Causes of the Panic
Reserve inflation of a peculiarly objectionable
type.”

15

Bear Tactics and Outside Calling of Loans
The Chronicle assigned yet other causes to
the panic:
“The latter part of September, however, some
of the large groups of operators, having accomplished
 their purpose in carrying prices to new
extremes, began unloading their holdings, and this
had the effect of weakening the market . . . but
after the decline had been going on for several
weeks, there came an entirely new development,
namely, the calling of loans on a huge scale, not by
the banks themselves, but by the mongrel crowd of
outside lenders.”
The first was doubtless true; stocks passed from
strong to weak holders. The second, the withdrawal
of funds in many cases came from the banks first,
which caused outside lenders and brokers to call
their loans. It soon lost most of its significance
in the fact that by this time the demand also fell
off; if the supply of funds had been cut off more
than the demand, money rates would have risen
and they did not.

Margins Not Figured Scientifically
A series of causes of the panic was described by
Fred I. Kent, Director of the Bankers’ Trust Company
 of New York in his address before the Ameri-