The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1893-08-23
PANICs AND TARIFFS.

PANICS AND TARIFFS.
The crude and illogical ideas uttered
by some on the subject of panics, as re-
lated to the tariff, emanate largely from
partisan stupidity. The phases of mod
ern' business life. seen in prosperity,
panic and liquidation, following in cycles
again and again. about every twelve or
fifteen years in this country and in
Europe. have received careful consider
alton and analysis from students of
economics. There is a logical relation
between these manifestations of business
phenomena, founded on qualities of hui
man nature. which appear with such
uniformity and certainty as to deserve
to be characterized as laws of human
nature.
A panic is accompanied by and ex-
hibits certain characteristics, the lead
ing features being a lack of new buyers.
a fall in prices and a lack Of credit. In
broad terms a panic may be said to be
due to overtrading; this precipitates
need for more than the available capt.
tai, and in turn this results in the symp-
toms above named-a general lack of
credit followed by an uneasy feeling to-
ward banks on the part of depositors
and falling off of buyers.
From what has been said it is evident
that the indications of an approaching
panic are: Abnormal activity in bust
ness with apparent prosperity, a prev
alence of the speculative spirit, a rise
in the price of all commodities, demand
for labor. higher wages. higher salaries,
and an incredible credulity on the part
Of the public in the success of any sort
Of business venture. extravaganza and
luxurious living, and large discounts
balance sheets of banks reflect the re-
suits of the above influences and consti-
tute a barometer of the coming storm.
When prices are high and business
booming the loans by banks are large in
proportion to the deposits; when a panic
comes banks reduce their loans and dis
counts, and continue this conservative
policy till prices are low, speculation
ceases and economy characterizes the
habits of the people This process of
liquidation eliminates the weak bust
ness concerns and particularly the weak
banking concerns. 1t is clear from these
observations that no mere note shaver
or half-informed business man can be
a banker.
The successful banker must not only
be man of intelligence with the money
instinct. but he must be more; he must
be familiar with economic history. the
laws governing production and ex-
changes and the history of banking bus
mess.
There will not be so many bank fail
ures when this type of man is placed in
the important and trusted position now
occupied by the banker in a modern bus
mess community.
The present panic has been preceded
by overtrading, under a high tariff. ex-
travagant and luxurious living, which
always marks the era of overtrading.
and the distrust on the part of the credi-
tor and capitalistic classes in this coun-
try and abroad of the ability of the
government of the United States to keep
it's silver and paper dollars on an equal
footing with it's gold dollar This dis
trust is emphasized by a congested
financial condition abroad. England and
France have been recently engaged in
large and disastrous speculative ven
lures in canal and railroad building; a
demand for money and a lack of credit
with a panicky condition has been the
result abroad and notably in England.
England is the creditor Of the United
States. holding large investments In
American municipal and corporate Sc
curities; the condition of her money
market has necessitated the sale in this
country of many of these securities
those here interested In maintaining the
credit OF the institutions issuing these
bonds have been forced to purchase or