket
for two francs. The doors fere hardly
soclates and tools 1 from the Clearing
House Association, thus driving several
of the Institiitions they controlled Into
bankruptcy. Then tho Loan Committee,
formed by such men as Alexander Gil
bert, president of the Clearing Houm
Association; James T. Woodtvard, presi
dent of tiie Hanover National Bank, and
ottrer hankers of «qu*J Mfratt, Incltjd
lng William A. Nash. James Stlllman,
George F. Baker and William Sherer.
the Clearing House manager. Ditmont
t'liirke, bead of the American Exchange
National: Edward Towusend, of the Im
porters and Traders', and A. Barton
Hepburn, the present president of tbe
Chaae National, met and .after a session
lasting all night several millions of dol
lars were raised and pledged to tide
over those banks which were Imperiled
by ths never ceasing drain on tbelr re
sources. This action was repeated sev
eral times until aid from tbe National
Treasury, through George B. Cortelyou.
arrived in the form of $25,000,000 and
once more the banking circles of New
York, as well as those of tbe entire
world breathed easier and another panic
was averted.
Cutll the Clearing House Association
stepped Into the breach and put tbe Morse-
Helnre-Thomas chain of banks out of busi
ness a system of bank kiting In New
York was being Indulged In at such au
alarming rate that there Is no telling
where It would have ended, or what banks
would have been swallowed In the specu
lative whirlpool If this summary action
had not been taken. It was simply a rea
sonably safe and sure means of using
other people's funds for another's private
purposes, provided of course tbe market
"was right," but In this Instance the mar
ket veered unexpectedly and exposure, loss
and ruin speedily followed. But tbe lesson
taught by tbe exposure Is a valuable one
and it will not be easy for another band
of stock raiders and traders to operate
with tbe funds controlled by tbe banks
which they, in turn, have got control of
by nefarious means and sharp practices,
without being' exposed before tbelr opera
tions have gotten under full headway.
The eyes of the' Association are wider
open today than ever before and the con
servative element of Wall street is grati
fied to know that Helnze and those of his
Ilk are no longer a factor In the financial
reckonings of the street.
It Is highly probable that after the storm
the banking Interests of New York have
Just weathered that every Institution doing
a banking business will be safeguarded by
more stringent laws and tbat tbe powers
and functions of Clearing Houses will be
even more far-reaching In tbe future than
tbey have been In tbe past. But one fact
stands glaringly forth and that Is: The
New York Clearing House Association
saved the day. With Morgan and Cortel
you at its back It threw millions into a
seemingly dark and bottomless abyss, but
not a dollar failed to again come to the
surface and find it's way back to where it
belonged.
opened when the ball is filled with
•lancers and others are waiting to take
their turn There Is merry laughter
everywhere, the orchestra roars until th«
c<>llo and the violin sound as though they
would break. The men whirl faster »n<l
faster until the girls begin to pant for
breath. Bag! Bas! comes tbe cry from
every corner. The appreciation la so
great the conductor it forced to repeat
every number a second time. The noise
reaches Its height when two or three
hunu'red art students who have had sup
per at one of the restaurants or In *B
atelier come to Bullier's In a body.
To know the art created In this Quar-
I ter and what the. men and women who
live here enjoy, one should visit some of
the cabarets. Though .I* GrUloo Is one
.of the beet known, there are several. It
Is to toes* haunts that the true Bohemian
loves to go where he may enjoy ¦ happy
hour free from wild strains of music and'
noisy laughter. Here be listens to some
of tbe best satire and tome of the clever
eat songs that ar written In Paris. ';^;.'
' These are composed and : sung by men
of - genius, . destined for one - reason or
another jto . die without achieving | fame. ,
There Is scarcely a man well known in
France, who is not caricatured In one of
these cabarets. They know It and take it
good naturedly, realising the humor of i
the verses. ¦ To know the Latin Quarter,
at Its ' best i one ' should be- familiar - wit i
tbe Bal dcs Quarts Arts given by to*
Art Students In April at the Moulin
Rouge. Months ' before the students .of
tbe different ateliers are. • busy • planning
costumes - and - tableaux ¦¦¦' for ; - this .' gala
event. Tbe „ floats . represent ' everything
One can imagine from Venn* rising from
the Sea to a Flower Girl. The ball be
gins at eleven and lasts I until 1 morning.
Only those having cards < are . admitted, .
and these are not transferable. Everyone
who ... goes \ on • the floor s must " wear a
masque. ¦• .._ '¦:.. ¦ ,', -, ¦ 1 ,"¦. V'-v, ¦"¦""
: Not all the ffayety of the quarter takes
place at night. . In the Spring the Lux
embourg : Gardens are . lively . with * artists
and students of tbe quarter. Some come
>to copy the Medici ' fountains $ and | gar
dens, others to rest and to drink In the
balmy fresh air. Friday afternoon iis tbe '
day when women come from all part* of
' Paris to • enjoy ; the > foliage, * the r, flower j
; beds and listen to tbe music of the great
brass band. •¦.'.¦.-•••..'.¦.,: ?•' .'¦.¦-,"¦,; ¦¦ 7T1.W.-.-JE." •
' In the . outskirts of the Quarter", along
. the ' Hue Vanglrard the streets ¦ become
more ' deserted; the .bouses are ' mo i
hovel-like, ¦¦ while squatters , and , gypsies
abound. On Sunday : the p people of > the/
Quarter come here to enjoy the shooting j
galleries, the carousals and the .tent elr-j
ens. '.It Is here one sees the cockneys of J
Parts. The girls who walk with a swag-?
ger, not tbe chic shop girl everyone must
admire. The men are no less grotesque!
with the large Checked vests and imlta.*
tlon diamonds that flash on their vests. ?
Tbe stranger comes to the Latin Quar
ter to see wild ' and ; foolish >. excitement
and ha finds to his surprise that love UM
the note struck here— love for art, know
edge, > borne > and ; woman. The gayety, m
! only ¦ the j overture, i tbe ¦ theme , Is Jot
' Sometimes j gay, ( sometimes ft sad, «°«n
times | poetic, and sometimes • tragic, bjH
always love. This Is why the Latin QuaH
ter Is fascinating and . should b« csJlsH
tbe Heart of Paris.