one-half were treasury notes of 1890, which by law the Secretary might
redeem "in gold or silver coin at his discretion." The public was now
alarmed by a rumor that Secretary Carlisle, who while in Congress had
voted for free silver, would resort to silver payments on this class of
notes, and regarded his statements as being noncommittal on the point.
Popular alarm was, to some extent, dispelled by a statement from
President Cleveland, on the 23rd of April, declaring flatly and
unmistakably that redemption in gold would be maintained. But the
financial situation throughout the country was such that nothing could
stave off the impending panic. Failures were increasing in number, some
large firms broke under the strain, and the final stroke came on the 5th
of May when the National Cordage Company went into bankruptcy. As often
happens in the history of panics, the event was trivial in comparison
with the consequences. This company was of a type that is the reproach
of American jurisprudence--the marauding corporation. In the very month
in which it failed, it declared a large cash dividend. Its stock, which
had sold at 147 in January, fell in May to below ten dollars a share.
Though the Philadelphia and Reading Railway Company, which failed
in February, had a capital of $40,000,000 and a debt of more than
$125,000,000, the market did not break completely under that strain. The
National Cordage had a capital of $20,000,000 and liabilities of only
$10,000,000, but its collapse brought down with it the whole structure
of credit. A general movement of liquidation set in, which throughout
the West was so violent as to threaten general bankruptcy. Nearly all
of the national bank failures were in the West and South, and still more
extensive was the wreck of state banks and private banks. It had been
the practice of country banks, while firmly maintaining local rates, to
keep the bulk of their resources on deposit with city banks at two
per cent. This practice now proved to be a fatal entanglement to many
institutions. There were instances in which country banks were forced
to suspend, though cash resources were actually on the way to them from
depository centers.*

* Out of 158 national bank failures during the year, 153 were in
the West and South. In addition there went down 172 state banks, 177
private banks, 47 savings banks, 13 loan and trust companies, and 6
mortgage companies.

Even worse than the effect of these