TRIFLES THAT SCARE MILLIONAIRES.

Otago Witness, Issue 2499, 5 February 1902, Page 65

TRIFLES THAT SCARE MILLIONAIRES.

HOW MONEY PANICS ARE STARTED.

A bit of cloth the size of your smallest fingernail caused Britain a loss of £1,155,000 the other day, for the sudden news of its presence in the ill-fated President M'Kinley's wound startled Britain into a bigger slump than the actual fact of his death did.

This was because the money market had made up its mind that Mr M'Kinley was going to recover, and had laid its plans accordingly. So the three-line cable that there was a scrap of cloth in the wound, which would have to be extracted, though it was not a big matter, came like a shock on the financiers, sending American shares down like lead, although the actual fact of the President's death would not make any great difference to money or trade. But the world's stock exchanges have very delicate nervps, and at once begin to think what mignt happen when anything unusual occurs, so there was a rushing about to sell, a rise in the interest that money could be borrowed at, and an entire half-point fall in British Consols, which means a loss o-f value amounting to £1,155,000, besides about £100.000 actually lost in various shares affected by the news, within ten minutes of the <• cablegram's arrival. The sudden news of the bit of cloth did all this in a few counted minutes — the actual dangerous relapse two days later had not much less effect.

A still smaller thing than this made a big scare a few years ago. The King, or rather Prince of Wales, was out shooting, and while firing into the eye of the wind at driven birds, a grain or two of burnt powder was blown back into his eyes, as often happens when shooting on a windy day. This news was wired up to town in the middle of the afternoon, and caught the money market in an idle and irritable moment. The report was exaggerated, and it sounded as though the Prince was likely to lose his eyesight. Now, it was the time of the commercial treaty with Germany, which was due to receive the signatures of the Sovereign and the Heir Apparent next day, a formality which didn't make any great difference to the power of the treaty, but was necessary to wind things up. The treaty had been settled in every other way, and the markets and stock exchanges of both countries had counted on it, and were waiting for the moment of the signature. Then they would fling millions to right and left, and juggle with thousands of tons of produce, and gamble joyously in shares ; but the news al tLat grain of powder, which really only made the King rub his eye for a moment, scared them into thinking the treaty would be delayed for want of his signature, and there was a frantic panic. Within 4?0 minutes most stocks had dropped like lead, and £1.000.000 "went under" in half an hour. Nine big firms were hammered as a result.

Although the German Emperor has done more good to commerce and finance than any monarch on record, he often tries the Stock Exchanges very badly, and they are afraid of him. One of the quickest and most thorough panics on the list was caused because a small boy once threw a ball of paper at him, in a crowd, while he was driving to Potsdam. Why this appalling incident should cause a slump in British securities seems a poser, but within a minute of the arrival of the news in London, elderly financiers, with millions at their backs, were scuttering about like r& obits in a copse, and shouting breathlessly that they would sell this and that is cheaply as you pleased. This was the famous "Basket" slump, and one of the most pointless panics on record, for it is hard to see how the ball of paper could have been supposed to be dangerous, though the cablegram was not very clear. But it was in some mysterious way supposed to have endangered matters, and certainly the Kaiser's death just then would have thrown a large section of finance into confusion, for it was the period of the loan negotiations with China. There was hardly a British or foreign stock that did not slump. Consols fell in value by £2,300,000 in a few moments, and about a score of men were ruined. That piece of paper was, as a matter of fact, a crampled-up petition which a blind man got his son to throw into the Kaiser's carriage as he passed.

Influenza has given the House some of its biggest shocks, and the report of a wave of it sweeping over the country generally sends prices down, especially if Royalty or any statesman gets it. The money market knows the habits and state of health of every powerful statesman in Europe ; and it is a fact that, when Mr Chamberlain came to tho Commons one day wirhout his orchid, late, and looking tired, everything slumped like lead among financiers, and there was over £1.0C0,000 difference in prices next day. That was put down mainly to the orchid, and, al-

though half in jest, it was really due to nothing else. For another instance, there was a big scare because of a railway accident at Crewe, not long ago, in which a good many people were killed and injured. Lord Salisbury was reported to have started for Edinburgh in that train, and so in truth he should have, but he altered his plans at the last moment. That shook up the funds pretty badly, and kept a hatless, anxious crowd of financiers striving for their financial lives in the rainy street, long after business hours, and sent over £4,500,000 of money out of the country. Nothing in the way of death, by the way, would make so much difference to the money market as Lord Salisbury's sudden decease.

It is largely the money market's habit of counting on things before they come off, and staking millions on them, that lets it in for these panics ; and a report some time ago that the Teutonic was overdue — nothing very extraordinary — threw the whole market into confusion, and depreciated fivesevenths of all stocks by over £6.000,000. This was because Evor Gordon, the United States envoy, was returning to America on the Teutonic, after his audience with the British Cabinet, to latify the contract as soon as he arrived. Now_ that contract, as soon as the date was known, was gambled upon to the extent of over £30.000,000 by British "money men," and the terror that the Teutonic might be at the bottom, and the satisfying of the treaty delayed, rrade even multi-millionaires tremble.