The National tribune., 1893-07-13
COMMON SENSE ABOUT COMMERCIAL
CRISES.

and is as far out Of the way as if he should
say that the eruptions of the skin caused
smallpox. One thinks it is paper money
another silver, a third over-speculation, q
fourth railroad building, fifth the tariff.
and so on.
Just now the favorite cause for the panic
is the Sherman silver law.
These men never stop to think that these
panics occur all over the world at the same
time-where there is paper money, and
where there is gold, where silver coinage is
free, and where the white metal is demone-
tized, where there is tariff, and where there
is free trade, where there has been enormous
railroad building, and where there has
been none.
The man who is able to see beyond his
own immediate environment knows that
none of the alleged causes produce crises
they are only symptoms and aggravations.
The real reason is that business men are
hopeful and sanguine. They are eager to
make money, and they push their credit and
means to the utmost in enterprises that
promise profit. They discount the future
in building towns, factories, ships, railroads,
etc. or course this cannot 90 on forever.
There comes a day when settlement must
be had, and when this process" liquida-
ton" is the latest word for it-begins in
one portion of the world it speedily extends
to all the others.
This is governed by law as regular and
certain in its operations as the law which gov
erns the seasons 1t takes just about so long
for the Sheriff and the bankruptcy officers
to put things on a hard-pan, cash-paying
basis, and then it takes just about so many
years again for those who went through the
experience to forget its lessons, and for the
new generation which has not gone through
the experience TO come upon the active stage
and get control. The period between one
panic and another is usually about 30 years.
In England, and perhaps other countries.
they have intermediate panics every 10
years. This is because England is more of
a cash country than ours, and demands gen.
erai settlements more frequently.
The first panic of this century was that
of 1919, which followed the enormous up
heaval, the utter arrangement of values,
and the general decentralization of the none
tary systems of the Napoleonic era.
The next panic was that of 1887, which
was started by the failure of little bank
in Ireland. In this country it was rendered
more severe by bad banking systems, which
had flooded the country with worthless
notes, by wild real-estate speculaiions, and
by enormous sums invested in railroads. II
was then the infancy of railroading, and
everybody thought that a railroad was a
sure mine of wealth. Considering the small
ness of the wealth of the country, and the
general lack of knowledge regarding rail
the railroad enterprises of
the 1887 era were of far greater magnitude
than the building of the Pacific Railroads
30 years later
The panic of 1857 was also rendered much
more severe in the Western part of the
country by the same reason. In the East
the stringency was not severe, and lasted but
a little while. But the West was still in the
" wildcat banking" period, and large por-
ton of the peoples wealth was given for notes
either positively worthless or liable to be-
over-building Of railroads. Many roads
were built which did not pay dividend for
20 years after. Hundreds of roads were
caught in various stages of completion, some
remaining unfinished to this day. These
absorbed many millions of dollars, and
81 100000 was much more of sum Sc years
ago than If is to day.
The panic of 1873 was greatly intensified
in this country by the losses and cost of
the war, the enormous activity in railroad
building, the terrible Chicago and Boston
fires, and the general arrangement of values
by the initiation of the currency.
In the first place the actual cost of the
war up to that time had been over $4,000
000,000-abOut three-eighths the entire tax
able value Of the property of the country in
1860. Nearly 100000 men, on both sides,
had been taken away from productive occu-
pations, and had been engaged for four years
in destruction. All the values in the coun-
try had been demoralized by the deprecia-
ton of the legal tender to below half of its
gold value, and the process of returning to
that value after the war closed. The pro-
ductive capacity of about one-third of the
country had been nearly ruined. Then tens
of thousands of miles of non-paying rail-
roads, including those to the Pacific, were
built, and, to crown all, came the loss of
probably 81 0Oo,OOo,O00 worth of property
by the Chicago and Boston fires. The great
wonder is that we came out as we'll as we