The Washington herald., 1907-12-19

moods Of human nature. But even with
these things left out there is the widest
Of opinion as to what was the
actual underlying cause of the financial
stringency from which the country IS
just now recovering. An examination OF
the replies given TO this same question
in other times may shed some light on
the subject
Financial panics are OF more or less
periodic recurrence. For nearly two cen
turies the financial world has experienced
upheavals al periods OF approximately
ten years apart. In the United States
financial panics Of more or less severity
have been experienced in the years 1872.
1913. 1875. 1879. 1877. 1857. 1863. 1873, 1854,
1890 1898. 1893. and 1907. The very severe
panics were those Of 1887. 1857. 1873. and
1885 Panics appear 10 prefer years end
ing In 3 or Z The general period Of ten
years between panics is usually 10 be
observed, and when there is a shorter
period, as between 1880 and 1893, Il is
generally found that financial unrest real
ly continued all through the briefer
period.
The theory Of the periodicity Of panics
has been discussed in many ways by
many writer's Walter Stanley Jevons
attributes financial panics 10 spots on
the sun. He supports the theory held by
some astronomers that the period OF the
maximum Of sun spot activity IS about
ten and three-fourths years He under
takes 10 prove that when Old Soils face
is covered with an unusual number OF
those mysterious spots that the people
lose confidence in financial conditions and
panlcs follow. Before the civil war the
sun spot activity and the periods OF
panic coincided with remarkable regu-
larity. The war aaused panics which
were not on the suns schedule. But even
since the war the sun spot theory has
found some. remarkable condolences
which tend TO support IT, The year 1901
is one Of these.
Few persons would accept the sun spot
theory, Yet many financial experts think
II quite as reasonable as a theory pre-
sented by a financial expert Of some other
school Of faith. The tendency OF panics
10 recur at approximately regular inter
walls cannot be denied. The reasons for
this periodicity. and the laws which gov
ern the recurrence Of panics, il there are
such laws, has not yet been clearly ex-
planned
In 1883 everybody asked the question:
What caused the panic?" Democrats
said 1t is because OF the wicked Nc
Kinley bill. which was passed in 1880. Il
has ruined US from the first. We have
elected a Democratic President and a
Democratic Congress now. and we will re-
peal the Mckinley tariff and everybody
viii be happy" Republicans said: The
success Of the Democrats in the Con-
gresslonal elections Of 1890 and the general
elections Of 1889 has destroyed confidence
in the integrity Of American institutions,
and has laid the sacred doctrine OF a
protective tariff open 10 danger Of viola
ton az the hands Of the wicked free
traders. This lack OF confidence caused
by the Democratic success has caused the
panic"
other Democrats and Republicans said
the two great parties had not then
lined up as between silver and gold
1T is because we have too much silver
money. Cheap money IS driving our gold
away and that is the cause OF the panic -
Still other Republicans and Democrats
said. What we need is more money,
and the fact that we have closed the mints
10 silver, and have cast of the dollar Of
our daddles' has brought US 20 woe and
ruin. Open the mints 10 silver and the
cause OF the panic will be removed 80
Others. forgetting their partisan afilia-
tions or their metallic preferences, ex-
plained it all by pointing TO tEe successive
failures Of crops. But this did not ex-
D.
down in price in spite Of the fact that the
supply was smaller Still others ex-
planned the panic by going into the de-
tailed intricacies Of our currency system,
and laying the blame on the financial
regulations That has been fourteen years
ago. and il is almost as impossible 20 find
two or three men who viii agree on what
was the cause Of the panic Of 1898 as il
was then.
No matter how wide the difference of
opinion as to what causes a panic in the
first instance, everybody knows that the
first stage Of a panic is that peculiar
fright which causes "a lack of confidence
in the financial institutions OF the coun-
! try The reduction OF coin in the banks
is the signal for the explosion. When
the first mutterings of an approaching
financial storm are heard. there are those
put it in the conventional old stocking
Whether they do this literally. or whether
they begin TO sell stock and inaugurate
general liquidation. the effect is the same
1t shows that some people have lost con-
| fdence. and lack OF faith is more con-
tagious than faith. If this tendency con-
| tinues the banks begin 10 conserve their
balances and try 10 gather in as much
money as possible.
Whether the people lose confidence in
the banks, or whether the banks lose con
fdence in the confidence which the peo-
| pie have in the banks-the result IS The
same. Money ceases to circulate. Fac
! tories have difficulty in meeting the week
ly pay roll In order TO get ready money
manufacturers and wholesale dealers
offer bargain-day inducements. The re
taller takes these. and he in turn offers
! especial inducements TO bring a little OF
the timid money from the old stockings
/ That means falling prices. The farmers
| produce meets the same fate. and 10:
much the same reason. Then everybody
great and small out OF prudence OF
necessity, begins 20 retrench In his ex-
| penditures-
After the panic is over the period OF
| retrenchment continues for some time
Then the fear dies away in the hearts OF
mea. and money begins to expand into
credit. and credit into the undertaking OF
| new enterprises Prices go up and there is
a period Of prosperity Everybody tries tc
get his share OF the prosperity. Every
| body is successful in nearly all Of his
/ undertakings, and therefore his credit is
good. The financial institutions cannot