New-York tribune., 1874-03-21
PANIC AND IT'S REMEDY
CAUSE AND CURE OF FINANCIAL Dis
0RDERS

OF THE PANIC-TIME AND rHK GRo"ih y. 80 -
rIpENCE REQUIRED INITIATION NO hhhr f'"
OUR DIFFICULTIES
70 ths Bdifor Of rae gr'o"ne'
SIR: What is q panic Such one ioi eAainp'o'
"a we have lately had in the hnanciaI anu ov"i'y.
cial world Such one as We had In io0'' anu "e"."
IN ,s,7 An important question because on the an
- s.nond ;mnortant conclusions. doctor
,vor cures his patent till he knows what ais nun.
A nanic il fright 1t is an alarm. Ii may DO wen
,onnded or IL NAV be i'll founded. Its duration ana
;tons;tv are very apt to depend upon whether IL DO
the one or the other In the trading world IL Is
aonbt of and disbelief in the value OF securities. IL
!. a distrust of the standing and solvency OF IN
diyiduals and corporations. On the Exchange
whether the dealings be in gold. IN STOCKS III pahh
bills or merchants notes, or bankers oDhgadohs' IL
is Just the same; an eager tremulous' appfenonsfe
inouirv into values. The feeling flies from city to
city and from town to town. till 1T involves all the
trading and part of the producing world, ana
very large number of people beside. Itcauses stimuli
taneous overhauling of securities and obligations
and AT once wherever 1t is possible, test 10 DO APP
piied TO discover what is good what IL Dad anu
what is doubtful among them. In that tess' ihoi-
yiduals corporations, prOduoors operators anu
above all spectators, go to the wall IL Is tline
when obligations have to be met or repudiated'
The whole bong list of debtors Is sifted anu ohai
lenged from one end of the line to the other "nero
the default is found to be frequent or unexpecteo'
apprehension is intensified. aud the panic noreaSoS
and spreads.
Nv this is a natural process and not an unreason-
allie one Such a sitting is the only method known
~ trade. finance and commerce. by which to detect
and arrest rash adventure. expose Cal
culations check wild enterprises. and deieat reck-
less speculations II is the only way to bring lend
o TO their senses and stop borrowing at inordinate
and ruinous rates of interest. When the tradlnR
world gets too full of bubbles it is the only way 10
explode them. A financial and commercial panic ls
20 that what a thunderstorm ia in the natural
world 1t clears the sky of its yapoTs ana its ini-
purities and its dangerous gases. 1t may leave
wrecks and spread disaster but the eeherai ehoc' 10
purifying, bracing, and healthful
No system of finance that has ever yet been IN
vented has been able to prevent paDics or scarcely
to modify them, aud it seems safe TO say none ever
will be- They come rs surely where tho measure ol
values is metallic standard and where the clrculat
ing medium is wholly coin. "a IN California; oi
whore the money in use is mixed paper and gold, as
in England and France; or where 1T is all irredeem
able paper as in this country 1t Is the credit sys
TEN that breeds panics. naturally as sun and ram
breed vegetation and miasma in their order After
long period of active trade. extended manufacture
enlarged production. multiplied transactions, aDt
CONSEQUENT increase of securities and above ALL th'
extension Of enterprise into untried fields day o
review and settlement is necessitated by the in
ev;table pressure of the situation
Enterprising men postpone it a. long as possible
and would postpone it forever If they could bu
the conservative forces of solid capital, aided by
some unhappy fortuitous cODjuncture OF events
always precipitate the crisis sooner or later And ~
IL has been in the past it will be In the future
Panic is thus simply name for condition which II
developed from the credit system and the nature OF
modern enterprise and which will forever recur al
due intervals while that nature romans unchanged
In describing what panic is we have necessarily
referred in part what is the of 1T. But there
is this to be said in addition. Panic is the effect of
OVERRIDING, OverwOrk Over-exertoD. Over-stnvlng
after results which will not be hurred-only that
some doctrinaires object to the word we should
say Overtrading For in the world of enterprise
aud trade this is just what it IL. People import
more goods than wanted by their customers
they build railroads. and stores, and dwellings,
ia advance of the necessities of pOpula-
ton; they buy more property than they can
pay for; they give more notes than they
can meet they embark i'll hazardous speculations
under the temptation of extraordinary gains, spend
ing their money and straining their credit beyond
the bounds of prudence All this we call over
trading When this has been going on for a certain
length of time the creditor class takes the alarm
and demands a settlement And then. and often not
till then people find out they have Oyertraded. AS
we have already said it all comes of the undue ex-
pauson of the credit system of that confidence OF
men in one anotheTs capacity genius integrity,
splvency and general intelligence and ability to
carry out their obligations and enterprises, which is
earned by common experience. This confidence is
natural, and trading and financial systems rest
on it. But that confidence is sometimes found to
Ia misplaced This fact does not, however. and
ought not to destroy it, We must accept the system
with its drawbac for the sake of its advantages
and its blessings. 1t is always left to us to amend it
and improve it, and this. it is to be hoped, is what
will result from our recent experiences.
Such collapse and revulson as the trade and in
dustry of the country now undergoing must then
be submitted to with patience as an inevitable re-
suit of modern and especially American develop
ment Naturally, however. the eager spirit of the
nation insists upon a complete and speedy cure
Hence the unreasonable demands by congressman
for fresh issues of paper money as means of re-
covery measure which in itself has no curative
power whatever. Hence the thousand and one
schemes of speculative persons. marked by every
species of crude conception and absurd suggestion
that the human mind can conceive of. Those who
propose the issue of more paper money means of
reviving trade and stimulating industry quite over
look existing facts. They clearly overlook the
breakdown Of credit, the prostratOn of numerous
extensive enterprises arising from doubt of their
feasibility, demonstration of their Improbable
ness; the dminution of consumption, and its
sulting depressiOns in every branch of industrial
activity. Surely such serious disorders as these
reaching down to the very heart of things, not
going to be mended by anybody simply by offer
to lend more money. What is wanted is not money
itself but the means of proftably employing it,