New-York tribune., 1874-08-14
TIE PRILOSOPHY or PANICS.


TIE PROSPECT FOR THE FALL TRADE-CAUsN AND
CONSEQUENCES OF FINANCIAL CRIsES-EFFECr
OF GOOD CROPS UPON BUSINESS GENERALLf-A
FINED FINANCIAL POLICY DESIRABLE
To the Edttcr OF The Tri6ane.
SIR: The newspapers have considerable to
say about general revival of trade and the g'and bu
ness We are have next Fall An impression seems TO
prevail that we must make up for the dlpess OF the
past months by great activity during the coming
season, very much as, in imc of drouth, people say
that enough rain will soon fall give the proper total
Of inches as in cold May hear OF the approaching
| hot Summer or as in a swehering Summer there arc
many predictions of the coming Winters severity the
community is seized with the idea that some natural
law guarantees a correct general average in all things
Whether idea be sound not. matters very little
for eases the question of time is allimportan
In drou:h we wish TO know II the will come be
the crops ruined. Our present difficulty Is to
find out whether good business should follow the first
months OF dullness, whether IL Is more natural
FOR the bad business. succeeding panic TO continue
for several years before the reaction Among business
men | have noticed singular unanimiy OF opinion
finding expressions like these We hear great deal
about hs business but II has not reached us yet" "Our
customers have no very large ideas at present
bat We suppose they will soon get them up
fear that the wish for lively trade is father
to the belief in IT, which IS indeed aided by newspaper
the theory Of general average noticed above Some es-
timate of the future may perhaps be gained by con
siierinc panlcs in general
What them is The philosophy Of panic? II it be a
time when crazy without cause, or lose conf
deuco in each other when they should continue to trust
If nat be all the explanation of panic, we may have
another crisis tomorrow and we need not consider our
financial condition all Fortunately for however,
history records many panics, and clear thinkers have
discussed the phenomena Of them, fudins series
of causes for this disturbance, and another
for that. but not attdbuting any trouble
to chance or 10 the whms Of business men.
panic seems to be the natural sequel to several con
sccutIve years of good business. During hrsk trade
with fair profits men get into habit or trusting cdch
other, and reposlng confidence in unworthy per
the desire to sell AID realize oNerpOwers the
every body pay his debts crs instead OF reius-
lug sell this customer charge hln " .itte more to
nav for the risk without considering that the
ittle more" Will ruin the customer and bring the loss
home. All kinds OF new enterprises are entered INTO TO
salt down" surplus profits Tnc prospect OF great gam
@ t,,s hen T., attr1ci lgrrey ,h ul-
tai The Ere Canal finished in lo25, mad served 10 de-
@ voyP i en- sneciainn in western iInds lad or.
stripped all reason. The progress oi the MANIA Us
shown by the returns OF sales OF pHbc lands, vas as
900: 1s55 si7coGJ $50 s2laOoj5 1851 S6oJocj; 1855,
sJoOiOOo Ne"-1orA ny rel e,t'te, Gc'.rGGuS -
not gam reach S3J)OJJO1 uut ISL Railroad building
seems have been 0uy chcta"d 10y the crisis oi 1857
tie building proceeded IS shown D, The l0IoWhE m
OF miles Dult IN each wear; ISL p; 1882 li: 1913,
lS35 400; 1881, ~ 1875, avi
1882 $50 1910, SIG; 1Sil, II; 1872 49! 1919 lj9
Years OF advancing prices ana seeming prosperity. nc
compined bV extension o ci'u'' pIct'eu W. Cruz OF
indeed. being used to sci lc Nr' small proportion OF
business Transactions. Several men, keeping accounts IN
banks OF CIScOuu may an "htiih eH"H edIl money 10
enable them tOr many months. large bio"h~ OF
m,rclaudse real estate, for wAlch tAee is no sale,
by Recommending each othcr with tIcir sisl~Jurc-
NAV get B's note discounted, get Cs, ct D..
ana get As Each note maturing week or i"o LATER
f4 IA. PRECEDING il j. ouy necessary for A. y. G aHd
D 10 keep enough money among them 20 meet
Is paid the process begins again. In good
times, bank expansion is very srea., ani. o. coaIs'
extremely reckless, hld, II Impossible to htts ms en-
caremnuis. Then desire 10 ties, prices aGd the
IL money cuOugl 10 around. The man VINO gave DIS
note $1,000 scarcely obtain he acun' AT an Tor
h. own notes. Discounts only To be hal wan great
difficulty. For borrowed money securities have to be
gwen for double the amouli, ald those persons VINO
cannot give them must 90 under OF course, ~ panic
there l. always excessive fright, but TIN, soon passes
away and then there settling 10 The conviction Adt
credit enabled buS!nes, aud prices 10 exceed their
nro.er bounie and also that economy snOuid bc the
rule The natural recovery from great crisis We
believe Ice very slow. In lss business seemed TO have
revived the Bank Of the United states considered tue
troubles 10 be over and became involved IN cotton
specuatiOn In 1862 the price 0t cotton was 10 c"nS
b,t nm $50 was L. cents In Jsl, II cents IN 1872
cents in 1873 cents The price dd again reach II
cents until 1sl7. The bank failed ~ October, 1892 aud
was followed by nearly all the banas N the ooutn aui
West The year IsIj was a gloomy one. ant the
general revival OF business did not happen unui loi
What shall say OF the probihe duration o. our
dun tradel r,od harvest Is expected but The ist
effect of must b. decline ~ prices OF breadstuI',
and possible failures OF dealers IN them. The great
English harvests Of 1918 anu 1874 precPatcd financial
rcVuriOu. while all agree that gSoi crops are national
blessings yet tnor first effects are Soct disastrous.
There too Il, a prevalent idea that banks reds
coun'iug that s carrying dlOuE htT customers 10
enable Them 20 wade out OF their difficulties Thc whole
country is trying 10 practice economy; hut everybody
tur.t md. the hardness OF tho task, and that tikes
time for person a nation tD gct on OF cNrayagtnt
bnIts OF course, economy means future prosperity.
ut does II not also present dnllncss OF rgdct
Nhle the Fdl business should pe SOMEWHAT oel'tl thah
l9t Of
feeling that large business IL not 10 De expected OAK
money uncertain STANDARD oI N1luc' hhl lhcfe j,
founded dread Of the next Congress and lis rObd
bic uukcr4ug with the currency. We cannot soc Tar
enough iutO the future 10 enter upon ventures That take
time maturity. Perhaps are really tending TO-
ward specie pa, ,ents II this b' sO. We should antci
pate further decline Of prcrs, of at least no advance
from the present low tutll reach specie pit
ments definitely agree that There HaIl br 40 attempt
TO reach them. may hope fUr ttc Improvement iu
trade but need not anticipate the volume OF business
tba. preceded The panic OF -. EApiA
Netc York, Aug. 5. 1874