On Thursday, October 24th, panic swept over the Stock Exchange. The bank position being then in its most critical phase, restriction of credit occurred on a scale which, if continued, would probably have reduced the Stock Exchange community to general insolvency. This day of suspense an unvarying incident of formidable credit panics brought the rate for Stock Exchange demand loans up to 125 percent.; before the day was over, however, personal intervention of the president of the Stock Exchange and of J. P. Morgan with the banks caused release of $25,000,000 which, in accordance with sound rule, was loaned out at high rates, but in such manner as to meet pressing exigencies. This averted the formidable aspect of the crisis which, in 1873, made necessary the closing of the Stock Exchange and which in 1907 forced the governments of several Western States to decree a series of special holidays.

The crisis of the banks, however, had only begun, and it followed the lines made familiar by all former crises. The New York City national banks alone held in 1907 no less than $470,000,000 deposits due to other institutions ; considerably more than double what had been thus held in 1893. Banks of interior cities, most of which had three-fifths of their 15 per cent. reserve thus deposited in other hands, took natural alarm at the panic news, remembered 1893, and called for return of part of these deposits. What followed, merely repeated history a history, however, which the country had been assured could never be repeated. The New York banks, on Saturday, October 26th, determined to take out Clearing-House loan certificates. .The intent of this expedient, never adopted since the panic of 1893, was to help out hard-pressed banks through loan of the cash resources of their neighbors ; but its result, in 1907, as in 1893, was to bring about general suspension of cash payments in the Clearing-House. Before the panic of 1907 was over the New York banks had $88,420,000 of such loan certificates in use, as against a maximum of $38,280,000 in the panic of 1893, and the loan certificates remained in use during twenty-two weeks, as against only nineteen weeks' duration in the earlier panic.

Two days after New York had set the example, practically every clearing-house in the country took similar action a wholly unprecedented event, which resulted in issue, throughout the whole United States, of $238,000,000 of such certificates, as against $69,000,000 during 1893. Notwithstanding this recourse, reserves of the New York banks, which had stood at a surplus of $11,182,000 in the week before the panic, fell to a deficit of $54,103,000 on November 3d, very much the largest shortage of the kind in our banking history, the maximum deficit of 1893 having been $16,545,000.

This formidable shrinkage was occasioned by an actual loss of $51,000,000 cash in the five intervening weeks, and the position thus created brought suddenly into view two other phenomena of 1893. Hoarding of cash by individuals set in ; it was estimated in high quarters that, in the country as a whole, no less a sum than $296,000,000 actually disappeared from sight. This hoarding partly caused, and was partly caused by, the policy of banks in limiting the amount of cash which they would pay out to depositors, and one immediate result of such restriction being the issue of emergency currency by the banks of cities like Pittsburgh and Chicago, where manufacturers' pay-rolls created urgent need for great sums of currency. The amount of such makeshift money has been estimated at upward of $96,000,000. The next result of the bank restriction was a premium on currency, paid in checks on such institutions, which rose to 4 percent. and which continued for two months, as against only one month's duration in the panic of 1893.

There were left the larger after-effects, of which the panic itself was only a premonitory symptom, and which came only gradually into sight, along with assertions that they would not come at all, on this occasion as on others of the kind. The panic of 1907 was unlike the panic of 1893, which followed a period of uncertainty and misgiving, leading to acquiescence, on the part of the community at large, in the certainty of prolonged reaction and depression. It resembled far more intimately the panic of 1873, which came, like the traditional "bolt from the blue," on a situation presenting so brilliant an aspect of assured prosperity that the people most of all the great capitalists whose schemes had come to earth refused for many months to admit that one chapter in finance and industry had ended and that another and different one was opening.

The visible sequel to the panic of 1907 was necessarily recognized. That commercial failures in the United States should not only have increased, in the panic months of November and December, 30 percent. in number as compared with 1906, and 125 percent. in liabilities, but that the first nine months of 1908 should have shown increase of 55 percent. over 1907 in number, and 120 percent. in liabilities, was a matter of record. So was the shrinkage in the iron trade, in December, 1907, to 36 percent. of normal, and the 50 percent. reduction in iron production during the first half of 1908 ; the decrease, for the full year 1908, of $290,000,000, or 11 5/8 percent., in traffic receipts of American railways ; the shrinkage of nearly 17 percent. in checks drawn on American banks; the reduction in March, 1908, of 25 percent. in output, 10 percent. in wages, and 25 to 50 percent. in prices in the textile trade, and the great increase in number of unemployed.