The Superior times. [volume] (Superior, Wis.) 1870-1912, 1876-05-12

ence between a panic aud crls is
The former may be caused by some
accident, springing out of certain
state of the public mind, and is gen
orally OF short duration; the latter
springs out of general causes, anC
is OF considerable duration
COMMERCIAL CRISIS is CAUSED BY
THE DESTRUCTION, THAT Is, THE
UNPRODUCTIoN CoNsUMPTIvE OF
WEALTH.
There are times when credit
ceases; when prices suddenly fall
when manufactures slacken; when
wages decline and great numbers OF
laborers are thrown out of employ
ment ;and when bankers cease to loan
money, and a. unable to pay back
the deposits which have been made
at their banks. When this state of
things exists, there is said to be a
commercial crisis.
Let as see what causes all this.
Il is at the banks that crisis first
shows itself. We will best under
stand what crisis is, therefore, by
beginning to study it at the banks.
Banks gather up the savings
which are made by one class of the
community, and loan them to an
other class to be employed in the
production of wealth. Every 81 900
loaned by the savings bank is said
70 give employment, on an average,
to one laborer. Let us suppose that
one thousand persons each deposit
$1,000 in a bank for safe keeping.
If it is left on deposit long enough,
the bank will pay the owner or 5
per cent interest OF it; but the bank
must make more than 4 or 5 per
cent by loaning the deposit. 1t it
did not 1t would lose money 1t
therefore loans It's deposits at 8 or
10 or II per cent, to persons en-
ployed In the production of wealth.
Its profits consists in the difference
between the interest it pays and the
interest it gets.
Let US suppose that the 81 100000
deposited by the thousand persons
is loaned out to build railroad
Then this amount of capital takes
the form Of railroad. Ii the rail-
road was wanted, the company
that build it will be prepaid by the
receipts from treights, fares, etc.
The company can therefore repay
the banker, and the banker his de-
positors. But if the railroad has
been built where it was not needed,
SO that DO use, or very little use, is
made Of it after it is built, then the
company viii receive nothing or al
most nothing from freights, fares,
etc. 1t will therefore be unable to
pay the banker, and the banker
therefore cannot pay his depositors.
What is the consequence Of this !?
The depOsltors run to the bank.
The bank cannot pay them. 1t
closes. The railroad company can
get no loans. 1t has to stop work.
The laborer employed i'll taking
care of the part of the road already
built and in building the other part,
is thrown out Of work. There is
now less demand for rails, locomo-
tives, cars, etc. The manufacturers
of these things dismiss some Ct
their hands and slac en- work. But
if less railroad iron is wanted, fewer
men will be wanted to work Theron
mines and to carry the iron from
the mines to the place where 1t Is
made into rails, locomo tives, car
wheels, etc. This has all happened
because a railroad was produced
which was not needed, that is, be-
cause Sl,OO0,OOO of deposits was
CONSUMED unproductiyely, or de-
stroyed; for Dnproductivs con-
sumption and destruction are the
same.
The unproductive consumption
of the 5 100000 has had several
bad effects.
|. 1t caused the bank to close.
2. 1t made the depositors lose
their money.
3. 1t threw railroad employees out
of work.
4. 1t stopped the ironworks
where railroad iron was being man,
utactured.
5. 1t diminished the demand fol
iron at the mines.
6. 1t threw out of employment a
number OF miners, ore-carrlers and
| iron-makers.
7. 1t slackened all kinds of busi
ness, for the laborers thrown out O
employ could not buy of the
grocer, dry goods merchant, shoe
maker, ETC., as before.
8. Consequently, theretail grocer
shoemaker, etc, were unable to bu1
Of the wholesale dealers in grocer
les, boots and shoes, etc.
8. Therefore, the wholesale deale