The herald., 1893-06-21
THE THEORY or PANIcs.

What is the reason why man OF av-
erage intelligence will awaken in the
morning at seven O'Clock with perfect
confidence in his kind, and with man
ners bland, and beaming face, will par.
take OF his matutinal meal, go to his
place of business and by eleven O'Clock
of that very came morning will show to
his most particular friend an austere
and forbidding vlsage, in which anguish
and distrust will be the most predomi-
nant features?
The reason is simple. He awoke with
confidence in his kind, and in the course
of few hours he has lost it because
come favorite bank has failed, in which
he has deposits. The bank has failed,
in nine cases out of ten, amply because
a lot of nervous people have started
rush upon it, OF course there are cases
in which embezzlement and peculation
have created conditions OF failure; but
in nearly all cases, in California at least,
the failure of the bank has arisen from
artificial conditions.
1t has been brought about by simple
gossip. A rumor starts and a crowd
collects about bank. These quid nuncs
are generally persons who have no inter
est in the institutions menaced. Just
in proportion to the smallness of their
peeuniary stake in the bank which ie
subject to run is the eager interest
they exhibit in spreading all sorts OF
alarmist reports about the solvency Of
any and every bank of the city. If
there should happen to be ono failure
they magnify it to ten; and rumor,
with her hundred tongues, ia unceasng
in her work OF disturbing confidence.
1t mattera nothin to the individual
who has enlisted him self in the work of
alarming people that the sum OF money
available in country has not been
diminished by 80 much az silver from
the store that WAS available day be-
fore. This disturber of the we'll being
ofithe community in which he lives,
moves and has his being, is intent only
on his work OF mischief. In nine cases
out OF ten he has never had dollar on
deposit in any bank. 1t is his resent
ment at his inability to sport bank
account that makes him 30 malignant in
his efforts to wreck those that have.
Impelled largely by those who have
nothing, crowds gather around a bank
whose etatus responds to all the condi-
tions of solvency according to ordinary
banking csnons. Their only aim is to
replace confidence by distruet, prosper.
ity by bankruptcy. They disseminate
lack of confidence that often results in
financial disaster. They are the teredos
who bore their way into the stauncE
piles of wharves. They are the smsll
fiseures that let in the mighty tloode
that wreck great dams and produce dis
astrous overfows.
The theory that underlies panic ie {
lack of public confidence, often createC
srtihcially, in the insidious manner WI
have described. The duty of grea
community like Los Angeles 10 to real.
ize its wealth and power. and to inaug
urate public spirited movement tina
will render unavailing the effort ia
wreck it for day, which is all that the
utmost ingenuity OF the most cunuin,
or the most malicious could do. A com
munity like this should never lose it
he ad, and especially it should not loa
it at time when the prospects for tn
future never looked 30 roseate as they
do now. Psnics founded on nothing ar
ridiculous.