, 1874-04-18
hoy woro tho ovcrcnd b aurnoys Of tho Unitcd

They r voro tho ovorend d aurnoys of tho United
Btntes.
We zoo, then, that tho dny Of erisa is tho day
of tho settlement Of losnoa. Tho lonaoa hnvo
boon incurrcd-tho woalth iB gone, for the goods
hnvo persl,cd and arc ,,nreplacod. Tho conyul-
plops OF q panic aro the pushngs OF crowd,
their depusit-for. tho bank nay DO hanging over
tho prooipicc.
TIE ROOT OF 4 PANIC
is want of knowlodgo-'gnorarco OF WHO hns
spoculatct or granted loans beyond his means;
iFnoranco Of whether the milton hns consumed
occurs TO no ono. Even at an earlier stage,
whom tho inquiry might havo givon 1afoty, no
ono thinks OF putting tho question. Tlon tl,oro
IL ignoranco OF what oach bank or mercantile
house has been doing; how ,r, .y many raah
responsibility may ho trnstod for aolvenoy. Tho
anxiety becomes greatly aggravated in rango and
intonHity by tho vnst oxpnnso OF English trado
and tho 1noney .mRrkots OF tho world contoring
in London. For who is to Say how capital lntd
ont In India aud the far East, in tic United
Statos and the groat Wcnt, In tho Colonies aud
in Cbina, has prospored? whether 1t is yio1dng
returns or has been annihllAtod whether by
nctual loss Or consumption, Or m works to DO pro-
1nonts Of vast influence over English banllors.
Yot they are moat difficult to lonrn accurately
still more. arc likely to be not thought OF Mt all
by thoao who act, whether ns lendors or borrow
eao,rot ~ 4a rnto n aisno,lnt ~ nr.ana nnd nano
,ca. mi how hard are thoy to track out md
weigh accurately In the vast ocean Of British
trade!
One conclusion Ia Irresistible. Thore Ia an
ELEMENT OF UNCERTAINTY
In ascertnining tho actual situation Of trade at
givon timo, Which mny wax Creator or less, b1lt
which never can bo got rid Of. It is Of I'M
monBe importance to bnnkora and to borrowers
on discount, to forocast tue future of commerce.
problem. This uncertainty, moreover, is dis
tributod into two different regions. There is,
first, tho fold Of capitnl-what Is going on with
its destruction and reproduction; md there is,
whnt is taking placo in tho ahiftings Of dobts
and loans botwoen ledger and ledger, between
country and country. Every resource Of bnnk-
ing wo have seen ontesa ut point A, creating
debt to n depositor; and 1t disarrears finally,
chasgo for those sold at a. But between A and
endless movements may tako place; and there
can casily spring up betweon A, when the bank
WAS sound, and the final q, number Of move
monts BY checks and paper, which may create
and yet not touch the quantity Of pronerty
originating and ending tho transaction. These
informal movements nay Cause anxiety and ng-
gravato panics; but they never create one. II
there lB no WaatG WEAlLll, 1llUEG AECOu1lt NGT0
deciding who wins md who losos in the hazard,
may alter tho fortunes Of individuals but con-
stitute no djmlnution Of tho wealth available,
though banking for loans.
warov noaa m to the aecond thoorv
IL "o;ninr r Gro',n1 n oven in to nowannnars
T. t.,,n 5ds;,t - io,.S ~ Ia
Ttrs n rnoponr1oy. oF THE RESERVES
IN tba l;o1d1,t;ea ~ lin hnniS When That rro,
nnrt;on ;ne,aaaos tho ham1. Ia safor ~hop Il
loAs'SeN 0'Noet ~ "AHN-A -
Io renrn rara,rnonions Il, cransinr mans. Nav
t1,;a rroroat;nn l.; itaef ;s trno H. ia
thnrpnchiv t1irarcnt in 1sini from na1Sed nmntn. !.
tions ~ Tia mero atocI Of coli 10 % tho banE. II
~ M m's ~ ,r" ~ ,o 10 'q M
...'s.. ~ no a, exooa5a ~" ~
a5o;,d ~ fnnds n bc throucl, thc
bo., ~, fferan,e ,,r.t n"n"eaarv o"enn,,,,"to
nt th Tia ban]t in tbs form Of eold. Tho conyerso
~ ~ s' ~ .aaSo - ~ roavn ri, 3r;o;a TIA hn,i;on
ha ~ 1mna3;oo ~ tam hocon"a this o How a.
t1to.o I,r,,, o5r,cota thn nronnrtion of uoid IN
,np9S VINO t ,, snp oa " gou M
nntnn of tho hank. nroposo to nnnly Il in nrao.
IT, ~ l,a,ti;nt IL ao1o oh;nat ~ ', rosor,,r
:a1u H. n;reators ~ a. n1, ~ "rt;
ratn III, o 40 nnc .trd aa tha nont n etaIIs
."st a ~ r;oa onJ jotror +t,o rot ~ 1,ann,,nt
occorainc as tl,a h,1lion falls le,ow nr r;sos
ainv. ti,s ,,o;,,t II lint Ia az 10 INT ;a H.
@ n.'i ~ r;n'n,,t cnl,;so ,y;n n t
inta eanni.cr;a;s ,vomid he hrourht nnt hv iii,
1o io as m arbtrory % articjaI and nnisiah'. II
comnotion com = excited in tic money market, and
Heavy initiation nf loas and contraction Of In
dustrv % imnosod % unon I trale by Directors enoran m
Of liz science OF thoir busincss. Tic rato OF dis
| coun WAS raised on Sept, 81 from
mar cent. when the: ,roportion Of reserve to Lin
biIities stood at te aupor-safety point Of Il pc,
cent It was rnpidly nushct1 on TO 0. and the dis
| turbnnce ceased on Doc, ii, whom tho ratio wat
sti at lie fun safoty leyol Of SO par cent. Thu,
| tie violent leaps Of tho ratio, up and down. oc
curreii wl,st Tie rosorye was wol above The linz
of eafaty: it ia impossible. therefore to adont th,
theory that IDEAS Of safety, ID based on the ratio
of resarye to iiabIlitios, guidod tho conduct d
| tho Directors: and this principle cannot bo ao.
cnntei ar Tie governor OF the rate Of dscoun
without involving tho Directors in tho clnrge 0
| having hnrasscd trade and injured merchants
| nnnn nurolv wild md fnuciful notions. in tiirec
| v!nnt{on ~ rirht doctrine. The rnkin nf reaoryn
comuarod wit6 liabilities, clearly furnishoH u
explanation, much lesa justification Of thoi
oopdnnt
Aga;n in t,,a .,root cv;aa M 1Rsf film han,
von} m landing mncI, and swiftly long after
"'A' ~ TnEIEyrt. or aArETY
| t..1 Atr -" - N'A" =,