Year: 1874

Der, 1873, like o clap ot thunder Out Of
cloudless sky. It's occurrence took tn


country completely by surprise. Notion


man In thousand Of all the great arm!
of producers, dealers, traders and specu
latoB throughout the country expected Il
30 much had been said alter the close 0


the war about initiation, about the vast
Of our resources, about the necessity fo
economy, and about the possibility o
such panic, that people had come a
last to pay very little attention tc
It, and In fact, had settled down to the
comfortable belief that q panic on an irro'
deemAble paper money basis was an i'm
possibility. How could we have panic
they said, as long as the money OF the
banks was quite as safe and Just as cur
rent as the money In which Ii was redeem
AbleS Panics, they said, occurred only
from q sudden curtailment oi bank accom-,
mOdations, and the banks having nc
redemption 10 care for had no motive, as
in other days, TO curtail the usual accom-
modatons to their!pauons. But despite
this very popular and pleasing delusion the
panic actually occurred, and the banks IL
obedience TO the great law OF seltpreser-
vAtion instantly curtailed their accom-.
modations. This they were compelled
to do, not on account Of their circulation
but on account ot their deposits. Deposi.
tors have bad habit oiall wanting their
money at the same time on the out. break
Of panic, and this fact necessitated avery
sudden and wholesale policy OF contrac-
ton on the part Of banks. When Jay
Cooke & 90. and Fisk s. Hatch failed on
the 18th Of September, 1873, the air was
at once filed with rumorS about number.
less other concerns, and in twinkliDg, as
it were, there was a loss Of confidence
Every new failure added iuel to the flame
until at last distrust and alarm were uni
versal throughout the country. And thus
the eternal laws Of trade were vindicated
Notwithstanding we were doirg business
in an irredeemable currency.


A year has passed away since the frat
grand shock Of the panic was experienced
Since then we have had at intervals q
series Of minor shocks, resulting from oc.
casional failures. But the first blow was
the serious one, the others following as q
matter Of course. 1t destroyed confidence,
and the loss Of confidence destroyed trade
Production slackened at once and con.
sumption was immensely curtailed. The
first thought Of every producer was TO
got his pay for what he had produced
aud sold, and next to stop producing fur.
ther until he could sec q safe market
ahead. Those in debt were consumed
with anxiety about paying their
debts, inasmuch as a Ehrinksge oi
their assets at once set in. In q panic
there is but one value that inflltes-that
Of tmoney-resdy money;-all other values
shrink. Thus it was last fall. Men paid
enormous rates for money and submitted
10 enormous deprecistions in their assets.
Fortunately the general condition OF the
country was such that while many were
wounded but comparatively few were
killed. The expensive process Of liqui-
dstion was gone through with without
widespread failures. There remains yet
a certain amount oil debris in the shape
of deferred payments, but take the
country as q whole and It has not been
as.near general settlement, one man with
another, for years as at the present time
1t Is the opinion Of those best qualified to
Judge that at no time since the war has
trade been on such healthy foundation
as now. The people have practiCed
rigid economy for year past, and there
has been a great decline in values. In
hated prices have had the imitation taken
out oi them. The anomalous factnow stsres
US in the face Of a paper currency circula.
tlon twice as large as before tho war, &C
companied in many departments OF
trade by prices as low or lower
than before the war. How long can
such an anomaly last? The an.
swer is one Of the curious problems
OF this present time. The question is
whether values can continue to shrink or
indeed remain shrunken as now, and yet
the volume Of our paper money remain the
same. Political economists tell Us that
the excess OF money over and above the
amount necessary to perform the ex-
changes OF q country enters into and in
fitcs values. This Is 80 on specie
basis and much more so on basis Of
deprecated paper. Can prices therefore
remain unnaturally depressed, once con-
tdenee that the storm Is over is restored,
1t would seem not. Therefore an active
trade Is looked for in the NOT distant fu.
ture. The money is in the country TO do
business with, and even to unduly s,lmu.
late business whenever those who hold it
have sufficient confidence in the stability
Of values 10 either loan or invest 1t.


There Is an additional view Of the sit
uAtIon that 1t Is well to bear in mind In
connection with the anniversary ofwhich
we are speaking and ot the restoration Of
confidence that Is predicted. 1t is that
we can have no reliable and permanent
adjustment Of prices until our money will
buy as much as other peoples money. II