The rise in the discount rate attracted foreign capital little by
little, and exchange grew easier. With the help of the syndicate the
credit circulation became re-established, and the rate of discount
declined to 5 per cent. For commercial needs money was always to be had
at 4-1/2 per cent. and at 5 per cent. when at the Stock Exchange it was
necessary to pay 4 per cent. per day!
The panic was terrible from the 3d to the 10th of May; for two days no
one wished to part with his money; it was impossible to borrow on any
collateral, at any price whatever. Hence came a decline in the public
securities, which fell below the low prices of 1873.
The public complained that it could not have foreseen the panic, because
the loss of gold had been concealed by the oft-repeated assurance that
there was a reserve of $600,000,000 in Washington.
Similar situations in 1857 and in 1873 were recalled, and it was
remarked that like troubles had not occurred until after a long period
of high prices, when capital was scarce and the rate of interest high,
whereas this was far from being the case at this period.
It was nevertheless notorious that the decline in prices began two years
back, that the advance in prices had been stopped by the breaking out of
the panic of 1882 in Europe, at Paris, and that since that moment prices
had begun to decline, less rapidly, however, than in Europe, because the
shock had then merely disturbed a market which had not yet recovered
from the panic of 1873, from which, in consequence of the
Franco-Prussian war, France had escaped.
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