The Bridgeport evening farmer., 1914-06-16
THE CAUSE OF PANICs i

8 ness depression IS que abQ d pSycA0tpBl- cal condition, and this is literally true. Every historical panic has been due to state of mind and every such state of mind has been induced by acts of very similar character.
 This state of mind is induced in the masses the same way it is induced in individual mind.
 One owns home which is repeatedly bur- elarized because the police and the thieves are in partnership. Ii is evident the owner of this home will not use 1t as a repository for~his wall uables. The lesson of experience will create in him the conviction that his goods will be again stolen
 similar feeling would exist among all the members ofsa com nlunity in which every home was subject to such disastrous raids.
 So also if man lends $5 to a friend, who never repays it, he will hesitate, after time to loan his friend and finally will refuse to lend him anything
 In a community in which everybody bor- rowed and nobody repaid there would soon loan, which would prevent any loans being made. The confidence of that community would be destroyed, and the consciousness of the destruction would be 8. state of mind
 Now these two illustrations show by anal oRY the method by which the historical busi- ness depressi0ns have come into being.
 The Illustrations describe the conditions that existed prior to the panic which John Law brought about. They hold good with res pect to the South Sea Island bubble and the Holland Tulip craze They are descriptive of the conditions anteeedent to the panic of 1873, which caused wide spread suffering in this country.
 There is a state of mind which depressess business. This state of mind now exists over The entire United States. This state Of mind is induced insthe same way that other such states Of mind have come into being
 The people who have money to invest have been robbed until their confidence is impaired.
 The methods of this robbery are obvious. and simple. Financiers, big and little, small and medium sized gigantic and crooked or in frequently honest and ignorant had taken ex- isting physical values, and have doubled, quad rupled, or otherwise increased these values up t0 ten or twenty fold.
 They have written these watered figures onto paper. They have taken this paper, di- vided if into large number of pieces ofSpaper, each representing portion of the lie about the. value, and have sold these pieces of paper broadcast.
 They have promised a return to the invest ors upon amounts equal to the figures written upon the face of every such piece of paper
 Thus it has come into being that perfectly honest physical properties which earn and have always earned a fair dividend upon every honest dollar invested in them, have been re- duired also to earn sums to pay a return upon tho values described in those fragments of pa per and have not been able to do se.-
 This method has been applied to railroads 10 all kinds of public services to misunderstanding plants, to real estate investments and to every CO1GeARdA5A0 h4lu k11OpcEty uStu pfO1IG ing.
 The New Haven road has very valuable physical property, which earns a very large re- turn upon that value.s
 Tie New Haven Company owns steamboats and trolley lines and water, gas, electric, and power companies, which have valuable physi-s { cal property and which earn a large return MFpon those values.
 But these actual values have been swollen. after the fashion described, and great many pieces of paper have been sold-called stocks and bonds-and the properties have for years been drained to meet the demand of these pie ces of paper.
 Finally the end came. Dividends were, suspended The pieces of paper were then perceived in their true nature as a claim upon property without any being.
 What happened on the New Haven happen ed on the Boston & Maine, happened in San Francisco, happened all over the broad United States.
 While these things were happening to rail- road lies about the investment they were hap pening to manufacturing lies about the invest ment, and to real estate lies about the invest ment.
 Everybody who reads the newspaper will remember dozen, perhaps a score of eases, fn which investors in all sorts of enterprises have found themselves stripped Of the return upon their money, not because the business failed, btit because the property was Watered.