The Cecil Whig. [volume] (Elkton, Md.) 1841-current, 1878-07-20
EXPLAINING THE TIMES.
PAPER READ BEFORE THE INSTITUTE OF
SCIENCE BY HON. JOHN NJ. BRooMALL.

What are the causes Of the present depres
sion IN business, Gnd hOlc does ii conlpare in
extent and duratiOn aoih that Of 1S3S-'44.
To very large extent the capital Of the
country and of the commercial world is
lying idle in banks and other places of de-
post, the Owners OF it refusing to use it
themselves in productive enterprise ard
refusing also to loan it to those who will
Why this should be particularly so just at
this time is the first branch Of the question
propounded. The general answer to this
question is that We are now III Il period Of
unreasoning and unreasonable diSlTust,
following naturally upon II period Of uu
reasoning and unreasonable confidence.
That the community should oscllate be-
tween these extremes is owing to causes
founded deep in human nature itself
Men are gregarious; they follow one
another. One man is over confident be.
cause his neighbors are SO; he is over dis
trustful because his neighbors ale So And
when this temporary peculiarity of mind
extends owe: the whole community it has
the nature of 4 social epidemic. Repeated
instances of these epidemicS have occurred
in history. The Tulip Mania, the South
Sea Bubble the Mississippi scheme, the
railroad enterprises, are all instances of
one phase of social epidemic, that is to say,
the one characterized by over confidence,
and each one in its turn WAS followed by
the opposite phase, that of extreme and
senseless distrust. 1t is the opinion Of
some that these extremes occur once in
abeut thirty years. There is however, no
regularity in them, but it may be said that
every generation has to learn its lesson of
over confidence and its consequences. 1t
is also said that the duration of the present
phase of the epidemic is about five years.
This is very possible, but | see no reason
for limiting it to this period. If the dis
ease is slight, it will pass the sooner; if
serious, it will talks longer time for the
community to get over it. | have no means
of comparing the present depression with
that which extended from 1888 to 1914,
if those are the true dates During the
present, heretofore the opinion has pre-
vailed that the whole fault was in the
banking system of the country. The
present one has exposed the fallacy of this
opinion. There has been no time since
1873 or before when any want OF confidence
existed in the National banks. Their notes
have passed freely from hand to hand with
unquestioning confidence. Their deposits
have gone on increasing capital aeon
mulated in the hands of those who would
not use it. In fact the usual causes as
signed for these depreSsions are generally
fallacious. The only true cause is the
disposition of men to follow one another in
over confidence or unreasonably distrust.
We are therefore without remedy against
these epidemics until we can change the
constitution OF man himself and build him
up in such way that he will never trust
without cause and suspect without cause.
1t viii readily be seen that VII. n the whole
community Is effected by the same want of
general confidence, everybody will want
his debtors to pay him aud will refuse to
use or loan the money thus accumulated,
and a condition like the present becomes
inevitable. We can also readily see that
when that condition of things changes,
everybody is willing to trust everybody
else, that then no debts will be wanted to
be paid and the business of the community
will increase simply because capital will
not lie idle while there is anybody ready to
use it. These are two extremes from and
to which by the very constitution of human
nature the community passes, and there is
no use in looking in banks, governments,
tariffs or anything else either for the cause
or the cure of what is in the very nature of
man himself, inevitable.
Several causes have combined to inten-
Sify the present depressed condition of the
business and finances of the country. In
the first place, the capital of the country
was greatly lesSened by the war The alb
solute destruction OF more than five thou
sand millions of capital by the expensive
luxury of fighting left just that much less
to supply the country and induced the
n un 70 ha &C
of confidence sooner and to remain there
longer. During the war also large amounts
OF capital were accumulated by hands I'M
accustomed to wealth. The result was an
enormously increased personal expendl-
ture. This tended farther to lessen the
capital of the country and to intensity the
panic With this also may be mentioned
another cause of the severity of the pres.
ent period. The great bulk of the debts
of the country existing in the Fall of 1873
were contracted in dollars worth seventy
five cents or less each. By causes arising
out of the laws of trade to some extent and
the action of the government to slight
extent, these dollars have increased in
value to about ninety nine cents. Debt
ors, then, who borrowed, say $50 to the
thousand are called upon to pay 5000 to the
thousand. 1t will be readily seen that n
demand of this kind upon all the debtors
of the country, extending over period of
five years, would result in very extensive
failures, increasing the intensity of the dis
trust and prolonging the time of recovery.
A much more interesting question pre-
sents itself at this time, and that is
whether we are, or are not, at present on
the road to recovery. The newspapers
have promised, every returning business
season, that the difficulties were over, and
as frequently they have been compelled to
confess their entire mistake. But there
are at present unmstakable symptoms of