Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-09-12

place thereafter. the work of recovery.
takes time; but the panic itself strikes with
periences Of this year may be said to have
prevented a panic. But for the slow lqui-
dalton, the steady decline in prices the re-
adjustment Of values to the higher rates
of interest, the reaction from the evils of
overpromotion and overspeculation-but for
this there would have been probably such
panic this fall as would have shaken the
financial world. But panic foreseen is
usually a panic averted.
Stock and Commercial Panics.
The fact is we misuse the word panic
to describe a number of very dissimlar
phenomena. A panic In Wall street is a
different thing altogether from CONNER
cial panic. One is a CONFUSION in the
stock market. The other involves disaster
to the industries and trade of the whole
country. Strictly speaking. a panic Is
sudden crash in the leading markets. such
as might result from unexpected news Of
an unfayorable character. The Venezuelan
panic Is. perhaps. the best example Of this.
1t produced terrifying slump in the stock
markets of New York and London, because
of the fear of a war between England and
the United States. this fear being caused
sage to Congress. But the panic quickly
passed as soon as 1t was realized that no
war was possible. On the other hand
panic may be caused by some immense
speculation or financial operation like the
gold conspiracy of 1863. eliminating in
Black Friday. and the panic of May 8. 1901
| caused by the corner in Northern Pacific
resulting from a clash between two great
interests seeking its control. The word
panic is also used to cover great COM
mercial depression like those of 1873 and
nificance. 1t will be instructive to review
briefly the panics of Wall street. especially
as regards the action Of such financial
mechanism as may be employed to check
them.
Twenty-Year Theory.
There Is a favorite theory which holds
sway over the minds of many. 1t is the
theory of the regular recurrence of panics.
1t is said that a big panic comes every
twenty years. with small panic midway
in that period. For instance, there were
panics in 1918, 1887, 1857, 1873 and 1893.
These were panics on national scale, de-
vastating the entire country. But there
1884. these coming midway between the
great commissions of the twenty-year
period. Thus on a large scale Is worked
out one of the laws Of the stock market.
Whenever there has been sharp fall in
prices there follows partial recovery that
ends in another downward movement not
quite SO severe as the first. Likewise when
there Is a boom 1t is followed by reaction
that gives place to another upward move
ment, which. however. does not advance
quite so far the first. So with these al
teTnatlnR PERIODS Oh expansion ana COntTdC-
ton, of boom and panic ''cyces" in bust
ness. as they have been called, there is this
same law at work. We have. first, several
years of prosperity, and advancing prices,
then a year so Of reaction, followed by
another decade of activity. ending in a
general collapse, involving the business Of
the entire country.
The commercial panics are usually of in
ternational extent. 1t is found that every
severe business crisis in the United States
has either been preceded or followed, or Is
accompanied. by panics in the leading
countries of Europe. There are really no
territorial lines in finance. We raise tariffs
against foreign merchandise, but there Is
free trade in credit, and SO closely affiliated
are the principal markets of the world that
disturbance in one country is sure to un-
settle the business Of the others.
But there are Wall street panics that
scarcely cause ripple on the surface Of
trade. Reference has already been made
to Black Fridays panic, the result OF Jay
Gould's scheme to corner gold in 1860. This
was probably the most sensational incident
in Wall streets history. Even now. full
generation after the panic occurred, Black
Friday, in Wall street Technology. IL syn
0nymous with Extreme excitement and dis
aster. All other days OF panic are COM
monty compared with that supreme expert
ence of the street when men were fairly
erased By the strain and excitsment. But
the story Of Black Friday has been 70 fra
Quently told that need not repeat II here.
Great Panics Compared.
There are large fssaily ressmblanoss b.
tween panics. That q 1871 was Tie ssssiaa