The herald., 1897-06-13
ACKNOWLEDGEMENTS
: PANICS AND BOOMS
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a Gracual increase OF population and
more rapid accumulation of wealth.
Wealth is the result of labor, and with
out labor there can be no wealth.
Men live and pass away. but as they
cannot take their wealth with them q
large percentage accumulates for the
benefit Of their successors Hence the
wealth of the world today per capita is
much greater than ever before, and it Is
continually on the increase.
The transfer of wealth or property
from one person to another creates busi-
ness Under favorable conditions trans
fers are Numerous and business is brisk
Under unfavorable conditions transfers
are few and business is dull.
During periods of business activity
there Isl work for all, and, this Of Itself
makes greater business activity. Dur
ing periods of business depression there
is not work for ALL and thie of itself
makes business dull and Improbable.
The existence of either one of these
conditions leads necessarily to the other.
1t Is an impos:fbility for either prosper
Gus times or depressed times to continue
permanently.
During prosperous times. there being
work for all, all are supplied with the
means of accomplishing wealth, and thus
all ere enabled to provide themselves
and families with all the neceSsaries, and
many of the luxuries. of life; and hence
during the prosperous times the demand
for goods and property increases and
soon the demand exceeds the supply, and
| then prices advance.
This rule, which is applied to the la
borer, is also applied to the business
man. Prosperous times induce business
men to branch out in their several lines
| of trade The. volume of trade being
large, each gets corresponding proper
tion of it. Many business men find that
they can do more business than is al
lowed by their limited capital. They then
buy on credit.
Prices are continually advancing,
therefore they are able to make margins
of profit not only on the capital furnish
ed by themselves. but also on the capital
furnished through their credit.
This rule Also applies to people dealing
in real estate. The country Isl growing;
money is easy; times are good; business
is prosperous, and therefore speculation
is favored. A man worth $4,000 can buy
four times that amount of property by
using his creGit, and sometimes he can
buy ten times that amount or more.
While prices are advancing he not only
gets the benefits of the advance in the
price of the property represented by the
capital furnished by himself, but also on
the capital furnished by his credit.
When prices of property and goods
during a period of business depression
are failing, the loss cloes not come on the
| ao hr,f al On % inr1
of it represented by the cash capital the
man has invested in it. The debt never
shr!nkS until the margin Is all gone.
All people in q given section of country
use their credit at the same time because
they are all governed by the same local
conditions. Hence there is a fictitious
stimulation of prices which must come
to an end. This enc brings financial G'a-
pro.rton which must necessarily follow a
period of bus. nesir activity.
When the people arrive at poirt
where their credit limit is reached there
is necesioarily a decrease in the demand
for goods and property, and soon the
supply becomes greater than the de-
manG and prices begin to decline. This
stops speculation. Thousands of people
engaged in manufacturing or producing
articles of general use are thus thrown
out of employment, and this causes a
still further decrease in the demand for
| goods, and hence a further decline in
/ prices Those who have purchased on
credit find themselves subjected to
heavy losses because they are compell-
| eG to sustain the depreciation ON goods
they do not own-that is, goods, bought
on credit. Because of this decrease In
valuations all are compelled to econo-
mize in order to adjust their expenses
to the new order of things, they being
compelled to pay off the accumulated
Indebtedness with the decreased in
come. This economy of the masses still
further decreases the demand for goods
and property and this still further in
creases the supply over the demand, and
decreases the price throwing more peo-
pie out of employment and increasing the
depressed condition of business.
The business man feels the change ir
conditions as well as the laborer. Doing
business largely on borrowed capital, he
! loses on all the capital employed in the
| business, not alone on the money fur:
nished by himself. The value of the bust
ness shrinks, but the debt remains the
same or increases. Bankruptcy stares
! the business world in the face. The
weaker go under while the stronger pul
through, and sometimes make fortunes
at little later date out of the misfor.
tunes of others.
Here is a condition of hard times. A
large percentage of the laboring people
of the world are thrown out of employ
ment. Every time man stops work
stops producin2-his purchasing ability
is impaired, the demand for goods be.
comes less and prices are lowered.
During this period Of depression-this
debt paying perlod-the people at large
are forced to economize. The earning
capacities of all classes have been de
creased. A large percentage of people
are thrown out of steady employment
and wages are reduced for those who d.
| secure labor. Some earn enough to pay
expenses of living economically, Will,
others do not and are compelled to liv,
in part on the limited accumulations O.
former more prosperous years.
Many business men continue in bust
ness; some - able to meet running ex
pens,as, while others prefer to lose a littl,
each month, awaiting the return of bette
times, rather than to lose more heavily
by retiring entirely from business. Man,
cannot stand the pressure and quit bust
years.
During the periods of depression val
ues of all kinds of property shrink. II