The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-10-16
no Financial Prospect-Rcvulsi0ns an
Their Causes.

The Financial Prospect-Rcvulsious and
Their Causes.
In financial affairs, as well as in other
things, there is much truth in the remark that
'there Is nothing new under the sum-" The
same causes that have operated in times past
to create panics or financial crisis continue
and will continue to produce like results. The
effect is more or less modified, 1t is true by the
peculiar and varying circumstances of different
epochs, but the causes are similar, and the
consequences in lesser or greater degree the
Same. The progress of civilization, with all
the blessings 1t brings, has not yet restrained
the cupidity of mankind. Indeed, speculation
and making haste to get rich seem to De
stimulated more aud more as civilization ad-
vances and as wealth augments. While the
world has continued to make progress from
the earliest period to the present time, by
succeeding generations using the knowledge OF
those that preceded them and by adding
thereto the knowledge that science and art are
constantly developing, the ruling passions OF
men exist as formerly. The financial affairs
of nations, like those of the moral world and
physical nature, move in cycles. Action and
reaction succeed each other inevitably. Mer-
curry in the barometer is scarcely more sensi-
tive to the weather than the money market and
business to speculation and current events.
Expansion Of credits, overtrading, fiscal bur-
dens, general extravaganza, wars, and great
calamities, like the fire at Chicago or the
failure of crops, must in the end create a re-
vulsion, and the extent of such revulsion de-
ponds upon the influence Of one or more Of
these causes or Of all combined.
In going back to the files Of the HERALD for
the year 1887, the graphic accounts of the
great revulsion of that period seem to be
descriptive in measure of the state of things
now existing and of the prospect before us.
Imitation or expansion of paper credits, specu-
lation on fictitious capital and extravaganza
in everything, caused financial collapse and
suspension Of specie payments. General
bankruptcy and high prices brought the peo-
pie to the point of starvation, though
there was no lack of provisions, and though
the country was full Of resources. A dollar
would not purchase as much as twenty-five
cents before the crisis. Distress was every
where and among all classes. Securities Of
all kinds and the extravagant inflated value of
real estate fell greatly. The fact that every
thing had been edup to fictitious value
by credit expansions and the mania of specu-
lation was apparent to all. This state of
things was like the high pressure Of the steam
engine when carried beyond the highest point
A fearful collapse followed, sending destruc-
ton all round. The law of equilibrium which
regulates trade and finance, as everything else
financial or commercial affairs without a
reaction OR rev ulsion than can the laws of the
physical or moral world.
The condition of the stock and money
market generally, and particularly at New
York, the great centre of wealth and COM
create an innprU-. -
reached the eliminating point VI
tion, overtrading and extravaganza, and
that it was about to pass through
another of those periodical revulsions
which occur at intervals. 1t did seem
to portend crisis something like that of 1887.
The vast destruction of property by the Chi
cago fire, the devastating fires in Michigan,
Wisconsin and Minnesota, the stupendous
frauds in this city, the fall of government
securities and rise Of gold, and the consequent
embarrassment brought upon the Treasury
Department and its Syndicate agency in hand
ling the new loan, with other circumstances
calculated to create apprehension and difficult
ties, appeared to combine to bring about
general crash. The rapid fall Of stocks gene
rally from ten to twenty-five per cent, some
declining even more than that, was like the
murmuring of coming storm. So significant
were the signs that we advised the people to
be prepared and to seek shelter. Happily
there has been a lull. The clouds are over
us yet, but remain stationary. Are they rest
ing there for the next financial gale of dis
turbance, and, then, to hasten on the threat
ened destruction9 Is this suspense simply
temporary reaction? Do the elements Of
greater and more general revulsion exist as
before, to burst over us in the end2 1t cannot
be said that the market has recovered. 1t is
only in state of suspense. Let us see what
is the prospect before us, for that is what
every one is anxious to know.
We have no disposition to be alarmists. We
ere more disposed always to be hopeful and
to inspire confidence when there are reason
able grounds for that. But it is necessary to
understand the financial situation of the coun-
avert as far as possible any disaster that may
come upon us. Our late war produced
revolution in the financial situation Of the
country as well as in political affairs, and in
both brought generalization. The people