Chapter 465: National Bank Run
"We have nothing to lose anyway!" Morse then stated that he must drag all financial institutions into the water, whether they are trust companies or banks.
Just like what Blair said, people still listen to Heinze and Morse now because they are still popular, but in a few days they won't be able to speak anymore because no one will believe a banker whose bankruptcy is inevitable. Heinze's tragic and heroic act of firing his last bullet can only move himself, not anyone else.
"Good, you have the arrogance of a financier." Sheffield praised into the microphone with a smile on his face, "In fact, the collapse of Knickerbocker Trust and Investment Company has left a far from sufficient market share. Other trust companies should not relax. Those bankers are obviously targeting all trust companies. This is a battle between banks and trust companies. However, this is only what bankers think. In the eyes of the citizen class, they do not need to distinguish between banks and trust companies, but all financial institutions. It is just a matter of who comes first and who comes later. No one can escape."
Bankers think this is just a problem for trust companies, and that's just what they think. Citizens don't think so, which is why the crisis still affects the banking industry. But for Sheffield, it doesn't matter. The financial crisis will eventually spread to the real industry, but it will definitely be the last to be affected.
For Heinze and Morse, a million dollars in acquisition money was certainly not a huge sum of money for them originally, but now they have no choice. Moreover, once the crisis spreads to the whole country, just like what the slave owners said, maybe a million dollars in cash, the acquired stocks, and property rights will restore their strength when the economy returns to normal. So why wouldn't they agree if someone writes a check and they are determined to fight to the death?
When the Knickerbocker Trust and Investment Company needed support the most, the New York Clearing Center stopped providing clearing services for the trust company due to its chaotic management. This move was tantamount to adding insult to injury, and directly caused the Knickerbocker Trust and Investment Company to become the first victim of the bank run. However, as the currency panic had gotten out of control, the bank run spread from trust institutions to banks and then to the whole country. Even mainland banks began to withdraw money to New York, causing a tight money supply in New York. The national banks, as the central reserve banks, also generally fell into trouble.
Historically, after this crisis, trust companies lost nearly 40% of their deposits, while the deposits of the National Bank of New York increased by 8%. The reason for this is that in order to cope with bank runs, trust institutions had to borrow money from the National Bank at high interest rates or sell assets to the National Bank, and some depositors would transfer their deposits from trust companies to the National Bank. "Due to the bank runs of depositors, the assets of trust institutions and financial markets have shrunk sharply, while the deposit business of the National Bank has increased relatively.
Eliminating the trust companies and allowing New York bankers to gain growth was the result that Wall Street hoped for, until Morgan came back to rescue the market. But in fact, Sheffield remembered that the bank run eventually spread across the country, which showed that Morgan's rescue was only useful to the New York banking industry, or he only wanted to save New York banks.
Heinze and Morse chose to fight to the death to expose the darkness of Wall Street, and Sheffield fully agreed that they should die together and fight to the death. This is the quality that a financial giant should have.
"I'm just waiting for good news from there!" Sheffield hung up the phone with satisfaction. Morgan hoped that trust companies and banks in other places would go bankrupt. New York bankers dominated the financial industry, so he adopted that kind of rescue method.
The slave owner's situation was simple. He wanted to be fair. New York bankers, like banks across the country, all went bankrupt. We were all bankers, so there was no need to distinguish between the upper and lower classes. It was fair if all went bankrupt.
"William, what do you want?" Edith Rockefeller had never seen Sheffield anxious before, but she was not anxious even in the face of such a situation. Wasn't that a little abnormal? "If this continues, many banks may go bankrupt."
"Is it just the bank that goes bankrupt?" Sheffield asked, tilting his neck. "A bank's reserve is one-quarter of its book depositors' deposits, which is already a very healthy situation. Many are five percent, which means that if a good bank goes bankrupt, three-quarters of its depositors will lose all their money. A bad bank will cause 95% of its depositors to go bankrupt. Haha, I wonder how many people will jump off the building."
"That's a tragedy, it's terrible." Even Edith Rockefeller was shocked to hear this ratio. "Did you expect this result to happen?"
"It's nothing more than the difference between whether the whole country is like this except New York, or whether it's like this everywhere including New York." Sheffield said expressionlessly, "It's not a question of expectation or not. I'm a slave owner, and slave owners only have slaves in their eyes. As for the skin color of slaves, sometimes it's necessary to distinguish, but most of the time it's not necessary. Citizens should understand the difficulties of the country. Isn't it right to sacrifice for the country? Haven't you learned the theory of evolution?"
If the crisis develops normally and without interference, Morgan will arrive in New York in late October at the earliest. After half a month's voyage, he will come back to join forces with New York bankers to save the United States. However, Sheffield believes that this banker, who is semi-retired on the surface but has never left in fact, will not be seen in October.
The speed of pushing down the dominoes in China should be accelerated, and the bank run should be pushed to spread across the country as much as possible. This requires the power of the media. A free country should be open and transparent, and it is not allowed to tell the truth.
Why did he help Morse and Heinze when they were destined to be forgotten by the crowd, and even offered to buy out their shares, even though this was also a robbery. Robbery and help are not contradictory, it can be regarded as robbery-style help.
Without the slave owner, their banks would still be liquidated, and their stocks would be delisted as junk. It would be better to hand them over to the slave owner now in exchange for a little breathing space.
The purpose of helping the two was to make this Wall Street civil war public and expose the dirty tricks of the bankers in the dark when the Knickerbocker Trust Investment Company had just collapsed and was still attracting huge attention.
Why do this? The advantage of doing this is that the nature of the incident can be determined in advance before the bank run spreads across the country. By then, most depositors will have lost all their money due to bank bankruptcy and they can vent their anger on Wall Street bankers.
Before the crime was committed, the slave owner was already prepared to pass the buck. He wanted Wall Street to take the blame first so that he could go out and rob. Anyway, all this was true and not slander.
Newspapers across the country have received orders to prepare to reprint the news. According to the time difference, California is six hours behind, so they have set the time to reprint the New York Daily's report on the bank run.
Less than twelve hours after the Knickerbocker Trust and Investment Company went bankrupt, Heinze and Morse took the initiative to show up and hoped to be interviewed by the New York Daily News. To outsiders, this was very normal, and it was also very normal for the New York Daily News to respond because the bankruptcy of the Knickerbocker Trust and Investment Company received huge attention.
When Heinze was interviewed by reporters, he dropped bombshells one after another, pointing out that the bank run was caused by a competitor. He also said, "The reserve of Knickerbocker Trust and Investment Company is not lower than that of any trust company or bank. The reserve of other trust companies and banks is also very low, and their debt is terribly high. This is the current situation in the banking industry. Because of this situation, when the United Bank called on all banks to jointly cut interest rates, many bank mouthpieces accused the United Bank, saying that the United Bank's statement was destroying the market."
"Do all banks and trust companies have huge debt ratios? The funds inside are not enough to cause a run?" The reporter asked solemnly, "Is this really the case?"
"Many banks are just empty boxes. Heinze and I's bank is one of the healthiest ones." Morse said decisively, "The crisis will occur sooner or later, but some banks choose to let trust companies bear all the responsibilities. The current run on major trust companies is a conspiracy."
The next morning, a special report titled The Truth About Wall Street was sold on the streets of New York. Newsboys shouted in childish voices, "The banking industry is in crisis. The run is caused by the civil war on Wall Street. Morse and Heinze accuse other banks of setting traps for trust companies."
Under this kind of hawking, New Yorkers passing by stopped and bought a newspaper. They read the figures on the newspaper, saying that many banks' reserves were less than 5% of their accounts and that the banking industry was already in deep crisis. Everyone who saw it could not help but gasp.
The depositors who were rushing to withdraw money at the doors of major banks had not dispersed in the first place, and the report in the New York Daily News added fuel to the fire. The desperate long lines and anxious faces of the depositors seemed to have made the major banks see the advent of hell. The depositors who were usually regarded as gods appeared at the same time, making many banks feel that they had never felt so abominable.
Now the bank run is no longer limited to trust companies. No matter which bank it is, there are long queues at the door. Everyone is not going to work. Instead, they want to protect the safety of their property. The banker's words are just a placebo and are now completely useless. From New York to Los Angeles, from Boston to New Orleans, this bank run has begun to spread across the country, and no one can stop it.
(End of this chapter)
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