The New York herald., 1874-10-02
WHAT ARE PkNlCS?
An English Professor of Political Econ
omy Before the Chamber of Conn
merce-A Popular Address ON Eina nee.

Dodge. IN the chair. The following gentlemen
were elected members OF the Chamber benjamin
p Baker, No. lOl Pearl street; Antoine Barry. No.
90 Pearl street; Eugene r. Durkee. No. 1856 Water
street; william Dnryea, No. 20 Park place; Frank
lin Edison, No. % Whitehall street; Nathaniel
Fisher No. 81 Warren street; John II. Kemp, No.
1l6 Wall street; Ferdinand Lawrence, No. is East
Forty-sixth street, Frank B. Thurber, No. ll6
Reade street; George l.. Trask, No. $50 Broadwa
The PRESIDENT introduced TO the Chamber Mr..
Bonamy Price, Professor OF Political Economy, at
oxford University England).
PROFESSOR PRICES ADDRESS.
Professor PRICE regretted that he had not
known that ne should have mad the honor of ad-
dressing the Chamber, for in that case he would
have submitted a written address. He would
however talk TO them in an informal way on the
question OF 'Panics." What, then are panics or
! crises? Why they are occasions OF great diff
Guilty In obtaining funds; high rates OF discount
inquiries to who sound and who are I'M
sound; who are the men to be trusted and who
are the men not to be trusted. We had scene
like this in England in 1860. That was time
when the great London and Westminster Bank
the largest bank In England-was in d1f1icul-
ties. What the danger9 Why, simply fright
and nothing more; simply alarm and nothing else.
To use popular but significant phrase. the peo-
pie were in state OF ''funk." In that time the
fathers OF the city-always men OF high standing
sat IN council all night as though they could work
the cure for thus financial trouble by sitting up
all night. Now what is really the question to con-
slider In this state OF things The financial crises
have occurred with such wondrous regularity that
they are supposed to come within periodic GER
tanty like comet They come within deci-
NAL period OF ten years. SO that 1t really ap-
peared that there law OF the money
market which enabled man to 20
home at the end OF ten years and
tell his wife that he was ruined
man. Is there law Of business that maintains
such law9 or all this l believe nothing. l
believe the cause can be stated II you take
proper precautions the evil may be averted. IL
Is not the magnitude OF the loss alone that consti-
tutes the crisis. bad harvest In England is
loss OF f3O,oOOOOO. A bad harvest in England
that you have got to buy ESQ oo0 900 OF
twice over. The farmer has to seed, till and
manure the crop, but the August rain comes In
and the corn Is not reaped. You have got to live
and you have to buy 1t OF the stranger who mas
had better weather. That is loss OF ESQ, 900, 600
OF treasure. But that is not q financial ruin. 1t
is calamity, but that is ALL War is the most
un-economc thing in the world. 1t is deliberate
association Of men to destroy. But war not
necessary to produce panic. Take also the cot
ton famine in England Mills were ruined, poor
men were doing no work, the great apparatus OF
q great trade was consuming ana non producing.
Yet there was no panic. Mere loss Of property,
then, did not produce panic Like typhoOn q
panic whipped up the water locally but the neigh
boring waters were calm. In the panic OF 1856
and 1S47. the time am now referring TO, the COM
mon rate OF interest at the Bank OF England was
ten per cent and to many parties twenty per cent
Nay, Offering bali tlNlr property for
loans so that they might be saved from ruin, and
yet they could not get advances Yet at this very
time the agrlcuturists and country squires could
borrow money at iour per cent. This is fact
that was absolutely historical.
The most characteristic thing of modern trade
is that carried with otner peoples capital.
capital or capital ey do
provide, but not the bulk-certalny not. the bulk
hence" They must be discounted, and the panic
was a Jury IN which the general traders could not
procure discount. 1t was in the banks xaposcountng
took place. The locality OF the storm was there
lore fixed In the banks. Banks are peculiar in
stltutions. You may ask the Governor OF the Bank
OF England the simple question what bank Is,
and and that was Mr. Pollard, the founder OF the
great London john Stock Bank, who could tell me
ha anK m ne rhsy lns es n W Naa
any gentleman present tell me what banks deal
IL 1t is marvellous that no one can answer Yet
1t is essential 10 know what q bank Is to get at
this law as to crises. 1t ts said that bank deals
In money That Is not what a bank deals in. l
deny that nat. said in an article that wrote in
Frdser's magazine that the bank Of Robarts, Cur
tbs Il Co. dld not deal In money and that thirty
actions. Money meant stamped pieces OF metal
which were generally known by the name OF
aware that in England bank note is money, but
you take the note and can go over to the other
q check money! 4 promise to give a thing is not
the thing itself. Paper of all kinds are merely
title deeds-nothing else.
Mr.. OpdyKe asked In what class legal tenders
should be included
Professor Price said-Cearly in the secondary
sense, money; though nothing could be real
money but actual coin. Sir 5ohn Lubbock had
n rns the Sasnss: Ssns: Of va: ssnks s
the transaction Of that business they had
only used ss in every sloo Of bank notes. and in
and a half per cent Bankers, therefore, don't
deal In money. what, then, are the other ninety
seven things they deal INF banks business was
OF several kinds. First, to collect debts, to take
pieces OF paper embodying debts and to collect
them. What does he do to avoid gong about and
cotton broker comes and puts down his bills. A
The BANKER says that cotton broker will not draw
against his bills for MONTH, and therefore you
may draw against them for a month. He
This is done through the Clearing House,
against him when he has but $1,000 TO collect on
the cotton bills. But tney run finer tnan that. In
lact at twelve O'Clock both transactions VIII be
ended. banker is, therefore, a transferrer OF
debt 1t was essential to understand what bank
ing was. IL was what related to the goods sold
ana bought. II banking was in danger it was be-
cause many goods had been sold and the buyers
were lew, When the buyers were unwilling TO
! use all their power then the banks were in money.
discounts were low and "money easy' When the
farmer mad good crops ne came ln sold his wheat
and left his surplus with the banker. But when 1t
was the other way-harvests bad prices low-the
poor farmer had nothing to leave, but wanted
10 borrow, Then came the pinch. flow silly
TO rejoice because the amount OF gold In the cellar
was increased. Yet that was what all Loncon
! was doing to-day. Banking, he repeated was a
! brokerage OF purchasing power. He begged them
not to associate that with the currency which rep
resented but three but with the other part repre-
sentng the nlnety-se per cent
Mr.. Dodge asked II in his view anything could
be done TO prevent panics.
Professor Price SAID then he must pass over to
the silk mans side The banker had acted Just
like O dollar in exchanging cotton Tor silk. He
had lent to the silk man. SO long as the SILK man Is
business was good the payments were all right,
7 one had paid for the other. But suppose instead
OF that the broker lent 1t TO q larmer VINO
was anxious TO put 100000 in drains. The
farmer was responsible, and the banker loaned.
The work went on LOT two years, the laborers
wearing out their clothes and consuming food but