Essex County herald. [volume] (Guildhall, Vt.) 1873-1964, 1875-08-14
BOnamy Price on the English Crisis

BOnamy Price on the English Crisis.
Professor Bonamy Price sends the
following for publication, being in reply
to a request from the indianapolis
Sentinel that, as the professor had ex-
pounded the causes of our own panic,
he would also account for the English
credit crisis:
The question you put to me has
reached me to-day. I send you the
best answer [ can make to it with the
information now at my disposal. The
half-crisis in the London banking mar
ket has obeyed the universal law of all
crises. There has been, first, destruc-
ton of capital, and then, secondly, a
scare in the banking market. Who is to
bear the losses9
Wealth has disappeared chiefly in
matters connected with the iron trade.
Bad business has been going on for a
long time. The iron trade has far from
reproduced the capital which it cost to
make and capital not reproduced after
its consumption means impoverishment,
diminu5ion of actually existing wealth.
There has been large consumption of
food, clothing, materials, and tools by
the workers in iron ; the iron produced
has not fetched back equivalent corn
from America, wool and cotton from
divers countries, meat and butter from
England, and so on. The nation is
poorer, fewer things in it, smaller
means for sustaining future industry.
This waste has been going on for long
time undiscovered. Houses engaged in
some other trades hadruna similar career.
Business ended in losses, which must
never be regarded as diminution OF
money, but of goods, of wealth, which
money only places in different hands.
Then came the day of discovery, the
day of settlement and alarm. The firms
, which had continued on these operations
stopped at last and the banking com
munity found itself loaded with pieces
of paper, bills which it had imagined
could command the money expressed
upon them. This was revelation O.
nothing short of bad banking. Agita
ton and alarm Immediately sprang up
Who would have to bear the losses, ant
to what extent would they run9 1t was
+ discovered that there had been clevel
machinery at work by which pennies
people had put two OF more names tt
worthless bills, drawing upon one an
+ other without any property to pay th'
E sums they were pledged to, and thel
they had contrived to get these bills dis
counted by considerable number o
:, banks--that is, had sold these bills tx
: these banks and obtained the money fo
them. The banks had been overreached
They had not the wit to perceive tina
these were bad bills with WORTHLESS
J names upon them, and, as is alleged
Q palmed upon them by clever rogues
|, The banking world then felt very uneasy
How far was the revelation to proceed
How many of the bills discounted b,
bankers and bill brokers would prove t.
= be worthless pieces of paper We wer
! very near upon real crisis but tn
mischief stopped short of one, becaus
it was gradually perceived that the los
!, fell upon banks able to bear it, and no
likely by failing themselves to exten'
3 the agony as to how many persons wh
had given credit to others would have nj
chance of being repaid. The banks hav
y been very smartly bit by their eager
. reckless, and bad banking. Then th
evil ended in the money market, anC
: alarm calmed down. The loss of capita
to England caused by the consumption
of wealth in the iron and other trades
. . which was not replaced by goods o
equal value produced, remains. Tim
alone can cure that.