{"1": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0001.jp2"}, "2": {"fulltext": "Class jM^a:!!!\\nBook A J 8\\nCopyright N*:\\nCOFBRIGHT DEPOSm", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0002.jp2"}, "3": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0003.jp2"}, "4": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0004.jp2"}, "5": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0005.jp2"}, "6": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0006.jp2"}, "7": {"fulltext": "THE CITIZEN S LIBRARY\\nOF\\nECONOMICS, POLITICS, AND\\nSOCIOLOGY\\nEDITED BY\\nRICHARD T. ELY, Ph.D., LL.D.\\nDIRECTOR OF THE SCHOOL OF ECONOMICS,\\nPOLITICAL SCIENCE, AND HISTORY,\\nUNIVERSITY OF WISCONSIN\\nECONOMIC CRISES", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0007.jp2"}, "8": {"fulltext": "-y^y^", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0008.jp2"}, "9": {"fulltext": "THE CITIZEN S LIBRARY\\nECONOMIC CRISES\\nBY\\nEDWARD D. JONES, Ph.D.\\nASSISTANT PROFESSOR OF ECONOMICS AND COMMERCIAL\\nGEOGRAPHY, UNIVERSITY OF WISCONSIN\\nNeixj gorit\\nTHE MACMILLAN COMPANY\\nLONDON MACMILLAN AND CO., LTD.\\n1900\\nAll rights reserved", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0009.jp2"}, "10": {"fulltext": "12856\\nL-Jbrai V\\nJUN^SO I9iu\\ni SECOND COPY.\\nDelivered to\\nORDER DlVSSiON,\\nJUL 12 1900\\nCopyright, igoo,\\nbf the macmillan company.\\nNorb3fDott i^resB\\nJ. S. Gushing Co. Berwick Smith\\nNorwood Mass. U.S.A.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0010.jp2"}, "11": {"fulltext": "CONTENTS\\nCHAPTER\\nI. Introduction\\nPAGE\\nI\\nII.\\nThe Industrial Equilibrium\\n21\\nIII.\\nThe Organization of Industry\\n41\\nIV.\\nCrises and the Problem of Capital\\n58\\nV.\\nCrises and the Wage System\\n81\\nVI.\\nCrises and Legislation\\n103\\nVII.\\nThe Periodicity of Crises\\n131\\nVIII.\\nCredit and Speculation\\n153\\nIX.\\nThe Psychology of Crises\\n180\\nX.\\nConclusion\\n219\\nBibliography\\n225\\nIndex\\n247", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0011.jp2"}, "12": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0012.jp2"}, "13": {"fulltext": "ECONOMIC CRISES\\nCHAPTER I\\nINTRODUCTION\\nThe growth and differentiation of industrial\\ninstitutions which have taken place within the\\npresent century have brought many new and per-\\nplexing problems to the man of affairs and the\\nstudent of economics. None of these problems\\ntakes a firmer hold upon the fundamentals of\\neconomic society than does that of crises, and\\nfew of them receive more attention or create\\nmore controversy.\\nThe crisis is practically of nineteenth-century\\norigin, and it is an acute malady to which business\\nappears to be increasingly subject. These crises\\nare periodically recurring convulsions which para-\\nlyze the course of trade, give rise to violent fluctu-\\nations of values, and leave behind them crippled\\nindustries, bankrupt or suspicious capitaHsts, and\\nimpoverished laborers as the result of their visits.\\nIt is often desirable to begin a treatise with a\\ndefinition. Descriptions and definitions, however,", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0013.jp2"}, "14": {"fulltext": "ECONOMIC CRISES\\nshade off almost imperceptibly into one another,\\nand what may be called a descriptive definition is\\nsometimes best suited to the purpose. Two such\\ndescriptions of an industrial cycle containing a\\ncrisis are here offered. The first, taken from the\\nTracts of Lord Overstone, is as follows State\\nof quiescence, improvement, growing confidence,\\nprosperity, excitement, overtrading, convulsions,\\npressure, stagnation, distress, ending again in qui-\\nescence. A somewhat more extended descrip-\\ntion from the pen of Frederick Engels is as follows\\nThe whole industrial and commercial world, pro-\\nduction and exchange, among all civilized peoples\\nand their more or less barbaric hangers-on, are\\nthrown out of joint about once every ten years.\\n1 The symptoms of a crisis are thus catalogued by Max Wirth\\nI. Abnormal activity in floating enterprises, and boldness in spec-\\nulation. 2. Unusual activity in stock-jobbing: viz. the desire to\\nfound stock corporations in order to use all possible means to force\\nthe stocks rapidly to a high figure, and then sell out at a profit, leav-\\ning the corporation to those in vi^hose hands the stock, like an un-\\nlucky card, is found at last. A rule in such cases is that a good\\nbusiness is operated by one s self or a few companions, but a bad\\none is formed into a stock company. 3. Unusual excitement and\\ngullibility of the public caused by the report of large profits.\\n4. Rapid increase of luxury. 5. Sharp rise of the price of necessa-\\nries, articles of luxury, raw^ materials, and provisions. 6. Rise in\\nthe price of real estate. 7. Strong demand for labor, and rise in\\nwages. 8. Unusual expansion of credit and credit instrumentalities\\nin consequence of which a rapid and unusual increase in discount.\\n9. Large demand for cash, and, in consequence of this demand, a\\ndecline in stocks. Handbuch des Bankwesens, 3 Aufl., p. 62.\\nThe same is also contained in the Geschichte der Handelskrisen,\\nby Max Wirth.\\n2", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0014.jp2"}, "15": {"fulltext": "INTRODUCTION\\nCommerce is at a standstill, the markets are glutted,\\nproducts accumulate, as multitudinous as they are\\nunsalable, hard cash disappears, credit vanishes,\\nfactories are closed, the mass of the workmen are\\nin want of the means of subsistence, because they\\nhave produced too much of the means of subsist-\\nence, bankruptcy follows upon bankruptcy, execu-\\ntion upon execution. The stagnation lasts for\\nyears productive forces and products are wasted\\nand destroyed wholesale, until the accumulated\\nmass of commodities finally filters off, more or less\\ndepreciated in value, until production and exchange\\ngradually begin to move again. Little by little the\\npace quickens. It becomes a trot. The industrial\\ntrot breaks into a canter, the canter in turn grows\\ninto the headlong gallop of a perfect steeple-chase\\nof industry, commercial credit, and speculation,\\nwhich finally, after breakneck leaps, ends where it\\nbegan in the ditch of a crisis. And so over and\\nover again. 2\\nIf we confine our thought to the culminating\\nperiod of a crisis, we may define it more concisely\\nthan is done above, in the following terms A crisis\\nis the sudden application of a critical conservatism\\n2 Socialism Utopian and Scientific (trans, by Edward Ave-\\nling), London, 1892, pp. 64, 65. The steps are given by another\\nauthor thus A round of variations expressed as follows, is pretty\\nsure to run its course at least once in the life of each generation\\n\u00e2\u0080\u00a2torpor, prudence, health, plethora, blood-letting or thus: stag-\\nnation, economy, productive industry, accumulation, enterprise, ex-\\npansion, collapse. T. F. Plunkett, Money Panics and Specie\\nPayments, Pittstield, Mass., 1873, p. 9.\\n3", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0015.jp2"}, "16": {"fulltext": "ECONOMIC CRISES\\nto business transactions, leading to such a demand\\nfor liquidation as to cause a widespread inability\\namong business men to meet their obligations.^\\nHerkner follows Roscher in defining crises as\\nconsisting of a disturbance in the equilibrium\\nbetween production and effective demand.*\\nIn the work of definition the most important\\npoint is to establish the proper distinction be-\\ntween crises and industrial depressions. Either\\nof these two classes of phenomena may appear\\n8 Wagner says Crises imply the overwhelming and\\nsimultaneous occurrence of inability on the part of independent\\nentrepreneurs to pay their debts. Krisen, in Rentzsch, Hand-\\nworterbuch, p. 26. Clement Juglar thus defines crisis The com-\\nmercial crisis, as in disease, is a critical period. The all-important\\nquestion asked by those caught in embarrassment is whether they\\nwill hold out or succumb. The crisis is the touchstone which\\nreveals the soHdity of commercial houses. Say s Dictionnaire,\\nSec. I. Mr. Horace White gives the following Commercial crises\\nare disturbances of the course of trade at given times, arising from\\nthe necessity of readjusting its conditions to the common standard\\nand measure of value. Article Commercial Crises, Lalor s\\nCyclopaedia, Vol. I, p. 523.\\nTo this Schaffle also agrees. Herkner, in Conrad s Hand-\\nworterbuch, Bd. IV, Sec. i, p. 891. Schaffle, Handelspolitik,\\nin Bluntschli s Deutsches Staatsworterbuch, Bd. IV, p. 638.\\nSchaffle criticises the definitions offered by Mill, Juglar, and Max\\nWirth, and also the definition of Coquehn, in the Dictionnaire\\nde I Economie Politique, that crises are the sudden disappear-\\nances of credit. This calls to mind a remark made by John\\nMills in The Bank Charter Act and the Late Panic, p. 6,\\nwhere, in speaking of the crisis of 1866, he says: A volumi-\\nnous magazine writer on this subject considers the main evil to\\nhave been a want of currency, which is about as explicit as the\\njocular diagnosis that a man died of want of breath.\\n4", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0016.jp2"}, "17": {"fulltext": "INTRODUCTION\\nindependently of the other in fact, the presence of\\none is more or less a guarantee of immunity from\\nthe other. By some writers the crisis proper is\\ncalled an active crisis, while an industrial de-\\npression is called a passive crisis. The patho-\\nlogic terminology which is frequently employed in\\nthe discussion of crises enables us to express very\\nwell the distinction between crises and depressions.\\nThe first are acute, the second chronic maladies of\\nindustry. The causes of the first lead rapidly to a\\nclimax of unnatural and unstable conditions which\\nin the panic find their rupture and give place to\\nextreme stagnation. The causes of depression\\nappear to be more enduring. They weigh down\\nbusiness by handicapping disabilities which exert\\na steady pressure, producing dejection and prostra-\\ntion. A crisis results when business is carried to\\na high point from which it is precipitated. A de-\\npression marks the struggle of industry under a\\nweight of adverse conditions.\\nAccording as crises have more or less conspicu-\\nously involved disturbances of the medium of ex-\\nchange, of financial institutions, or of productive\\nor commercial industry, they have been denomi-\\nnated monetary, financial, commercial, or industrial\\ncrises. These varying designations are useful to\\nindicate the causes or characteristics of individual\\ncrises. A more general term and one which\\n5 De Viti de Marco, cited by Lexis in Schonberg s Handbuch,\\n2 Aufl., Vol. II, Ch. XXI, Sec. 51.\\n6 Neuwirth, Roscher, and Schaffle, for example, use this.\\n5", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0017.jp2"}, "18": {"fulltext": "ECONOMIC CRISES\\ninvolves commitment to no view or school is\\neconomic crisisJ\\nWhile the crash or panic is the particular feature\\nwhich characterizes the modern crisis, no consid-\\neration of the subject, which is limited to this\\nculminating period of the disturbance, can be com-\\nplete. The circumstances leading up to the climax\\ncan only be distinguished by the study of the evo-\\nlution of a crisis.^\\nWagner uses the phrase credit crises because he especially\\nemphasizes the abuse of credit as a cause of crises. Overstock-\\ning of the market is usually an accompaniment of crises. The\\nname overproduction crisis usually suffices therefore, but it does\\nnot express so exactly the nature of the evil as the name credit\\ncrisis. The expression money crisis is indefinite, since the word\\nmoney has many meanings; capital crisis is not accurate enough;\\ncommercial crisis is one-sided, for crises are not affairs concerning\\ncommercial circles alone. Rentzsch, Handworterbuch, p. 526.\\nThe following division of crises is given by Max Wirth In\\nthe first place, there are two sorts of crises to distinguish\\nI. Crises of the circulating medium, and\\nII. Crises of capital.\\nThe first are divided into such as follow distressing experiences\\nor defective arrangements of the credit and money machinery of\\nindustry: a congestion of the circulating medium; {b) those\\nwhich follow an immoderate issue of irredeemable paper currency,\\nwhich causes a sudden rise of prices and unstable fluctuations.\\nThose capital crises which fall under II may be subdivided\\ninto (a) acute diseases of production, of stock market specu-\\nlation especially accompanied by the founding of new enterprises,\\nand of real estate values; (3) commercial crises proper and over-\\nstocking of the product market.\\nIt is the business of the student to examine these years of\\nbusiness history, and construct in theory a complex of forces\\nwhich will account for the phenomena. Oechelhauser says In\\nour opinion, high and low prices do not stand opposed as good\\n6", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0018.jp2"}, "19": {"fulltext": "INTRODUCTION\\nThe concentration of distress upon one portion\\nof the industrial cycle which the term crisis\\nimplies is the result of modern economic practices.\\nThe division of function which was first planned\\nbetween man and man has been extended to apply-\\nbetween regions and countries. The organic rela-\\ntions which have resulted have produced a de-\\npendency of part on part. The life history of any\\nindustry is of import to all. Particularly, however,\\nhave the institutions connected with finance and\\ncredit worked an economy of effort based upon the\\nexistence of normal conditions. The crisis reaches\\neach industry through the interdependence of in-\\ndustries, but chiefly through the relation of all\\nindustries to monetary and credit institutions.\\nThe importance of crises as a subject of study\\nis commensurate with the loss which they inflict.\\nThe industrial life of the nineteenth century can-\\nnot be completely presented without considering\\nthem. As Diihring has well pointed out health\\nand disease are but two complementary phases\\nunder which the processes of life manifest them-\\nselves. To understand the social organism com-\\npletely we must study it in disease as well as in\\nhealth.9\\nand bad, or prosperous times and calamitous times, but they\\ntogether form two phases of the same critical evolution. The\\nlast crisis took its start in the unusual advance of prices over\\nvalues, not with the revolution of prices. Die Wirthschaft-\\nliche Krises, p. 24.\\nE. Diihring, Cursus der National- und Socialokonomie,\\nPart V, Ch. I, p. 225. Cf. Cossa, An Introduction to the Study\\n7", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0019.jp2"}, "20": {"fulltext": "ECONOMIC CRISES\\nThe striking and unusual character of the phe-\\nnomena composing a crisis calls attention to them,\\nbut sets them in a light which is, on the whole,\\nnot favorable to their proper scientific observation.\\nIt is hard to recognize in the crisis the result of\\na combination of familiar forces. The interest\\nwhich invests crises attracts many to their study\\nwho come inadequately equipped by previous\\ntraining in the observation and interpretation of\\neconomic phenomena. Again, in the study of so\\npronounced a subject, arraying interests so sharply\\nagainst one another, it is natural that opinions\\nshould prevail which are pronounced rather than\\njudicious. A voluminous partisan literature exists\\non the subject of crises which impedes scientific\\nresearch. The study of crises is difficult, since the\\ncrisis is a period of rapid transition. Conditions\\nare not permanent enough to permit of elaborate\\nexamination and classification. The forces which\\nare in control are an entirely different compound\\nof human motives than that which usually prevails.\\nThe gradual appearance of crises within a com-\\nparatively recent period and as an accompaniment\\nof the present industrial system, gives to them at\\nonce a definite significance. They have come to\\nus in company with industrial freedom and indi-\\nvidualism, with the factory system, the extension\\nof foreign commerce, the use of credit, and the\\nother features which mark the economic life of\\nof Political Economy, London, 1893, Theoretics, Ch, IV, Sec. 2,\\npp. 47, 48.\\n8", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0020.jp2"}, "21": {"fulltext": "INTRODUCTION\\nthis century. The order in which the leading\\nindustrial nations began to experience crises is a\\nsignificant fact, as is to-day the varying degrees of\\nintensity with which these storms expend them-\\nselves in different countries. It helps to direct\\ninquiry to know that crises are more severe and\\nfrequent in the United States than in any other\\ncountry. They are felt in progressively diminish-\\ning force in England, Germany, France, Holland,\\nand Switzerland. The comparative study of the\\nhistory of crises suggests the wisdom, of observing\\nthe extent to which various nations have developed\\nforeign trade and adopted credit and banks. The\\nstudy of race psychology is not foreign to the sub-\\nject, nor the observation of national honesty, edu-\\ncation, natural conservatism, and the speed and\\nenergy of life.^^ The comparative method alone\\nrenders it possible duly to subordinate the politi-\\ncal situation, the peculiar system of currency pre-\\nvailing, the banking system adopted by a nation,\\nor the bankruptcy legislation in force.\\nEspecially significant for comparative study is\\n1^ After stating that crises fall where the credit system is well\\ndeveloped, Mr. Horace White says It is an observed fact that\\nnations of Teutonic origin (including the English, American,\\nGerman, Dutch, and Scandinavian) are most frequently and se-\\nverely affected with commercial crises. Lalor s Cyclopaedia,\\nVol. I, p. 524.\\nDe Tocqueville considered that the temperament of democratic\\nnations was particularly favorable to crises, since in them economic\\nambitions are supreme. Democracy in America, Boston, 1873,\\nVol. II, Bk. II, Ch. XIX, prf\u00c2\u00bb92.\\n9", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0021.jp2"}, "22": {"fulltext": "ECONOMIC CRISES\\nthe international or world crisis. The widespread\\ndisturbance which occurred between the years 1836\\nand 1839 in most nations, and the crises of the\\nyears 1857, 1873, and 1882, deserve to be desig-\\nnated world-crises.^^ The crisis of 1825, which\\naffected England and America together with some\\nother countries, and which arose through the dis-\\nturbance of the cotton trade, may perhaps be\\nranked as the first international crisis. In 1847\\nthe condition of England very seriously affected\\nthe money markets of Paris, New York, and\\nAmsterdam. The most widespread and endur-\\ning international crisis was probably that of 1873.\\nThis susceptibility of the whole crisis area of the\\nworld to be drawn from time to time into one con-\\n11 The following table is presented by Juglar in Say s Diction-\\nnaire, to show the solidity of France, England, and the United\\nStates in the matter of crises. Crises of more or less severity\\nhave occurred at the dates indicated\\nFrance\\nEngland\\nUnited States\\n1804 1803\\n1810\\n1810\\n1813-I4\\n1815\\n1814\\n1818\\n1818\\n1818\\n1825\\n1825\\n1826\\n1830\\n1830\\n1836-39\\n1836-39\\n1837-39\\n1847\\n1847\\n1848\\n1857\\n1857\\n1857\\n1864\\n1864-66\\n1873\\nWar\\n1873\\n1882\\n1882\\n1882\\nCompare this list with the one given in Ch. VII.\\n10", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0022.jp2"}, "23": {"fulltext": "INTRODUCTION\\nvulsion, shows a high degree of economic inter-\\ndependence.\\nThe question whether crises are increasing in\\nseverity has been a much mooted one. The mat-\\nter presents a different appearance according to\\nwhether a long or short industrial period is con-\\nsidered. Taking the entire history of crises into\\naccount, an increase in the severity of crises seems\\ncertain. During the last half century, however,\\ncrises appear to be losing something of their in-\\ntensity, but to be approaching the character of\\nindustrial depressions as the period of recovery\\nafter a crisis is lengthened.^^\\nThe place which the subject of crises should\\noccupy, in a systematic treatise upon political\\neconomy, is not definitely fixed. For German\\neconomists, who divide their works into theoreti-\\ncal and practical economics, the matter presents\\nlittle difficulty, although the discussion of crises\\nis by no means always placed in the latter divi-\\nsion.^^ For those who hold rigidly to the English\\n^2 In the First Annual Report of the Commissioner of Labor,\\nupon Industrial Depressions, occurs the following As already\\nstated, the features of regularity and contemporaneousness of crises\\nand depressions have been apparent since the commencement of\\nthis century. Crises and panics, with more or less of industrial\\ndepression accompanying them, have occurred in various coun-\\ntries, but there were not such strong connecting influences and\\nfacts and associated conditions as have been observed during the\\npast fifty years. Ch. I, p. 15.\\n13 A review of the literature of crises discovers the fact that the\\nposition which this theory has occupied in economic science has\\nbeen an extremely varied one. Without considering that the sub-\\nII", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0023.jp2"}, "24": {"fulltext": "ECONOMIC CRISES\\ndivision of the science into Production, Exchange,\\nDistribution, and Consumption, the adjustment of\\nthe subject into the general scheme of arrange-\\nment is more difficult. The crisis involves so\\nmany economic functions that it cannot be ade-\\nquately treated within the boundaries of any one\\nof the departments of economic science. Impor-\\ntant considerations arise when the subject is looked\\nupon from each of the view-points, Production,\\nExchange, Distribution, and Consumption. It\\nlies athwart these lines of demarkation. From\\nthe standpoint of crises it is possible to judge\\nevery important economic tendency, and study\\nevery economic institution. If crises are disturb-\\nances of the equilibrium between production and\\nconsumption, they evidently concern both these\\nfunctions as well as the methods of adjusting the\\ntwo with which Exchange and Distribution have\\nto do. In accordance with this view we find such\\nwriters as Professor R. T. Ely, presenting some\\nspecial aspects of the subject of crises in each of the\\ndivisions of theoretical economics, while emphasiz-\\ning especially the connection between crises and the\\nject is taken up at times in the general, then in the special, part\\nof economic science, and sometimes in both, we find its position\\nin General Economics variable. Often it is treated under Pro-\\nduction, as a disturbance of the same; again and most frequently\\nit is taken up in Exchange; at times in Consumption, as is the\\npractice with Roscher, who considers all crises to be disturbances\\nof the balance between production and consumption. Rodbertus-\\nJagetzow considers crises under the caption Distribution. Was-\\nSERRAB, Preise und Krisen, p. 39.\\n12", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0024.jp2"}, "25": {"fulltext": "INTRODUCTION\\nprocess of consumption. Francis A. Walker, in\\nhis Political Economy, set apart for the consid-\\neration of crises a portion of the last chapter under\\nthe subject of Exchange, entitling it The Reac-\\ntion of Exchange upon Production. i* J. S. Mill\\nlays some of the fundamental propositions neces-\\nsary to his development of the subject in Book I,\\non Production, others in Book II, on Distribution,\\nand he finally brings out his theory in Book IV,\\nentitled, Influence of the Progress of Society on\\nProduction and Distribution.\\nTurning to the theories which have been con-\\nstructed to account for crises, we have first to\\nnotice some of the limitations of economic theory\\nwhich concern us. As is to be expected in the\\ncase of so striking and intricate a subject, a truly\\nenormous number of theories have been expounded\\nto explain crises. The First Annual Report of\\nthe Commissioner of Labor, which was devoted\\nto the subject of industrial crises and depressions,\\nenumerates the following assigned causes of crises\\nRailway speculation, under-, over-, misdirected, and\\nunsteady consumption, contracted, inflated, depre-\\nciated, or fluctuating currency, machinery, various\\nkinds of laws, debt, intemperance, monopoly, spec-\\nulation, tariff, and taxation. These are but a few\\nof the particular arraignments, while bad sanitary\\nconditions, free passes, education too exclusively\\nintellectual, coolie, convict, female, child, and im-\\n1* Political Economy (advanced course), Part III, Ch. VII.\\n13", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0025.jp2"}, "26": {"fulltext": "ECONOMIC CRISES\\nported labor come in for a share of the blame.\\nThe enumeration rounds well up to the border\\nof the ridiculous with the mention of such causes\\nas absence of caste, and instinctive and wide-\\nspread indolence. Concerning the collapse of\\n1878, Mr. Walter Stanley Jevons wrote, in his\\nessays on Currency and Finance It is curious\\nto notice the variety of the explanations offered\\nby commercial writers concerning the course of\\nthe present state of trade. Foreign competition,\\nbeer drinking, over-production, trades-unionism,\\nwar, peace, want of gold, superabundance of sil-\\nver. Lord Beaconsfield, Sir Stafford Northcote,\\ntheir extravagant expenditure, the Government\\npolicy, the Glasgow bank directors, Mr. Edison\\nand the electric light, are a few of the happy and\\nconsistent suggestions continually made to explain\\nthe present disastrous collapse of industry and\\ncredit. To this list a malicious reader might add\\nsun-spots. 1^\\nThe literature devoted to crises is full of discus-\\nsions of the purely local and incidental features of\\nindividual crises. The external and apparent has\\n1^ Many opinions concerning the origin of crises have been\\nexpressed by economic writers which have not been taken up\\nto any extent by students of the subject, Laveleye emphasizes\\nthe derangement of the balance of trade leading to the exporta-\\ntion of precious metals as the cause of contractions of credit liable\\nto bring on crises. Bonamy Price attributes crises to a diminution\\nof the means of buying. Nasse dwells upon the effect of changes\\ndue to progress. Leroy-Beaulieu brings forward the importance\\nof commercial treaties and of commercial legislation in general.\\n14", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0026.jp2"}, "27": {"fulltext": "INTRODUCTION\\nalways been seized upon. Without comparative\\nstudy it is impossible to establish a perspective\\nwithin the subject which permits the subordina-\\ntion of local and incidental causes to those more\\nfundamental. The literature which appears dur-\\ning and immediately after a crisis, and which con-\\ntains only an analysis of that crisis, cannot be\\nexpected to contribute much to a well-balanced\\ndiscussion of the subject. Writers who only ven-\\nture into the field when stirred by local happen-\\nings, are likely to be permeated by local prejudices\\nand inflamed by prevailing social and economic\\ncontroversies.^^ When it has been determined that\\nany crisis is unusual in character and in its causes\\ndeparts from the type, then we must look with\\ndistrust upon all literature known to have been\\nparticularly inspired by it. The crises of the\\nlatter part of the seventeenth century and the\\nfirst part of this century seem, as a rule, to have\\nbeen the result of peculiar and unusual combina-\\ntions of events. The conditions under which they\\noccurred are so different from those prevaiHng\\nsince, that it may be safely said that little of value\\ncan be found in discussions published prior to 1837.\\n1^ As is often the case, in the study of crises and in distin-\\nguishing their successive periods, theory has gone ahead of\\npractice. It need not excite surprise that that theory was for\\niwenty-five years considered one of the most obscure in eco-\\nnomics. Each author, maintaining his own point of view, has\\nindicated such causes of crises as best agree with the system\\nof thought he has accepted or built up. Clement Juglar in\\nSay s Dictionnaire.\\n15", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0027.jp2"}, "28": {"fulltext": "ECONOMIC CRISES\\nIn the literature of crises the tendency has until\\nrecently been strong to consider the last link in a\\nchain of causes as the only one of importance.\\nThe crash of a panic has been observed to the\\nneglect of the pre-crisis period in which the secret\\nof causes lies.^*^ Financial and credit institutions\\nhave received undue attention because through\\nthem unstable conditions are first brought to\\nrupture.\\nNot only are the varying phases of the history\\nof commercial convulsions reflected in theories of\\ncrises, but so also are the prevailing social and\\neconomic ideas. As Friederich A. Lange has\\nsaid, We examine a science, and we find in its\\ndoctrines only the mirror of social conditions.\\nIt is human nature that good results or qualities\\nshould be referred most easily to causes or objects\\nwhich already have a favorable character in our\\nestimation. Bad actions are laid at the door of\\nthose whom we believe to be bad. Crises have\\nbeen time out of number laid at the door of the\\nopposite political party, the disliked financial sys-\\n1 In all economic questions, one can note the tendency of\\nobservers to trace great consequences back to some single cause\\nwhich, by accident, is known or understood by them. This ten-\\ndency has especially manifested itself in the judgments which have\\nbeen formed regarding the causes of periods of speculation and\\ncommercial crises, and in general regarding phenomena connected\\nwith money and credit. A. Wagner, Die Geld- und Credit-\\ntheorie der Peel schen Bankacte, p. 257.\\n18 History of Materialism (2d ed.), Boston, 1879-81, Vol.\\nIll, p. 233.\\n16", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0028.jp2"}, "29": {"fulltext": "INTRODUCTION\\ntern, and the economic class with whose interest\\none s own is not coincident. This kind of work is\\non an intellectual level with the practices of those\\nvillagers of past centuries who evolved the idea of\\na witch, attributing the sickness and deaths of the\\ncommunity to the influence of old women who\\nwere primarily disliked for their ugly appearance\\nand temper.\\nThe history of crises has often been made an\\narsenal from which were to be drafted arguments\\nfor political and economic polemics. The theory\\nof crises has been a handle in many arguments,\\nand has been subordinated to the purpose of first\\none popular discussion and then another.\\nAs between the French, German, and English\\nliteratures of the subject some comparisons may\\nbe made. In France, the literature of crises was\\nfor a long and important period a mere side-light\\nin the discussion of the freedom of bank-note\\nissue. French scientific economic literature, in\\ncommon with the English, brings the subject of\\ncrises into connection with the dispute over the\\nlaw of markets or over-production. English writers\\nfor some time only mentioned crises to connect\\nthem in one way or another with the expositions\\nof the Currency School or to use them in the\\ndefence or attack of the Peel Bank Act of 1844.\\nThat the theory of crises should have been until\\nthe last three decades involved in abstract discus-\\nsions of over-production, currency, and interna-\\ntional trade is not, broadly speaking, accidental.\\nc 17", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0029.jp2"}, "30": {"fulltext": "ECONOMIC CRISES\\nBefore the period mentioned the ideals and\\nmethods of the exact sciences prevailed and in-\\nfluenced economics. Such subjects were naturally\\nchosen as best fitted these methods, and economics\\nwas built with the idea of an exact science in mind.\\nMore recently the biological sciences have been\\nbuilt up. They now exert an influence as ideals,\\nwhile the inductive method appropriate to them\\nhas extended its influence.\\nGermany brings a double contribution, namely,\\nthat of the socialists and that of scientific econo-\\nmists. These two are relatively distinct. The\\ncontribution of the socialists to the subject is very\\nconsiderable. German scientific literature is not\\ngreatly influenced so far as the theory of crises is\\nconcerned by socialistic thought, and is free from\\nprolonged entanglement with any other discussions\\nsuch as arose in England or France. It is in Ger-\\nmany, therefore, that we find the most systematic\\nand unprejudiced discussions of crises.\\nBefore proceeding to consider the various theo-\\nries of crises it may be well to say a word con-\\ncerning diversities of view. The differences of\\nposition taken by writers is very frequently more\\napparent than real. Of a number of investigators\\nwho perceive that crises result from a divergence\\nbetween supply and demand, some will speak of\\nover-production and others of under-consumption.\\nOf a number who examine the fluctuation of\\ndemand and single out as the cause of crises the\\nfailure of the effective demand of wage-earning\\ni8", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0030.jp2"}, "31": {"fulltext": "INTRODUCTION\\nclasses, some will maintain that the institution of\\nprivate property permits capitalists to defraud\\nwage-earners and will, with Rodbertus, hold a\\nsocialistic theory. Others, like Robert Owen, will\\nsee most clearly the influence of machinery in\\nthese results, and will frame a mechanical and\\ntechnical problem. Others still may, with Bren-\\ntano, look upon the condition of the wage-earner\\nas due primarily to his intelligence and providence\\nor improvidence, and will thus constitute out of the\\nmatter a moral problem.\\nLet us proceed to the statement, in as favorable\\na light as may be, of the chief theories explaining\\ncrises. The presentation in the following chapters\\nwill be dominated by the idea of making each new\\npoint of view a position from which certain impor-\\ntant aspects of the subject may be best elucidated.\\nThe chapters which follow form, therefore, at once\\na systematic discussion of crises and a presentation\\nof the chief theories of crises.\\nRESUME\\nI. Definition (a) of a crisis cycle of a crisis (3) distinc-\\ntion between crises and depressions (c) types of\\ncrises the monetary, financial, commercial, and in-\\ndustrial crises the economic crisis.\\nII. The culmination of a crisis cycle in a crisis accounted for\\nby the solidarity of economic interests and modern\\ncredit.\\nIII. Importance of the study commensurate with the losses\\ninflicted by crises. Social ills reveal important aspects\\nof social forces.\\n19", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0031.jp2"}, "32": {"fulltext": "ECONOMIC CRISES\\nIV. Difficulty of study caused by (a) the complex, striking,\\nunusual, and temporary character of the phenom-\\nena (d) untrained observation (c) partisan opin-\\nions.\\nV. Guiding general facts (a) crises appeared with the\\npresent industrial system, with industrial freedom,\\nthe factory system, foreign commerce, and credit\\n(d) geographical distribution of crises the world\\ncrisis.\\nVI. Place of subject in economic treatises. It does not\\nadjust itself to the four-part division of economics\\ninto Production, Exchange, Distribution, and Con-\\nsumption.\\nVII. Limitations of economic theory\\n(a) Large number of theories advanced.\\n{d) Discussions devoted to local and incidental fea-\\ntures.\\nLiterature growing out of abnormal economic\\ncrises likely to be worthless.\\n(d) Little work of value prior to 1837.\\n(e) Undue prominence of the crash and of credit\\ninstitutions in studies of crises.\\nTheory of crises used as a handle in various\\neconomic and political discussions.\\n(g) French theory and the question of freedom of\\nbank-note issue.\\n(k) English theory and the Peel Bank Act of 1844.\\n(t) German socialistic and scientific contributions.\\nBoth of value. The latter the most unpreju-\\ndiced body of discussion extant.\\nVIII. Caution regarding apparent and real divergences of\\nopinion.\\n20", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0032.jp2"}, "33": {"fulltext": "CHAPTER II\\nINDUSTRIAL EQUILIBRIUM\\nA PROMINENT place is given in the science of\\neconomics to the idea of an equilibrium. The\\nforces of supply and demand bring about condi-\\ntions of equilibrium which are marked by price\\nquotations, and which serve as a guide and crite-\\nrion for the movement of economic interests. The\\nsimplest conception of an economic equilibrium is\\nthat which makes it resemble a pair of scales, in\\nwhich are balanced, on one side, utilities, on the\\nother, the costs of production involved. An ex-\\ntension of this conception, necessitated by the\\nentrance of the evolutionary doctrine into science\\nand the introduction of the historical method in\\neconomics, has regard to changes in the costs of\\nproduction and in men s wants, which are accom-\\nmodated by an equilibrium ever changing, but ever\\nbeing renewed. The dynamic conception of an\\nequilibrium is the only one which can be em-\\nployed in an extended examination of economic\\nphenomena.\\nThe first impression which the crisis gives to\\nthe student of political economy is that the normal\\nadjustment of economic forces has been violently\\n21", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0033.jp2"}, "34": {"fulltext": "ECONOMIC CRISES\\ndisturbed. The ratios of exchange, indicated by\\nprices, are abnormal. They imply the severest\\nhardships to the industries of a country.\\nGranted that in a crisis the normal relations of\\nsupply and demand have been destroyed, we may\\nask what are the causes of the disturbance.\\nAn examination of the literature dealing with\\neconomic crises shows that the theories which\\nhave been advanced to answer this question may\\nbe divided into two classes. First are those which\\nassign some specific, immediate, and actuating\\ncause, of such a character that no law can be\\nformulated as to its recurrence. Second, we may\\ngroup together all those explanations of crises\\npointing out an inherent tendency of industry\\nwhich, when not counteracted, leads to recurring\\nperiods of distress.\\nIt may be well, before taking up the study of\\nthose economic tendencies which lead to crises, to\\ngroup together in this chapter for convenient\\ntreatment the heterogeneous accidental causes\\nwhich have been pointed out by various writers, at\\ndifferent times, as the cause of this or that crisis.\\nA group of writers, among the most prominent of\\nwhom is Wilhelm Roscher, have presented the idea\\nthat the present industrial system tends to pre-\\nserve a stable equilibrium, and that there are no\\npersistent or recurrent tendencies operating to\\nbreak down the adjustment which normally pre-\\nvails between demand and supply. Such writers,\\namong whom we may include Nasse, Lugo Bren-", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0034.jp2"}, "35": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\ntano, Garnier, and perhaps Max Wirth,^ scout the\\nidea of a definite periodicity of crises, holding that\\nthey result from unforeseen occurrences, or acciden-\\ntal junctures in the life history of trade.^\\nThese writers and their followers all recognize,\\nhowever, that the nineteenth-century economy is\\nnot the same as that which preceded it. Changes\\nhave taken place which have resulted in making\\nindustry sensitive to destructive influences once\\nunknown. Such changes are the division of labor\\nand the application of capital to industry, which\\n1 The list of crises-producing causes enumerated by Max Wirth\\nis as follows: (i) Harvest failures; (2) Discovery of new deposits\\nof coal, metals particularly of the precious metals; (3) Inven-\\ntions; (4) Opening or closing of commercial routes and of mar-\\nkets; (5) War and revolutions; and, (6) Leading to depression\\nof trade, the depreciation of the currency. Grundziige der\\nNational Oekonomie, Bd. Ill, p. 57.\\n2 The germs of crises lie in unusual economic phenomena\\nwhich stimulate production and industry generally to forsake its\\nbeaten path, and which call forth unwonted activity in various\\nparts of the economic organism. Max Wirth, Grundziige der\\nNational Oekonomie, 3 Aufl., Bd. Ill, p. 57. The feverish\\nactivity of the market and the abnormal inflation of prices are\\nalways the result of peculiar causes, for the operation of which\\nthe previous depression of industry has, indeed, prepared the\\nway, but which exert throughout an independent, actuating influ-\\nence. Periods of depression give way to a gradual revival of\\ncommerce when such peculiar causes are not present, or when\\nthe evolution is not suddenly interrupted by such disturbing events\\nas war or the declaration of peace. Such a trade revival continues\\nuninterrupted, unless checked by some new disturbing influences.\\nNasse, Ueber die Verhiitung der Productionskrisen, Jahrbuch\\nfur Gesetzgebung, Bd. Ill, N. F. 1879, p. 150. Cf. Roscher,\\nSystem der Volkswirthschaft, Bd. Ill, p. 783.\\n23", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0035.jp2"}, "36": {"fulltext": "ECONOMIC CRISES\\nincrease the interdependence of industrial units.\\nThese also, by lengthening the chain of connected\\nproductive processes, lengthen the time during\\nwhich disturbing changes may occur. Both the\\nsolidarity and the sensitiveness of business condi-\\ntions are increased by the use of credit. It was\\nwith the economy and moral beauty of credit in\\nmind, but yet remembering the crisis, that Roscher\\nspoke of crises as the shadow side of progress\\nitself. 3\\nUnder some circumstances the industrial system\\nmay be said to be in unstable equilibrium, as when\\na country possesses a system of unsound banks or\\nan unregulated paper currency. The course of\\nforeign commerce is usually recognized as less sta-\\nble and reliable than that of home trade. Hence,\\nthe growth of international commerce opens the\\ntrade of a country to many new disturbing influ-\\nences. Agriculture and the other extractive in-\\ndustries are less susceptible to injury than are\\nmanufacture and commerce, because the goods\\nwhich they produce are in the least possible de-\\ngree specialized, and therefore sealed for specific\\ncommercial uses. These industries are adaptive,\\nsince, if one outlet is closed, the goods may be\\nfitted for another use. Each branch of manu-\\nfacture must follow the course of some specific\\ndemand, and commerce must suffer by any read-\\njustment of supply and demand areas. We may\\n3 Roscher, Ansichten der Volkswirthschaft, Bd. II, Sec. 4,\\np. 385-\\n24", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0036.jp2"}, "37": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\nsay furthermore that capital invested in agriculture\\nis not so rapidly impaired while lying idle as is\\ncapital invested in manufacturing and commercial\\nenterprises.* The bonds of credit linking these\\nvarious parts of a country s industries together by\\ncredit and debtor relations put the whole economic\\norganism in a position to suffer from the reverses\\nwhich come to the least stable elements compos-\\ning it. Whatever in any way extends the market,\\ntherefore, or complicates business, if it is accom-\\npanied by a corresponding increase in economic\\nsolidarity, makes larger the area within which\\ncrisis-producing causes may appear.\\nHaving noticed how liable the machinery of in-\\ndustry is to become deranged, it remains to con-\\nsider that group of the actuating causes of crises\\nwhich has been selected for treatment in this chap-\\nter, namely, the unpredictable ones. Beginning\\nwith those considerations which belong to the\\ndepartment of Production, in economic science,\\nwe may first mention invention, which has for its\\nimmediate effect a revolution in the technique of\\nsome industry. Invention changes the proportions\\nin which the factors of production are related to\\none another in industry, readjusts industries to one\\nanother in the scale of importance, and changes\\nThe varying degrees of sensitiveness to derangement which\\neconomic enterprises display is an important consideration in con-\\nnection with the laying of taxes, for it determines in a measure\\nthe reliability of the various sorts of public revenue. Cf. H. G\\nAdams, Taxation in the United States 1 789-1 8l6 (Johns Hop-\\nkins Studies), Vol. II, pp. 69, 70.\\n25", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0037.jp2"}, "38": {"fulltext": "ECONOMIC CRISES\\nthe territorial relations of producing areas. The\\ngradual accumulation of improvements, which is\\noften allowed to grow unheeded by capitalists\\nwhose money is invested in equipped plants, forms,-\\nfrom time to time, a crushing advantage for new\\nenterprises starting with all the latest devices\\nknown to the trade. During the early part of\\nthe century the advent of a new invention was\\nnot accompanied with great loss of fixed capital,\\nbecause at that time capital was for the first time\\nlet into the productive process on a large scale by\\nthese inventions, and the change meant the use of\\nexpensive equipment for the first time. At pres-\\nent great inventions are coming more and more\\nto mean the destruction of large amounts of fixed\\ncapital, which have been invested to utilize pre-\\nvious inventive achievements.\\nThe opening of a new means of communication\\nhas an effect in some respects similar to that of an\\ninvention. The European markets were convulsed\\nby the opening of the Suez Canal. The opening\\nof a new market has frequently, in the past, led\\nto ill-advised productive activity, resulting in great\\nloss. The requirements of a new market are at\\nfirst imperfectly understood, especially if it is in\\nan undeveloped country. Optimism and the love\\nof stimulating news serve generally to exaggerate\\nthe importance of an unknown demand. One has\\nonly to recall the Mississippi Scheme of 1718\\nand 1719 and the South Sea Bubble of 1720\\nin confirmation of this. Overestimation of the\\n26", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0038.jp2"}, "39": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\nmarkets of Brazil and of Spanish America con-\\ntributed principally to the distress in England in\\n1 8 10. In 1824 and 1825 the markets of Peru and\\nMexico were overestimated, and in 1843 those of\\nChina were likewise. European manufacturers\\nhave been prone to ship what they wanted to sell,\\nas regards assortments, quality, and style, rather\\nthan what the market demanded. A realization\\nof the importance of early establishing trade con-\\nnections, in order to hold the field against com-\\npetitors, leads to activities which anticipate in too\\ngreat a degree the development of a new field.\\nThis leads to such conditions as prevailed in Cali-\\nfornia in September, 1850. When a collapse does\\nnot follow the first receipt of accurate information\\nregarding the condition and capacity of a new\\nmarket, a second stage of the process is entered,\\nin which European capital and methods are rashly\\napplied to stimulate the local industries. When\\nthe crash, which is almost certain to come, lays\\nlow the colonial industry, European houses con-\\nnected therewith are often brought down in the\\ngeneral ruin. This is illustrated by the case of\\nthe Baring failure in England in the summer of\\n1890. Unfounded trade expansion in the home\\ncountries, such as that which was connected with\\nthe opening of California, is not likely to occur in\\nthe future, because of the improvement of means\\nof communication but the hasty and inconsider-\\nate application of European methods in a tropical\\nclimate, with strange flora, fauna, and with non-\\n27", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0039.jp2"}, "40": {"fulltext": "ECONOMIC CRISES\\nEuropean people, to bring about a forced growth\\nof industry through the use of European capital,\\nis likely yet to lead to trouble.\\nThe laying of import duties, a practice common\\namong new countries after reaching a certain stage\\nof development, offers a prolific cause of uncer-\\ntainty in trade with new markets. A tariff brings\\nabout an artificial distribution of industry which\\nthen must hang upon the course of legislation and\\nindirectly upon the fortune of political parties.\\nA tariff in a growing country must be revised\\nfrom time to time. Furthermore, a tariff tends\\nto build up interests which exert a pressure to\\nsecure revisions advantageous to themselves. The\\nsystem must therefore be pronounced an unstable\\none. The history of tariffs shows that the system\\nis a thing of shreds and patches. In connec-\\ntion with crises the unstability and artificiality of\\ntariffs is the chief subject of remark.^\\nfi The opinion of the business men of this country who are not\\nintrenched in monopolies may be judged from the well-indorsed\\nsentiment of the National Board of Trade, as expressed in Wash-\\nington in January, 1895, ^y Mr. Helman of Cleveland: The\\ngravest dangers from present methods of tariff discussion and\\nlegislation are found in the constant menace to the business\\ninterests of our country. History tells us that the various changes\\nfrom low to high and high to low tariff between 1S32 and 1880\\nled to periods of undue inflation, great demoralization, prosperity,\\nand depression. Uncertainty has always acted as a damper on\\ntrade, and even the mere suggestion of a possible change in\\nrevenue rates has operated to unsteady business and hinder pro-\\nduction. In the language of the resolution presented to this\\nbody, twice within the last two years have we, by overwhelming\\n28", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0040.jp2"}, "41": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\nIn this connection attempts to form monopoly\\nmay be mentioned. When these attempts are in\\nthe form of getting a corner on the market,\\ngreat and possibly destructive price fluctuations\\nmay result. Attention must be called to the char-\\nacter of the trust wars, at present becoming famil-\\niar to us, and in all probability to be made more\\nfamiliar in the future. These struggles may al-\\nmost be called the wars of the giants. The invest-\\nments of capital and the numbers of wage-earners\\ninvolved are so great as to make them a matter\\nof public solicitude.\\nA cause of crises, which may be considered to\\nfall under the head of Exchange in economics, is\\nthe course of the precious metals. As these metals\\nform the most important elements of the exchange\\nmedium of trade, and as every socio-economic\\nactivity is influenced by changes in the medium\\nof exchange, the circumstances which affect the\\nvalue of gold and silver are most important.^ The\\nvalue of these metals is, in a greater degree than\\nmajorities, reversed the national system of raising revenues, and\\ntwice placed in jeopardy the business interests of the country by\\nmaking uncertain for months the outcome of legislation touch-\\ning the exchange value of every article in trade. Every observer\\nknows that there need be no actual legislation to involve great\\nrisk. The mere suggestion of possible action is sufficient to stir\\nthe commercial world and to produce alarm and even serious\\ndisturbance in trade. Proceedings, 1895, PP- 3\u00c2\u00b0\u00c2\u00bb ^3^*\\nEmile de Laveleye considers that the fluctuations occasioned\\nby the settlement of the balance of trade and the resulting move-\\nment of the precious metals are responsible for crises. Revue\\ndes Deux Mondes, 1865, pp. 445 ff.\\n29", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0041.jp2"}, "42": {"fulltext": "ECONOMIC CRISES\\nis true of most other substances, dependent upon\\nlegislation. This suggests a source of economic\\ninsecurity. The crisis of 1893 in the United\\nStates was, in part, due to distrust of the integrity\\nof our currency, caused by the operation of the\\nSherman Law, and by the existence of a strong\\nfree silver sentiment. The physical conditions\\ngoverning the supply of gold and silver are also\\nto be considered. The assertion has been made\\nby Schaffle, Gustave du Puynode, and others that\\nthe increase in the production of gold, following\\nupon the discovery of the California fields, lowered\\nthe rate of interest in Europe and stimulated\\nspeculation, resulting in a number of crises, prom-\\ninently that of 1857.7 The Committee of the\\nHouse of Commons appointed to inquire into the\\ncauses of the crisis of 1857 reported that specula-\\ntion had been especially increased by three circum-\\nFor a discussion of this, see Schaffle s article in Zeitschrift\\nfur d. gesammte Staatswissenschaft, Bd. XIV, 1858, pp. 469, 470,\\nalso in Deutsche Vierteljahrsschrift, 1858, Heft I, p. 327. Puynode,\\nin Journal des Economistes for March, 1858, p. 458, argues the\\nsame cause for the crisis of 1857 in the United States. For a\\ndiscussion of the influence of the scarcity of gold and demone-\\ntization of silver upon trade since 1882, see Robert Giffen s\\nEssays in Finance, 2d Series (N. Y.), 1886, Essay I: Trade\\nDepression and Low Prices, Part IV; The Question of Gold\\nScarcity, pp. 22-28. Cf. Dr. Wm. Scharling, Die jetzige Ge-\\nschaftsstille und das Gold, Conrad s Jahrbuch, Bd. II, N. F., 1885,\\npp. 189-219, and pp. 289-312; also J. E. T. Rogers in Prince-\\nton Review, Vol. Ill, N. S., 1879, Article Causes of Commercial\\nDepressions Stephen Williamson, Contemporary Review, Vol.\\nXXXV, 1879, Article Bad Trade and its Cause, Part I, pp. 121-\\n131.\\n30", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0042.jp2"}, "43": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\nstances (i) The extension of foreign trade (2) A\\ngreat importation of gold and silver; (3) The econ-\\nomies in the use of money made possible by the\\npractice of banking.\\nThe productive process may be considered\\nrelatively stable and dependable, in comparison\\nwith the capricious movements of demand. The\\nunexpected in industry usually makes itself felt\\nfirst from the side of demand. We do not suffi-\\nciently understand the process by which wants rise\\nand propagate themselves among the individuals\\ncomposing society hence there is to us always an\\nelement of the unexpected in the movements of\\ndemand. There occurs to the mind at once the\\ninfluence of fashion. Undoubtedly the word fash-\\nion has been overworked in this connection and\\nmade to stand for a variety of forces governing\\nthe movement of wants. Undoubtedly also many\\nproducers who complain loudly of the uncertainty\\nof fashion have themselves to thank for nourish-\\ning a change of demand to put movement into the\\ncommodity market. A review of modern changes\\nin production and consumption strongly indicates\\nthat these two complementary parts of the eco-\\nnomic process are growing more and more unUke\\nand are with more and more difficulty adjusted to\\none another. Production, employing machinery,\\nand a strictly classified labor personnel under a\\ncomplete system of organization pours forth vast\\nquantities of goods of which each unit exactly\\nresembles the other. To secure the economies\\n31", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0043.jp2"}, "44": {"fulltext": "ECONOMIC CRISES\\ninherent in this system there is demanded above\\nall things stable and uniform conditions over wide\\nareas. Demand on the contrary, influenced by\\ngeneral education and the quickening of intellect-\\nual movements, and encouraged to nicety by the\\ngreat variety of goods available to choose from, is\\nbecoming more uncertain and more subject to\\nwhims and fads than ever before. The increase\\nin the income of the wage-earning classes increases\\ntheir power and desire to individualize their con-\\nsumption. The smaller an income the more pre-\\ndictable is the expenditure resulting from it as it\\nis mortgaged to the necessities of life. The larger\\nthe income the larger the disposable surplus set\\nfree to form an unpredictable demand.\\nTo this list of crisis-inducing influences may be\\nadded one or two which cannot be grouped accord-\\ning to the customary divisions of economics.\\nIt is a fact, known to every one, that war operates\\npowerfully to restrain certain kinds of consump-\\ntion and to increase other kinds. The Chicago\\nTribune of December 31, 1898, published a very\\ninteresting table, in the course of a review of the\\nindustry of Chicago, to show what industries were\\nstimulated by the Spanish war, what were depressed,\\nand what unaffected. In the first class are placed\\nindustries connected with drugs, groceries, farm\\nproduce, grain, flour, iron and steel, leather, paper,\\npacking cases and clothing. To this might be\\nadded the newspaper and photographic industries,\\nthe trade of American resorts and the manufacture\\n32", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0044.jp2"}, "45": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\nof powder, bunting and flags, brushes, etc. Among\\nthe industries depressed were those connected with\\nboots and shoes, real estate, building material, lum-\\nber, and beer. The bicycle industry was depressed\\nand trade on the Board of Trade was lessened.\\nThe industries not affected were connected with\\ncoal, furniture, hardware, jewellery, and millinery.\\nBanking was also unaffected. Not alone does war\\ndisturb the course of industry of those nations\\nengaged in it, but of many others as well. Neutral\\npowers may have their markets destroyed, or their\\nsources of raw material cut off, or may suffer from\\nnecessary changes in the routes of commerce.\\nAgain, neutral powers are tempted to expand their\\nproduction in the hope of gaining a stolen march\\nupon their competitors temporarily handicapped.\\nThe first great crisis of the nineteenth century,\\nthat of 1815 in England, was caused by the exag-\\ngerated hopes of English merchants that they\\nwould be able to control the continental markets\\nat the close of the Napoleonic wars.^ War is an\\nabnormal condition, but when it is long continued\\nindustry adjusts itself in a measure to its influence.\\nThe passage back to peace may then be a readjust-\\nment accompanied by anxiety and distress, until\\nthe situation of trade is again definite.\\nThe delicately poised industry, which is in these\\n8 Sir Fr. Baring considered the unexpected declaration of war\\nto be one of the chief causes of the crisis of 1 793. Observations\\non the Bank of England, p. 19. Tooke, however, disputed this.\\nHistory of Prices, Vol. I, p. 177.\\nD 33", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0045.jp2"}, "46": {"fulltext": "ECONOMIC CRISES\\ndays built up through the instrumentality of credit,\\nmay suffer derangement through the failure of a\\nstaple crop, through the collapse of a mining\\nexcitement, or in the puncture of the bubble of\\nover-capitalization of joint stock concerns. The\\nwhole industry of a country may suffer in a de-\\nrangement having its origin and cause in some\\none trade. It has even been maintained that in\\ncertain critical seasons a general convulsion has\\nfollowed as the result of the disastrous collapse of\\nsome one great individual concern. This extreme\\nstatement is frequently to be met with in the litera-\\nture devoted to the crisis of 1857 in .the United\\nStates. That crisis is attributed by some to the\\nfailure of the Ohio Life Insurance and Trust Com-\\npany, having a capital of $2,000,000 and a deficit\\nof ;^20,ooo. This is, of course, no more an expla-\\nnation of the crisis of 1857 than was the failure of\\nthe Cordage Company on May 5, 1893, the cause\\nof the crisis of 1893.\\nSuch an enumeration of the causes of crisis as\\nthe preceding, while, perhaps, fair enough and free\\nfrom partisan bias, and while elastic and compre-\\nhensive, is unsatisfying. Roscher has been justly\\npraised for early according a place to the discus-\\nsion of crises. His writings have been called pre-\\neminently fair. This is because what he has given\\nus is virtually a blanket theory an explanation\\nencyclopaedic rather than truly interpretative. An\\nenumeration similar to the one given above can\\nafford us no criterion to judge the future. Accord-\\n34", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0046.jp2"}, "47": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\ning to the Equilibrium theory, the cause of each\\ncrisis is some unusual conjecture which must be\\nsought in the study of the events immediately pre-\\nceding the crisis. The recognition of the delicacy\\nof the industrial adjustment is merely an indirect\\nway of saying that the precipitating cause of a\\ncrisis may be in itself something inconsequential\\nin comparison with the string of events which it\\nsets in motion. This takes the matter out of the\\ngeneral into the particular, and hides the roots of\\nthe problem in accidental and personal details\\nbeyond the reach of scientific study.^ The con-\\nclusions to be drawn from this are that the causes\\nof crises are innumerable, that no important classi-\\nfication can be made among them, and that all\\ntrue causes are equally important.^^ The discus-\\nsions contained in the following chapters may be\\nconsidered in the light of an answer to this\\nposition.\\nOne can see that the ultimate cause of such crises must be\\nan organic failure, and that the source from which the repetition\\nof the phenomenon takes its rise must be sharply distinguished\\nfrom the individual circumstances connected with each crisis.\\nIt is obviously a superficial procedure to fix attention on the\\nincidental character of the crisis phenomenon, and therein to\\nfind the real, and in part predictable, law without coupling with\\nthis the search for the ultimate causes which account for the\\nentire series of similar phenomena. E. Duhring, Cursus der\\nNational- und Socialokonomie, pp. 236, 237.\\n1^ The causes of such an economic disease are most numerous.\\nEvery circumstance which suddenly and largely increases produc-\\ntion or decreases consumption or which even disturbs the ordinary\\ncourse of industry must bring with it a commercial crisis.\\nRosCHER, Ansichten der Volkswirthschaft, Bd. II, Sec. 5, p. 391.\\n35", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0047.jp2"}, "48": {"fulltext": "ECONOMIC CRISES\\nPassing to the consideration of the remedies\\nwhich are proposed or suggest themselves in con-\\nnection with this Ust of causes, we have to observe\\nthat they must of necessity be as numerous and\\ndesultory as are the causes which they are to\\ncounteract. Alleviative rather than preventive\\nmeasures are proposed by the adherents of the\\nEquilibrium theory. First, as regards capital\\nDuring a financial panic persons who, in ordinary\\ntimes would be perfectly solvent, are liable to\\nhave their property swept away, at a merely nomi-\\nnal valuation, in order to purchase cash in a strin-\\ngent money market with which to pay a small\\nobligation. To meet this emergency the state may\\nissue a paper currency which may either draw\\ninterest, or be taxed to secure its rapid retirement\\nafter it has served its purpose. This aid may\\nbe made effective by advancing money to private\\nparties upon security of property including stocks\\nof goods.^^ The trial of this scheme in the United\\nStates in 1873 condemned it as tending to revive\\nspeculation, to create an unhealthy dependence\\nupon government, and as offering a relief from the\\ndue effects of unwise and dishonest financiering.\\nTo afford an equal relief to labor the local units\\nof government may give employment to those who\\nare out of work. If it is deemed unwise for the\\nstate to affirm the right of work, this may be\\ndone under the plea of taking advantage of a\\n11 Roscher, Ansichten, Bd. II, Sec. 16, B.\\n36", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0048.jp2"}, "49": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\nfavorable market. In behalf of such public expen-\\nditure it may be urged that persons so employed\\nwould become a charge upon the public if not\\naided in some such manner.\\nLittle can be done to diminish the force of such\\nreorganizing influences as invention, the opening\\nof new means of communication, or the opening\\nof new markets. Nothing short of a comprehen-\\nsive reorganization of industry such as is proposed\\nby the socialists would avail much. The same\\nmay be said of the wars of trusts and monopolies.\\nIt is to be observed that legislation to restrict trusts\\nand monopolies has been ineffective thus far in\\nthe United States. In regard to the risks con-\\nnected with changes in tariff or monetary legisla-\\ntion the remedy suggests itself. To forecast, and\\nin some degree diminish the uncertainties of\\ndemand, the sovereign remedy is statistical in-\\nquiry. It is a remarkable fact that almost without\\nexception every important writer upon crises has\\nemphasized in the most unmistakable manner\\nthe necessity of enlarging the scope of govern-\\nment statistical investigations.^^ Statistical bureaus\\nshould not only undertake investigations on their\\nown account, but should give the utmost pubUcity\\nto valuable statistical information gathered by pri-\\n12 Roscher says Had each producer and tradesman an accu-\\nrate and continuous knowledge both of the extent of demand and\\nof the number and capacity of his competitors, a serious crisis\\nwould scarcely be possible. System der Volkswirthschaft,\\nBd. Ill, Ch. II, Par. 175, A.\\n37", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0049.jp2"}, "50": {"fulltext": "ECONOMIC CRISES\\nvate persons and trade organizations and societies.\\nIf, as John Stuart Mill said, the laws of consump-\\ntion are the laws of human enjoyment, then the\\nprocess of consumption cannot be extensively regu-\\nlated by legislation without serious loss of freedom\\nand enjoyment.^^ The next best thing is to subject\\nthe phenomena of consumption to serious study in\\norder that we may at least foresee, if we cannot\\ncontrol events. In this connection it may be per-\\nmissible to add a brief explanation of the plans\\nfor the statistical study of consumption proposed\\nby the late Dr. Ernst Engel, of Berlin, formerly\\nthe Chief of the Prussian Statistical Bureau. This\\neminent statistician proposed, through the study\\nof budgets of private expenditure, to discover the\\nlaws of consumption. If changes in demand can\\nbe foreseen, it will greatly facilitate the adjustment\\nof supply to demand. Dr. Engel himself exam-\\nined the expenditures of thousands of Prussian\\nfamilies and formulated the following four propo-\\nsitions First. That the greater the income,\\nthe smaller the relative percentage of outlay for\\nsubsistence. Second. That the percentage of out-\\nlay for clothing is approximately the same, what-\\never the income. Third. That the percentage of\\n13 p^ systematic direction of production without freedom of\\ndemand and freedom in the choice of occupations would be,\\nwhile not precisely unthinkable, accompanied by the destruction\\nof civilization and all that which makes life worth living. To\\nharmonize the systematic direction of all industry with freedom\\nof demand and of the choice of occupation is a problem which\\ncan only be compared with the squaring of the circle.\\n38", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0050.jp2"}, "51": {"fulltext": "INDUSTRIAL EQUILIBRIUM\\noutlay for lodging, or rent, and for fuel and light,\\nis invariably the same, whatever the income.\\nFourth. That as the income increases in amount,\\nthe percentage of outlay for sundries becomes\\ngreater. Few subjects of economic research\\nappear to offer greater rewards to the student\\nthan does this one.\\nRESUME\\nL Economic equilibrium static conception dynamic\\nconception.\\nIL Grand divisions of crisis theories.\\n1. A stable equilibrium disturbed by unpredictable\\ncauses.\\n2. An unstable equilibrium eventually ruptured by\\nsteadily operating cumulative forces.\\nin. School adhering to the first class of theories Roscher.\\nIV. Sensitiveness of modern industry to disturbances caused\\nby {a) division of labor, (Jj) lengthening of\\neconomic forecasts, {c) use of credit (special\\ncase of unsound banks and unregulated\\npaper currency), foreign trade, {e) in-\\ncrease of elaborative as opposed to extrac-\\ntive industries.\\nV. Unpredictable causes of crises grouped according to the\\ndepartments of economic science.\\nI. Production.\\nz) Inventions destruction of invested capital.\\n(J)) New means of communication new markets\\nmisjudged exploitation of new markets\\nof the tropics.\\n1* Report of Massachusetts Bureau of Statistics of Labor, 1885,\\np. 152.\\n39", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0051.jp2"}, "52": {"fulltext": "ECONOMIC CRISES\\nChanges in tariffs.\\n{d) Monopolies trust wars.\\n2. Exchange.\\n(e) Course of the precious metals monetary\\nlegislation.\\n3. Consumption.\\nChanges of fashion divergence in the ten-\\ndencies governing production and those\\ngoverning consumption.\\nVI. Miscellaneous causes.\\n{g) War effect upon different industries,\\n(/z) Crop failures.\\nFailure of a single great business concern.\\nVII. Unsatisfactory character of such an enumeration of\\ncauses.\\nVIII. Remedies alleviative rather than preventative.\\n{a) For capital temporary issue of paper currency.\\nFor labor employment on public works.\\nLegislation affecting commerce.\\nStatistical information to adjust supply to de-\\nmand. Engel s plan his four laws of\\nbudgets.\\n40", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0052.jp2"}, "53": {"fulltext": "CHAPTER III\\nCRISES AND THE ORGANIZATION OF INDUSTRY\\nAs crises are evidences of a lack of adjustment\\nbetween economic forces, they naturally suggest\\nthe question, Who are the men whose business it\\nis to direct industry, and with what equipments\\nare they provided for the discharge of their duties\\nInquiry as to the character of the machinery which\\ncontrols the larger movements of industry reveals\\none of the serious weaknesses of the present eco-\\nnomic order. While the organization and control\\nof the internal affairs of business units have been\\nwell looked after, there have been developed as\\nyet few efficient means of facilitating the coordina-\\ntion of the activities of the various economic units\\naccording to a general and sufficient plan. There\\nis a lack of means for supplying information as to\\nthe general present and future conditions of the\\nmarket, and for subordinating individual producers\\nto the dictates of a comprehensive and rational\\npolicy.\\nThe changes which took place during the Indus-\\ntrial Revolution were primarily changes in the\\ntechnical processes of manufacture. In order to\\naccommodate these new processes many changes\\n41", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0053.jp2"}, "54": {"fulltext": "ECONOMIC CRISES\\nhave been rendered necessary in the organization\\nof the factors of production. The proportion of\\ncapital employed has been increased. The intro-\\nduction of machinery has necessitated elaborate\\nstructures and the use of steam power. The work-\\nshop and the tools have grown into a factory.\\nThe division of labor has been greatly furthered,\\nand this has necessitated the gathering of work-\\nmen into great communities where all depend upon\\nthe turning of the same chance of the markets.\\nThis concentration of productive forces means an\\nextension of the market. The evolution which has\\ndrawn men together as producers has separated\\nproducers from their markets both by distance,\\ntime, and general social and economic relations.^\\nUnder these conditions, when an industry is\\ndepressed it means a concentration of suffering\\nin a few localities. The difficulty of bringing\\ntogether a body of expert workmen and the diffi-\\nculty of providing for them if discharged en masse\\n1 John A. Hobson says of the effects of machinery Again\\nthe growth of machinery makes industry more intricate. Manu-\\nfacturers no longer produce for a small known market, the fluctua-\\ntions of which are slight and easily calculable. The element of\\nspeculation enters into manufacture at every pore, size of mar-\\nket, competitors, and price are all unknown. Machinery works\\nat random like the blind giant it is. Every improvement in com-\\nmunication and each application of labour-saving invention adds\\nto the delicacy and difficulty of trade calculations. Hence in the\\nproductive force of machinery, we see the material cause of the\\nviolent oscillations, the quiver of which never has time to pass\\nout of modern trade. Problems of Poverty, London, 1891,\\nP- 34.\\n42", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0054.jp2"}, "55": {"fulltext": "THE ORGANIZATION OF INDUSTRY\\nare circumstances leading employers to continue\\noperations when the conditions of the market are\\nunf avorable.2 Large capital also calls for continu-\\nous use regardless of the fluctuations of demand.\\nThe length of the productive process has been\\nincreased, if not in time, at least as regards the\\nnumber of hands to which the various parts are\\nintrusted, A cause of misunderstanding is thus\\nintroduced. The division of functions is so great\\nthat even makers of complementary goods and\\nparts of composite products lose sight of one\\nanother. As the sphere of the operations of each\\nunit is narrowed the difficulty of keeping informed\\nas to the whole process and of regulating one s\\nactivities accordingly is increased.\\nChanges in demand of no less momentous char-\\nacter have taken place. It is true that the market\\nopen to any single producer is now geographically\\nmuch wider than ever before, but every part of\\nthis field is now operated upon by causes tending\\nto produce uncertainty such as the producer for a\\nlocal market formerly never experienced. The\\ncharacter of our culture, which has emphasized\\nfreedom and individuality, has made the economic\\nconduct of the buyer difficult to predict.^ Custom\\nHerkner, Die Ober-Elsassische Baumwollindustrie, Strass-\\nburg, 1887, p. 257.\\n3 Fashion, by laying emphasis upon artistic qualities of goods\\nand by demanding ever new forms, prevents, in some degree, the\\napplication of the methods of the factory system to the produc-\\ntion of these goods. In so far as this is true and as fashion\\ndemands personal services and hand-made goods, its changes do\\n43", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0055.jp2"}, "56": {"fulltext": "ECONOMIC CRISES\\nformerly marked clearly defined limits within which\\nprediction was possible. As customs have lost\\ntheir force, these scanty rules have slipped from\\nthe Rands of an anxious trade to be replaced by no\\nequally adequate means of reading the markets.\\nThe city or district market once held by the local\\nmerchant or guild has now become commercially\\nfluid and mobile and responds to the influence of\\ncauses as various and remote as the circumstances\\nof production the world over.\\nThe movement of the masses out of ancient and\\nestablished conditions into new industry and intelli-\\ngence has given to our age the characteristics of a\\ntransitional period in which economic forecasts\\nshare the uncertainty of political and social pre-\\ndiction. The growth of means of communication,\\nand the removal of barriers to trade, stimulate a\\nrapid change of ideas and economic wants. The\\ngrowth of city life increases the variability of con-\\nsumption, for changes in the taste of city people\\nare rapid, and the power of choosing substitutes in\\nconsumption is greatest in cities. One concomi-\\ntant of a quickened social intercourse is the growth\\nof the power of fashion. A more rapid change of\\nnot fall upon the machine industry. As the root idea of fashion\\nis to express superiority or exclusiveness of social standing\\nthrough the possession of objects or manners not possessed by\\nothers, fashion frequently discriminates against machine-made\\ngoods because of the abundance and similarity of the product.\\nAn article is likely to be dropped from the list of those used to\\nexpress social standing when it has been once firmly seized upon\\nby machine industry.\\n44", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0056.jp2"}, "57": {"fulltext": "THE ORGANIZATION OF INDUSTRY\\nfashions takes place as the competition for social\\npreeminence is increased.\\nThe relations which foreign and domestic de-\\nmand sustain to one another may, under certain\\nconditions, be the cause of a peculiar and recur-\\nrent disturbance of trade. A country which has\\nbeen suffering from depression, if its merchants\\nare enterprising, may build up a foreign trade,\\ndepending upon the attractive power of the low\\nprices offered. Upon the recovery of local demand\\na period of intense activity may follow, during which\\nthe foreign demand persists and the newly awak-\\nened home demand is added to it. This home de-\\nmand, if business prospects are fair, is likely to be\\nabnormal, since stocks which have been kept low\\nand equipment which has been allowed to wear\\nout must now be replaced.\\nThe abnormal demand brings about a rise in\\nprices. In order to satisfy the home demand, and\\nsince foreign trade can no longer be attracted by\\nlow prices, the latter is neglected and falls off.\\nSubsequently, when the home demand is reduced\\nto normal proportions, a surplus of unsold products\\nbegins to emerge which seeks a foreign outlet.\\nBut since foreign trade is only slowly built up and\\nsince it has been neglected, this channel does not\\noffer a ready outlet to producers. The consequence\\nis over-production which brings on a depression.\\nThis cycle of foreign trade may repeat itself again\\nand again. It is this sort of danger coupled with\\nthe danger of overcapitalized industries which\\n45", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0057.jp2"}, "58": {"fulltext": "ECONOMIC CRISES\\nthreatens the United States at the present\\ntime.\\nThe localization of industry requires an extensive\\nmachinery to spread products evenly over the area\\nof consumption. Between the producer and the\\nconsumer an immense amount of complicated\\nmachinery has been erected so that it is difficult,\\nif not impossible, for them to trace each other s\\nmovements. The relation between the two has\\nbecome an impersonal one hard to forecast before\\nthe actual cash nexus is formed. In this respect\\nit little resembles the direct relations which were\\nonce maintained between the village shoemaker\\nand his neighbors, who were at once his patrons\\nand friends. The growth of means of transporta-\\ntion has accustomed the producer to look to a dis-\\ntance for his market, and the consumer* to hold in\\nequal esteem supplies coming from any quarter\\nor any distance. Modern credit and facilities of\\nexchange permit the most lively interchange of\\ninfluences between all parts of the economic field.\\nUpon so large a field no producer can single-\\nhanded compass the problem of understanding\\nthe market. The number of the competitors is\\nunknown, and so is their producing power. The\\nchanges of the market are more or less of a riddle.\\nCalculations based upon the conditions at home\\nG. Schmoller attributes the size and the increase of our\\ncrises chiefly to the astonishing growth of commercial transactions\\nnow carried on with all parts of the world. Jahrbuch fiir\\nGesetzgebung, Jahrgang 1886, p. 601.\\n46", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0058.jp2"}, "59": {"fulltext": "THE ORGANIZATION OF INDUSTRY\\nmay be upset by a failure of Russian harvests,\\nby a revolution in South America or legislative\\nchanges in Europe, by an invention or trust in\\nthe United States or a subsidized industry in\\nCanada.\\nThe result is that the problem of determining\\nthe nature and extent of demand is an extremely\\ndifficult one for the individual producer even when\\nequipped with long experience and the best avail-\\nable means of information. So it has been held\\nthat while these changes have been taking place\\nin production and in demand and in the range and\\nnature of competition an adequate change has not\\ntaken place in the methods and institutions used\\nto study the nature of industry and to direct the\\norganization of industrial forces. The productive\\npower of industry has in a half century been as-\\ntonishingly increased, but it is claimed that the dis-\\ntribution of this power, considering the industrial\\nproblem as a whole, has been relatively planless\\nbecause an equal advance has not been made\\nin methods of organization and control. Private\\nindividualistic control is the rule for much of\\nproductive property. Capital and the division\\nof labor which have accompHshed so much in\\nincreasing production have not been sufficiently\\napplied to the solution of the problem of the mar-\\nket. In short, the machinery of management has\\nnot developed pari passu with the technique of\\nproduction. The chief obstacle which prevents\\nthe growth of comprehensive governing agencies\\n47", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0059.jp2"}, "60": {"fulltext": "ECONOMIC CRISES\\nis the fact that production is carried on for private\\ngain. The presence of individual interests pre-\\nvents certain very desirable forms of cooperative\\naction. Exceptional ability to comprehend the\\nworkings of industry is guarded for private use\\nso that it may contribute to private gain. So also\\ninformation which would be of the utmost advan-\\ntage to trade as a whole, if made public, is guarded\\nin secrecy to serve as a source of private gain.\\nProduction takes place where, when, and in the\\nmeasure that individual organizers and capitalists\\nbelieve it will result in profit to themselves. Such\\nproduction must inevitably be irregular, slow to\\nadapt itself to social needs, and inadequate to sat-\\nisfy many legitimate desires. Private enterprise\\nwill not take hold of economic problems, no matter\\nhow desirable their solution may be to society,\\nunless a resultant private gain can be distinctly\\nseen. But private self-interest puts more than\\nnegative difficulties in the way, for it frequently\\nbegets endeavors to produce abnormal and artifi-\\ncial relations between demand and supply in order\\nto secure ratios of exchange which are profitable\\nto the private interests concerned.\\nIn spite of the splendor of isolated achievements\\nin the construction of great businesses, there is\\nsome ground for saying that the lack of a well-\\ncoordinated system of control makes industry re-\\nsemble, at present, a mob rather than an army.\\nIndeed, the headlong passion of the mob in which\\neach stimulates the other, and because there is no", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0060.jp2"}, "61": {"fulltext": "THE ORGANIZATION OF INDUSTRY\\nplan things are overdone, resembles somewhat the\\nstress of competition which when unrestrained\\nends in over-production.\\nIndividualistic production for a market which\\ncannot be understood without the cooperation of\\nextensive agencies cannot result otherwise than in\\nconfusion. Such conditions always favor concen-\\ntration and tend to work out their own cure through\\nthe one-man system. The climax of uncertainty is\\nwar hence the significance of such war terms as\\ncaptains of industry used in business. But\\nbusiness must go on, and when accurate informa-\\ntion fails, speculative estimates take its place, and\\nthe optimism which is a mental trait of vigorous\\nnatures leads the producer to forge blindly ahead\\nat full speed, attending only to hear the crash of\\nsome less fortunate rival s business. Our present\\nsolidarity is such that if one firm increases its out-\\nput, others must do the same to secure equal econ-\\nomies in production and avoid being edged out of\\nthe market.^ The result of such a system, or\\nrather lack of system, is misdirected production.\\nWhen this is sufficiently serious it impairs credit\\nand brings about total derangement of the market\\nin the form of the crisis.\\nIf it is individual self-interest which prevents\\nsuch an organization of industry as would prevent\\ncrises, we have evidence that self-interest may\\ndefeat its own purposes. As Dr. Leete says in\\nEdward Bellamy s Looking Backward, I sup-\\nWasserrab, Preise und Krisen, p. 65.\\nE 49", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0061.jp2"}, "62": {"fulltext": "ECONOMIC CRISES\\npose that no reflection would have cut the men of\\nyour wealth-worshipping century more keenly than\\nthe suggestion that they did not know how to make\\nmoney. Selfishness was their only science,\\nand, in industrial production, selfishness is suicide.\\nThe problem of the employment of capital, which\\nwill be taken up in the next chapter, is closely con-\\nnected with this matter of the managerial ability\\ndisplayed in industry. So far as there is at the\\npresent time any problem of oversaving, it is only\\nsuperficially viewed as a misadjustment of final\\nconsumption to the productivity of industry. It is\\nreally an indication of the lack of organizing abil-\\nity because of which wages and interest are low\\nand profits high while industry fails to keep pace\\nwith the growth of new wants.\\nIn as far as the line of argument which has been\\nhere followed is valid, the crisis is merely one of\\nmany symptoms of a lack of plan and organized\\neffort in the management of productive forces. It\\nhas been claimed that the business field and the\\namount and complexity of business transactions\\nhave increased much more rapidly than the size\\nand power of the individual business unit. The\\nresult is that each unit is less able than before to\\ncontrol the conditions affecting it. But it may\\nalso be asserted that the producing power of the\\nbusiness unit has increased more rapidly than its\\norienting and directing power.\\nTo provide the necessary organization, it is de-\\nsirable that there should be a movement both from\\n50", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0062.jp2"}, "63": {"fulltext": "THE ORGANIZATION OF INDUSTRY\\nthe side of private and public initiative. There\\nare forces in operation at present tending to se-\\ncure greater dependability of economic conditions.\\nWe have already spoken of the demand for uni-\\nformity made by the modern system of production.\\nA large investment of capital makes the continu-\\nous exploitation of a business a prime factor in\\nsecuring economy of production. So with the\\nskill expended in securing a competent body of\\nworkmen, and in perfecting plans of operation.\\nAs the amount of capital and brains necessary to\\nset a business on its feet increases, the crisis\\nwill obviously lay a greater burden of loss upon\\nthe capitalist and manager, and a less proportional\\nloss upon labor. Forces are thus set in motion to\\nsecure uniformity. The chief direction in which\\nthese forces have thus far exhibited themselves has\\nbeen in the elimination of competition by the forma-\\ntion of trusts and monopolies.^ But there are other\\nlines in which they might operate with equal effi-\\nciency and intelligence.\\nWhatever increases the size of business units by\\nreducing the number of independent unknown ele-\\nments in the business situation simplifies the prob-\\nlem. As Hon. Carroll D. Wright of the United\\n6 Stieda, Die deutsche Hausindustrie, Abschnitt II, Par. 19;\\nDie Krisen und die Hausindustrie, pp. 104, 105; also Moritz\\nMohl, Ueber die Wiirttembergische Gewerbsindustrie, Stutt-\\ngart, 1828, p. 408. Note the railway consolidation in England\\nfollowing the crisis of 1847, pooling and consolidation\\nin the United States after 1873, and the rapid formation of trusts\\nduring 1898 and 1899 in the United States.\\n51", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0063.jp2"}, "64": {"fulltext": "ECONOMIC CRISES\\nStates Department of Labor says in his report on\\nIndustrial Depressions, If the employers in any\\nindustry would combine under an organization that\\nshould have positive coherence, there would be no\\ndifficulty, so far as that industry is concerned, in\\nregulating the volume of production in accordance\\nwith the demand. It may very well be, however,\\nthat a means of solving a difficulty may not be com-\\nmendable because it creates greater difficulties than\\nit adjusts and this is true of a part of the present\\nmovement toward monopoly.\\nThe time once was when the ownership and\\ncontrol of property were largely coincident. We\\nhave been gradually, and for the most part uncon-\\nsciously, growing away from those conditions in\\nour endeavor to secure the economies of modern\\nproduction, and at the same time retain the institu-\\ntion of private property unchanged. So long as\\nthe ownership and the control of property are\\nclosely connected, the utmost tendency toward\\nconsolidation in either of them will fix the meas-\\nure of its realization in the other. The tendencies\\nnow observable to separate ownership and control\\nmay provide a means of superior business organi-\\nzation without sacrificing any fundamental princi-\\nple of our industrial order.\\nThe growth of monopolies will become increas-\\ningly difficult as the sphere brought under their\\ncontrol increases, because of the pressure of free\\ncapital to find investment. This can only be\\navoided by freely receiving into the trust, or mo-\\n52", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0064.jp2"}, "65": {"fulltext": "THE ORGANIZATION OF INDUSTRY\\nnopoly, all new capital on equal terms, thus\\nmaking of these institutions general agencies of\\nindustrial control, and dissociating them with\\nany idea of favoritism to a few. Unless this is\\ndone the sensitiveness of the public with regard to\\nthe exercise of monopoly power may be expected\\nto increase. But along these lines the problem of\\nthe world market can be solved by nothing less\\nthan a world monopoly.\\nIt is possible to effect a closer adjustment of the\\nvital parts of the industrial mechanism by the\\nelimination of unnecessary middlemen. This will\\nbring the producer and consumer into more direct\\nrelations and will facilitate mutual adjustments.\\nThe concentration of wholesaHng, jobbing, and\\nretailing in large houses would promote stability,\\nbecause small and local fluctuations are, in the\\nhands of large concerns, made to neutralize one\\nanother.\\nStock exchanges and boards of trade and ex-\\nchanges of a similar character for specific lines\\nof trade may render exceedingly valuable service\\nby subjecting certain kinds of property to a pro-\\ncess of continual valuation. Through these valua-\\ntions there is expressed the conclusions of the\\ncombined wisdom of the investing public as to\\nthe position and prospects of any business, or the\\nwisdom of any policy known to be adopted by its\\nmanagers. The high character of the social ser-\\nvice which such investors organizations may per-\\nform should promote an ambition leading to a\\n53", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0065.jp2"}, "66": {"fulltext": "ECONOMIC CRISES\\njealous exclusion of all practices likely to further\\nspurious or unwise investments.\\nLikewise to further the bringing of industry to\\nan intelligent knowledge of itself, all organizations\\nsuch as commercial agencies for the collection of\\ninformation are to be encouraged. It is of the\\nutmost importance that this information should\\nbe handled in the most honorable and unpreju-\\ndiced manner. More trade papers are needed and\\nmore editors with training in economics. The\\npublic should be educated to appreciate statistics\\nof production, of producing capacity, of visible\\nsupply, commerce, price, etc., and to demand care-\\nfully prepared market letters as a part of general\\nnews. In the collection of commercial statistics\\nthe cooperation of the state with private industry\\nmay be most valuable. The state, because of its\\nextent and coercive power, can collect much infor-\\nmation regarding both external and internal trade\\nnot otherwise obtainable. For the same reason\\nthat the work of the Signal Service of the Weather\\nBureau is commended, it is desirable that there\\nshould be established a competent commercial sig-\\nnal service. By the use of this information it will\\nbe possible to express with definiteness what is\\nmeant by average and normal conditions and,\\nperhaps, also to define, and detect at an early\\ndate in their appearance, the practices and con-\\nSee E. de Laveleye, La Marche Monetaire et ses crises\\ndepuis cinquante Ans, Ch. I, pp. 7, 8; Thun, Die Industrie am\\nNiederrhein, Bd. I, p. 140 ff.\\n54", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0066.jp2"}, "67": {"fulltext": "THE ORGANIZATION OF INDUSTRY\\nditions which lead to a crisis. It is possible that\\nan extension of insurance might be made to serve\\nas the basis for the better organization of produc-\\ntive forces. Any proposed scheme for the insur-\\nance of business profits will, however, necessarily\\nmeet the same sort of difficulties that beset insur-\\nance against the loss of work. Distress such as\\nthat through which the United States has recently\\npassed may well encourage the formation of reserve\\nfunds in public as well as private treasuries to serve\\nas a sort of informal insurance against times of\\ncrisis. The lines of insurance which are already\\norganized on business principles have in their\\nrecords accumulated valuable information concern-\\ning economic laws. More of this kind of informa-\\ntion is sorely needed. It would seem as if a more\\nliberal policy in regard to expenditures designed\\nto establish and preserve prosperity might be fol-\\nlowed quite generally by business enterprises, and\\na greater publicity be given to valuable business\\ns Wachtel, the author of a work entitled, Die Versicherung\\nder Actienrente, has proposed a plan for the universal insurance\\nof business profits, which he believes will prevent crises. For\\nthose businesses in which it is possible to calculate an average\\nreturn upon invested capital, he would establish by law a certain\\nminimum of dividends which must be paid within certain periods,\\nsay of ten years each. The concern doing business at a loss or\\nat small profit would be forced out of existence, and great care\\nwould be taken in the establishment of new business. The risk\\nfor those concerns willing to guarantee minimum dividends would\\nbe assumed by insurance companies voluntarily formed for that\\npurpose.\\n55", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0067.jp2"}, "68": {"fulltext": "ECONOMIC CRISES\\nrecords. But if private enterprise cannot be en-\\nlisted in securing and disseminating the informa-\\ntion which is needed to keep business in proper\\nproportions, the state must be called upon to\\nundertake the duty.\\nRESUME\\nI. One cause of crises is the lack of organs of industrial\\ncontrol to properly coordinate production\\nwith consumption.\\nII. Statement of the problem.\\nA. Certain changes have been brought about by\\nmodern industrial evolution.\\n{a) Division of labor causes territorial speciali-\\nzation.\\n(b) Large masses of capital call for continuous\\nexploitation.\\nt/V (0 Time required for a complete economic\\nprocess lengthened.\\nSpecialization making oversight of the mar-\\nket difficult.\\n(e) The widened market is subject to disturb-\\nance from many causes.\\nFreedom and individuality of buyer makes\\ndemand uncertain, custom weakened.\\nDevelopment of wholesale and retail agen-\\ncies hides producers and consumers from\\none another.\\nB. The corresponding evolution of means of control\\nwhich should have taken place has been\\nretarded by the competition of private\\ninterests.\\n(a) Ability and knowledge are reserved for pri-\\nvate use.\\nS6", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0068.jp2"}, "69": {"fulltext": "THE ORGANIZATION OF INDUSTRY\\n((5) Production is for gain only.\\nThe solution of economic problems is not\\nprovided for by a system based on com-\\npetition.\\nThe lack of cooperation which causes the\\ncrisis makes industry resemble a mob.\\nC. Result, (i) The market has grown more rapidly\\nthan individual business units have in-\\ncreased in size. (2) Business units have\\nincreased in productive power more than\\nin ability to judge the market.\\nIII. Remedies.\\n1. Monopoly.\\n{a) Competition when coupled with large capital\\nwhich demands continuous exploitation\\nand elaborate plans and a chosen body\\nof workmen not to be abandoned leads\\ntoward monopoly.\\n{b) This movement objectionable unless owner-\\nship and management are severed more\\nthan at present so that large capitalistic\\norganizations become managerial agencies\\nfor small stockholders rather than agencies\\nfor promoting the interests of a few.\\n2. Elimination of middlemen.\\n3. Increase of organizations of control and for spread-\\ning information such as stock exchanges,\\nboards of trade, commercial agencies, and\\ntrade papers. Demand for better official\\nand private statistics.\\n57", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0069.jp2"}, "70": {"fulltext": "CHAPTER IV\\nCRISES AND THE PROBLEM OF CAPITAL\\nThe nineteenth century is one which has wit-\\nnessed an unparalleled development of the material\\nequipment used to assist man in the production of\\nwealth. It is necessary, therefore, in searching\\nfor the cause of crises, to examine into the relation\\nbetween the accumulation and use of capital.\\nConsiderable attention has been devoted, by\\nEngHsh writers on political economy, to certain\\ntendencies at work in a progressive community, to\\nchange the proportion in which the three factors,\\nland, labor, and capital, unite in production. The\\neffect of the Industrial Revolution has been to\\nvastly increase the amount of capital which can be\\ncombined with a given amount of labor and land.\\nProfits or the returns on capital are fixed by\\nthe relation of demand and supply. It has been\\nlong observed that in certain progressive countries\\nthe rate of profit continually tends to decline.\\nAdam Smith believed that the desires leading to\\nthe accumulation of capital, and the competition\\nof capitalists among themselves to find employ-\\nment for their means, were suiHcient causes to\\n1 Wealth of Nations, Bk. II, Ch. IV.\\n53", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0070.jp2"}, "71": {"fulltext": "THE PROBLEM OF CAPITAL\\naccount for the decline of profits. To this expla-\\nnation a very important addition was made by\\nRicardo. To understand what this was, it will\\nbe necessary to refer to the law of diminishing\\nreturns.\\nThe price of food was exorbitantly high in Eng-\\nland at the opening of the nineteenth century.\\nAmong the causes of this were the war with\\nFrance, a succession of bad harvests, and the dis-\\nturbed condition of EngHsh agricultural labor.\\nBut the primary cause was that the population of\\nEngland was increasing beyond what the agricul-\\ntural resources of the country could support.\\nThese conditions attracted the attention of thinkers\\nto the agricultural industry. The law was formu-\\nlated that when the quantity of labor and capital\\napplied to a piece of land is increased by a given\\namount, the returns yielded by the land will be\\nincreased in a less than proportional degree. The\\nbest lands are naturally first brought under culti-\\nvation. If, then, the increase of population re-\\nquires that poorer land shall be cultivated, the\\napplication of labor and capital to this inferior\\nland will result in a smaller product than that\\nreceived from a similar expenditure upon the best\\nland. Thus the law of diminishing returns is held\\nto characterize the cultivation of the soil.\\nRicardo pointed out that if, as population in-\\ncreased, it was necessary to take inferior sorts of\\nland into cultivation, the cost of producing the mini-\\nmum supply of food upon which the wage-earner\\n59", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0071.jp2"}, "72": {"fulltext": "ECONOMIC CRISES\\ncould subsist would increase under the condition,\\ntherefore, that the population is increasing, wages\\nmust form an increasing factor in the cost of pro-\\nduction and profits must fall.\\nThis explanation of declining profits superseded\\nthat of Adam Smith. It was as a corollary of the\\nlaw of diminishing returns in agriculture that the\\ntendency of profits to a minimum was at this time\\ndiscussed. The former law was given an emphasis\\nwhich corresponded with the pessimistic view\\ntaken by economists of the future of England s\\nindustries. A shadow was cast by it over the\\neconomic discussions of the period. The thing\\nthat they could not overlook was that the land\\nof England was very limited in quantity. The\\nidea of a possibility of increasing the product of\\nthe soil by improving the methods of cultivation\\nwas swept aside as a temporary expedient. The\\nexhaustless field for the employment of capital pre-\\nsented by foreign trade was hardly as yet realized.\\nThe tendency of profits to a minimum was dis-\\ncussed by Wakefield and Chalmers,^ but the theory\\nwas developed and brought into definite connec-\\ntion with the subject of crises by John Stuart\\nMill.3\\n2 Dr. Chalmers was strangely confused as to the difference\\nbetween the balancing of the factors in production and the bal-\\nancing of the forces governing production and consumption. See\\nPolitical Economy and the Moral State and Prospects of Soci-\\nety, pp. 105, 106, and pp. 157, 158.\\n3 Principles of PoUtical Economy, Bk. I, Chs. IV, V, VI,\\nXI; Bk. II, Ch. XV; Bk. IV, Chs. Ill, IV, V, VI.\\n60", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0072.jp2"}, "73": {"fulltext": "THE PROBLEM OF CAPITAL\\nThe theory as perfected by this writer is as\\nfollows Profits depend upon the disposition to\\nsave and the field of employment open for capital.\\nIt is pointed out that the tendencies leading to the\\naccumulation of capital are strong in England.\\nThe opportunities which are open for the employ-\\nment of capital are constantly on the verge of\\nbeing entirely occupied however, from time to\\ntime events take place which create new openings.\\nThere exists a boundary of profitable investment\\nwhich is frequently in plain sight, but which is\\nfrom time to time being expanded by unforeseen\\noccurrences such as the perfecting of inventions\\nand improvements of one sort or another. The\\napplication of capital to the cheapening of the\\nnecessaries of life by means of which wages may\\nbe reduced affords a means of increasing profits.\\nThe opening of foreign trade provides an outlet\\nfor capital, and relieves the pressure of competing\\ncapital, which would otherwise quickly reduce\\nprofits to a minimum in a country so small and so\\nfrugal as England. Should these means for a\\ntime fail, profits would soon fall to such a point\\nthat they would merely induce the saving neces-\\nsary to keep intact the capital then in existence.\\nIndustry will then have reached the stationary\\nstate.\\nWhile the influences which expand the market\\nare occasional, the tendencies which promote the\\ngrowth of capital are continuous. There are,\\ntherefore, frequently considerable periods of time\\n6i", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0073.jp2"}, "74": {"fulltext": "ECONOMIC CRISES\\nwhen capital is growing more plentiful and profits\\nare falling. But a decline in profits is unwelcome,\\nand is by no means endured with equanimity or\\nwithout attempts at escape.* The search for new\\nfields of investment in which capital may be made\\nto yield large returns is stimulated by a general\\ndecline of profits. When the prevailing rate of\\nprofits is low, the capitalist is willing to make more\\ndaring ventures and run greater risks to secure\\nlarge remuneration. The decline of profits stimu-\\nlates speculation. The greater and more rapid\\nthis fall, the more reckless the ventures to which\\nit will give rise. Railways are built in the hope\\nthat industries will grow up along their lines in\\nthe future, mines are opened in the hope of creat-\\ning valuable property, manufactories are con-\\nstructed depending upon contingent markets. Any\\nnew thing which promises relief is eagerly listened\\nto. The period of speculation during which invest-\\nments are made is followed by a period of expec-\\ntancy, which soon changes to distress as the results\\nof rash investments become known.^ A break-\\ndown occurs, which spreads ruin through the\\nThe truth of this is embodied in the well-known proverb,\\nJohn Bull can stand a good deal, but not two per cent. Illus-\\ntrations of absurd production are given by E. de Laveleye in\\nRevue des Deux Mondes, 1865, p. 210.\\nThe effect of misdirected investments is pointed out by Bonamy\\nPrice, Contemporary Review, May, 1879. The dangers which\\nbeset a country rapidly increasing in wealth are noticed by Courcelle-\\nSeneuil, Journal des Economistes (2d Series), Vol. XLIII,\\nP- 34.\\n62", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0074.jp2"}, "75": {"fulltext": "THE PROBLEM OF CAPITAL\\nunsound structures of business, and the suspicion\\nwhich is aroused tries to the utmost the soUdity of\\nall enterprises. In the degree in which the com-\\npetition of capital leads to rash investment it\\naccomplishes the waste and destruction of capital.\\nThe capital tied up in unnecessary duplication of\\nrailways, unused mines, and superfluous factories\\ndoes noc iiinister to the production of wealth, and,\\ntherefore, loses its character as capital or wealth.\\nThese losses relieve the pressure of the competi-\\ntion of capital for investment. They throw away\\npart of the savings of society, and they do not\\ncreate new industries from which an annual saving\\ncan be made. In this expensive but automatic\\nmanner the fall of profits is checked. If specula-\\ntion has been very intense and the loss of capital\\nis great, the rate^ of profit may even be somewhat\\nadvanced above what it was when speculation\\nbegan. The restoration of a satisfactory rate of\\nprofits removes the desire to embark in speculative\\nenterprises.^ Business is, for a time, carried on in\\na normal and conservative manner. The higher\\nrate of profits, however, affords a new impulse to\\nthe tendency to save. The increase of capital\\nbegins again. If the field for the legitimate in-\\nvestment of these accumulations does not open as\\nOn the basis of this theory, it has been maintained that a\\nprivileged bank should not discount freely to keep down the\\nrate of interest, since low rates of interest are what give rise to\\nthe speculative spirit. Adolph Wagner, Lehre von den Banken,\\npp. 233-237.\\n63", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0075.jp2"}, "76": {"fulltext": "ECONOMIC CRISES\\nrapidly as the capital is furnished, a condition of\\nover-supply again results with consequent fall in\\nprofits and the rise of over-speculation which ends\\nas before in crises and loss. Thus, there is estab-\\nlished a cycle of influences which produces recur-\\nrent periods of industrial distress.\\nThe writers before John Stuart Mill made very\\nimportant the part which the losses of the crises\\nplayed in relieving the competition of capital. It\\nis indicative of a later phase of EngHsh industrial\\nprogress that Mill should have placed more em-\\nphasis than did these writers upon the openings\\nprovided for capital by foreign trade and by inven-\\ntions for reducing the cost of the necessaries of\\nlife. The older economists placed too much\\nemphasis upon land as fixing the limit of capital\\nThe testimony of economic history is by no means clear as\\nto the connection between crises and periods of declining rates\\nof interest. J. S. Mill mentions (Bk. I, Ch. XI, Sec. 3) that the\\nrate of interest in Holland at the time of its prosperity was two\\nper cent and three per cent. Certainly the crises that have visited\\nHolland since that time cannot be attributed to the tendency of\\nprofits to a minimum. In the middle of this century, the common\\nrate of interest paid in the English cotton industry for money was\\n2^ per cent. Edinburgh Review, 1849, p. 429.) Tooke has given\\nexamples of speculation occurring at the time of a rise in interest, as\\nin 1796 in provisions, in 1808 in general merchandise, and in\\n1 814 in export articles. See History of Prices, Vol. Ill, p. 159.\\nOn the other hand, the sudden reduction of interest upon the pub-\\nlic debt of England is enumerated as one of the causes of the\\nspeculative excitement of 1825. Tooke, Ibid., Vol. II, p. 148 ff.\\nWagner considers a decline of profits important in connection\\nwith crises, op. cit., p. 530 so also does Roscher, Grundlagen,\\nBd. I (21st Ed.), Sec. 188.\\n64", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0076.jp2"}, "77": {"fulltext": "THE PROBLEM OF CAPITAL\\ngrowth. They did not appreciate the world of\\nnew investments which the appHcation of inven-\\ntion to the means of ocean transportation might be\\nmade to open for EngHsh capital. The thing that\\nwas cramping and choking industry and rendering\\nits savings useless was the lack of human genius\\nand organizing power sufficient to open this new\\nworld. The economists then had much to say\\nof the niggardliness of nature, while we now\\nthink that progress depends chiefly upon the\\ntalent and virtue of man.\\nTheir mistake was one of emphasis. Land\\nseemed the chief factor in the problem of progress,\\nwhile wheat was exorbitantly high during the first\\nyears of this century. The problem has shown\\nnew aspects since that period. Since 1840 foreign\\ntrade has brought about the paradox that while\\nthe price of bread has been lowered, the wealth of\\nEngland has been steadily increasing, and at the\\nsame time the value of EngHsh land and the acreage\\nunder cultivation have decreased.\\nHaving before us the theory which economic\\nliterature affords us on the relation between the\\naccumulation of capital and economic crises, let us\\nexamine into the character of this relation a step\\nfurther. It is a common assertion that the chief\\ncause of the recent vast increase of the world s\\nproductive power is due to the use of capital.\\nThe meaning which is commonly conveyed by\\nthe phrase the use of capital is a narrow and\\ntechnical one. It is common to think of the prob-\\nF 65", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0077.jp2"}, "78": {"fulltext": "ECONOMIC CRISES\\nlem of capital as merely the problem of how to\\nequip a given industrial plant in such a way that it\\nwill yield as large a product as possible. It is\\ntrue that the use of capital enables man to com-\\nmand the forces of nature to assist in a specific\\nact of production. But the success of man s activ-\\nity in ministering to his own material well-being\\ndepends upon something more than his capacity\\nto produce plentifully certain kinds of goods.\\nThe problem raised by the crisis is broader than\\nthat of a given machine or factory or industry,\\nand lies in the maintaining of proper relations\\nbetween industries and men s wants.\\nIf the present employment of capital leads only\\nto over-production along certain lines, it cannot be\\nsaid that we are completely equal to the task of\\nusing capital. There must be ability to organize\\nand properly coordinate the forces of production\\nand to distribute their activity evenly over the\\nentire field of production in which demand will\\nsanction their use, before it can be said that we\\nhave in a broad sense mastered the problem of the\\nuse of capital. To be able, in the broadest sense,\\nto use capital implies not only the power to\\nemploy it successfully in bringing into existence\\nthis or that good, but also the power to so organize\\nthe system of industry and so develop the wants\\nof society as to accommodate and turn, without\\nfriction or waste, this increased productive power\\nto the service of man.\\nThe literature devoted to crises and the common\\n66", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0078.jp2"}, "79": {"fulltext": "THE PROBLEM OF CAPITAL\\ntestimony of business men leave no doubt but\\nthat production often runs unduly ahead of con-\\nsumption, and that the markets of certain regions\\nare frequently in a state of glut with reference to\\ncertain commodities. These are partial gluts, but\\nin the period of greatest stringency in the climax\\nof a crisis there is often such a general and exces-\\nsive cautionary restriction of consumption as to\\nproduce temporarily an almost universal glut.^ A\\nfailure to adjust production to consumption which\\nresults in a partial glut, with consequent demoraliza-\\ntion and loss in certain lines of industry, may in a\\ncredit economy easily precipitate a general rupture\\nof the equilibrium of trade. If the machinery of\\ncredit is so far weakened at any point, by a partial\\nglut, as to awaken general suspicion as to the\\nsoundness of that machinery, the suspicion may\\ngive rise to such a demand for liquidation as will\\nprecipitate a general crisis. A crisis naturally\\npromotes general economy in consumption. The\\nresult of this may be that the pressure to convert\\nstocks of goods into cash in the face of a failing\\nmarket will result in a temporary but very general\\noverstocking of markets and a diminution of every\\nCommodities that can serve as money being excepted. For\\na discussion of the effect of a sudden reduction in consumption,\\nsee Sismondi, Nouveau Principes d Economie Politique, Livre\\nII, Ch. Ill, pp. 82, 83, and William Smart, Contemporary Re-\\nview, May, 1888, p. 691.\\nDuring a crisis, a glut may extend to products that have not\\nbeen produced in excess of what the normal demand would war-\\nrant. Hobson, Evolution of Modern Capitalism, Ch. VII, Sec. i,\\n67", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0079.jp2"}, "80": {"fulltext": "ECONOMIC CRISES\\neffective demand except that for the more cumber-\\nsome medium of exchange suddenly demanded to\\ntake the place of credit.\\nThis condition has been variously called one of\\nover-production and one of under-consumption.\\nThe latter of these two designations is preferable,\\nas the initiative in the general change is most fre-\\nquently taken by demand. The supply cannot be\\nimmediately altered to accommodate this change.\\nThe trouble is, however, obviously a lack of\\nadjustment between the forces governing demand\\nand supply. Any step which can be taken to\\nimprove this adjustment and set up a regulative\\nand connective machinery will be a step in the\\nright direction. Crises present evidences of gen-\\neral distress for which a general cause has quite\\nnaturally been sought. By confining study to the\\nperiod of panic it is easy to believe, from the\\ntemporary conditions prevailing, that the cause\\nof distress is general over-production. But such\\nan explanation is not true. Disproportion in pro-\\nduction may precipitate a crisis; the consequent\\ndistress is general, not because over-production has\\nbeen general, but because the loss suffered by one\\nindustry has destroyed credit which is a general\\nbond of industrial society.\\nA partial glut, which is to be distinguished from\\npp. 167, 168. J. S. Mill maintained that there might be a\\ngeneral excess of products, not because of over-production, but\\nbecause of the effect of a lack of confidence. Some Unsettled\\nQuestions of Political Economy^ Essay II.\\n68", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0080.jp2"}, "81": {"fulltext": "THE PROBLEM OF CAPITAL\\nthe general glut of the panic period, is the evi-\\ndence that the producing power of society has not\\nbeen properly directed in the satisfaction of social\\nneeds. If the chief increase of the productive\\npower of industry comes through the introduction of\\ncapital, gluts must be looked upon as evidence that\\ncapital has put us in possession of productive powers\\nwhich we do not yet know how to utilize properly.\\nThe introduction of capital makes the act of\\nproduction a more roundabout and long-continued\\none. The greater the amounts of capital employed,\\nthe more does the specialization of capital depend\\nupon forecasts of the condition of the market at\\na relatively distant time. The lengthening of the\\nperiod of time over which the act of production\\nis extended increases the liability that before the\\ngood is completed the demand for it will have\\ndisappeared.\\nA glut of commodities can be easily prevented\\nor reduced by merely stopping the wheels of in-\\ndustry. But the capital which has been specialized\\nto produce those commodities, and the plans of\\noperation that have been perfected, cannot be\\ntransferred to other sorts of productive activity\\nwithout great loss. The misapplication of pro-\\nductive power which is revealed in the glut causes\\na loss in the unnecessary goods produced, in the\\nsacrifice which attends the transfer to some other\\nline of production, and in the distress which\\nthe failure of one branch of production may com-\\nmunicate to the rest of economic society.\\n69", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0081.jp2"}, "82": {"fulltext": "ECONOMIC CRISES\\nThe growth of industry does not take place with\\nthat perfection of constant readjustment of parts\\nand functions which characterizes the growth of\\nthe true organism it is accompanied by suffering\\nand uncertainty. Any increase in disposable capi-\\ntal necessitates a readjustment of the factors of\\nproduction to one another and brings up the gen-\\neral problem of the organization of industry in all\\nits parts. As a producer of wealth man has three\\npowers, the power to labor, to save, and to man-\\nage. In order that industrial society shall be\\nprosperous, these three powers must exist and be\\nexercised in proper proportion. In the early\\nstages of industry the first two appear most im-\\nportant. Our economic life increasingly demands\\nmanagerial ability. The manager must not only\\nstrive to increase production by improving the\\nway in which land, labor, and capital are related\\nto one another, but must correlate production and\\nconsumption not only by the proper distribution\\nof productive power but if necessary by educating\\nand stimulating consumption.\\nThe appUcation of the productive power, which\\ncomes from the use of capital, in such a way as\\nto promote a well-balanced growth of industry is\\nrendered difficult by the fact that equal amounts\\nof capital devoted to different industries do not\\nproduce the same increase in product, inasmuch\\nas there are businesses of increasing, constant, and\\ndiminishing returns. Capital is not as important\\na factor in some lines of production as in others.\\n70", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0082.jp2"}, "83": {"fulltext": "THE PROBLEM OF CAPITAL\\nCapital seeking investment is never distributed\\nevenly to all branches of industry. Indeed, new\\ncapital is not permitted to compete with equal\\nfreedom in all parts of the economic field. Large\\naggregates of capital effectively organized for\\ndefensive purposes discourage small capitals from\\nentering the lists against them. Just as public\\nthought is seldom distributed with proper empha-\\nsis, and as public interest unduly exploits a few\\ntopics upon which attention has been fixed, at the\\nexpense of other matters which are in need of\\nmore publicity than they receive, so industry bears\\nthe evidences that the productive powers of society\\nare unduly concentrated along a few lines. Prog-\\nress seems largely made up of uneven starts and\\nadvances. Some sciences are for a time accorded\\nveritable booms and become fads, while\\nothers, equally useful, are for a time relatively\\nneglected. In consumption the refinement and\\nprecision of popular taste along some lines are by\\nno means paralleled in other lines. So in the\\ndistribution of productive power the application\\nof labor-saving devices has made much more rapid\\nprogress in some industries than in others. And\\nproduction as a whole has been studied to the\\nneglect of consumption, and of the means of or-\\nganization and control necessary to coordinate the\\ntwo.\\nWhen a market has been oversupplied, and\\nprices have been unduly depressed, and with them\\nprofits, the wrong kind of virtue has often been\\nn", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0083.jp2"}, "84": {"fulltext": "ECONOMIC CRISES\\ninvoked. It seems to many as if industry was\\nlike war. Anglo-Saxon pugnacity has been forti-\\nfied by precepts exalting grit and staying power.\\nThe result is that industrial struggles are too com-\\nmon, the object of which is not so much to dis-\\ntribute properly productive power in industry, as to\\nenlist all available capital and brains in an attempt\\nto whip somebody else into bankruptcy. An\\nescape from small profits has too often been be-\\nlieved to exist only through securing the economies\\nof production on a large scale.\\nThese are some of the circumstances which\\nhave led to unnecessary reduplication of plant,\\nand an over-investment of capital, particularly in\\nbusinesses of increasing returns. The extent of\\nthis can be judged in some cases by the number of\\nestablishments closed by trusts, which have main-\\ntained the same product by operating a few plants\\nto full capacity.^*^ The evils attending the misap-\\n10 Even before the days of the Cotton Oil Trust, numerous\\npresses and refineries had for a long time been inactive. The\\ntrust closed at once more than a dozen of the small old-fashioned\\nmills. The same thing happened with the Sugar Trust, which\\ncan supply the whole market with the product of one-fourth of\\nthe plants it owns. The Whiskey Trust immediately closed sixty-\\neight of its eighty distilleries, and with the remaining twelve was\\nenabled to furnish the same output as before, and soon to largely\\nincrease it, E. von Halle, Trusts or Industrial Combinations\\nin the United States, p. 66. The manufacturers of hosiery at\\nChemnitz, Saxony, maintain that that city could easily turn out\\nfive times its present enormous product if the market would war-\\nrant. Cons. Rep., September, 1897, p. 63. Mr. Simon Sterne is\\nresponsible for the assertion that no railway, even when it is\\n72", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0084.jp2"}, "85": {"fulltext": "THE PROBLEM OF CAPITAL\\nplication of capital are manifestly increased by\\nanything which increases the amount of wealth\\ndevoted to further production until a rational\\nmeans of employing this wealth has been discov-\\nered. The unequal distribution of wealth gathers\\ntogether the products of industry into the hands\\nof a few in excess of what is needed for providing\\nthe necessaries and comforts of life, and creates a\\nsituation in which the conversion of a large part\\nof the social dividend into capital is easy. Such\\naccumulation is accompanied by little of the ab-\\nstinence of which economists had formerly much\\nto say. Large fortunes increase with truly appall-\\ning rapidity when kept long intact. Institutions\\nwhich gather together small savings and facilitate\\ntheir investment increase the amount of capital\\nseeking employment.\\nWealth should not be devoted to production\\nwithout a proper consideration of the demand\\nupon which the intended production must depend.\\nSaving should always be properly coordinated with\\nits final aim, consumption. To express the same\\nmost actively employed, is worked at anything more than a small\\npercentage of its maximum capacity. Address before National\\nBoard of Trade, New York City, 1878. It is notoriously true\\nthat the wholesale and retail trade of the country is on a scale\\nfitted to render many times its present service.\\n11 See Hearn, Plutology, Ch. VII, Sec. 6. Sismondi, Lauder-\\ndale, Malthus, and Chalmers all agree that capital can only be\\namassed with profit to a certain point. On the other hand, J. B.\\nSay, James Mill, Ricardo, McCulloch, and Senior adopted the\\nimperfect ideas of Adam Smith. See Robertson, The Fallacy\\nof Saving, p. 29.\\n73", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0085.jp2"}, "86": {"fulltext": "ECONOMIC CRISES\\nthing in another way, the economic mechanism\\nwill not run smoothly unless a proper proportion\\nis maintained between final and productive con-\\nsumption, that is, between the use of goods for\\nhuman enjoyment, and their use to assist in pro-\\nducing other goods. A small productive consump-\\ntion, by restricting the productivity of labor, compels\\na small final consumption. A large productive\\nconsumption, by increasing the productivity of\\nlabor, may render possible an increased accumu-\\nlation of wealth, but it renders imperative an\\nincreased final consumption. Otherwise, consum-\\ners goods will fail to return their values to their\\nproducers, and they and the specialized capital\\nnecessary to produce them will be degraded in\\nworth. The future, as such, never comes. The\\nhabit of preferring the future may become so fixed\\nas to crowd out the very realizations for which it\\nwas established, and in connection with which it\\nis alone reasonable. The increased consumption\\nwhich is made possible by saving can only be\\nrealized in contention with the habit formed to\\nprovide the means for its realization.\\nWe have long enough been saying, If we can\\nonly produce enough, consumption will take care\\nof itself. Nothing will take care of itself. The\\nmistake has been analogous to that fanatical doc-\\ntrine which counselled its followers to look after\\nthe interests of a future life, and leave those of\\nthis life to take care of themselves.\\nRelief from the problem of applying capital to\\n74", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0086.jp2"}, "87": {"fulltext": "THE PROBLEM OF CAPITAL\\nproduction is, of course, temporarily afforded by\\nthe destruction of capital. John Stuart Mill, as\\nwe have already seen, emphasized the relief which\\nis afforded by the losses suffered during a crisis.\\nSuch a remedy is too heroic and too temporary in\\ncharacter to command our attention. So also the\\nextravagant use of wealth may afford a relief,^^ but\\nthrough a remedy as bad as the disease. Many\\nwho admit the relief which results from a loss of\\ncapital are not willing to admit the relief which\\nresults from luxurious expenditure. Such persons\\nprobably hold their opinion because they look upon\\nluxury as wasteful and anti-social. But so is the\\nloss of capital suffered in crises wasteful and anti-\\nsocial. These losses are no more a real relief for\\nindustry than blood-letting is a universal panacea\\nfor the ills of the human body.\\nThe only permanent relief is to be found in\\ndeveloping, somehow, new and intelligent uses for\\nwealth as rapidly as wealth shall be accumulated.\\nProduction must be regulated with reference to\\ndemand; yet a gradual increase in any sort of\\nproduction may develop its own market within\\ncertain limits. In like manner it is necessary that\\nthe supply of the three factors of production should\\nstand in some relation to the usual method in which\\nthey are combined yet a gradual increase of any\\none factor may be accommodated by an alteration\\nin the methods of production. The invention of\\nmachinery and the elaboration of manufacturing\\nChalmers, pp. 124-132.\\n75", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0087.jp2"}, "88": {"fulltext": "ECONOMIC CRISES\\nprocesses afford new openings for capital by in-\\ncreasing the proportion in which it may be com-\\nbined with the other factors of production. The\\nquestion is, Will the application of these forces to\\nthe production of new classes of utilities and will\\nthe education and expansion of human wants take\\nplace as rapidly as the productive power of man\\nincreases\\nTo accommodate an increase of production, un-\\nless we are to be satisfied with the temporary relief\\nof stocking frontier markets, and exploiting the\\nneeds of primitive peoples, there must be a change\\nin demand, new wants being developed, and great\\nemphasis being placed upon those intellectual and\\nspiritual needs which are capable of indefinite\\nincrease.^^ The development of man s power over\\nnature must be accompanied by a study of the\\nmanner in which this power can be made to con-\\ntribute to the development of man s higher nature,\\nand by a determination to use it for that purpose.\\n^3 In regard to the plethora of products, Mr. John M. Robert-\\nson says: The real cure, as regards the labour-market, would\\nbe by way of extension of demand to objects not readily produced\\nin excess; such as superior hand-made goods and products of\\nart of all kinds. Here a glut is impossible It is not quan-\\ntity, but kind, of consumption, the setting up a continuous\\ndemand which shall withdraw labour from the fatally easy frui-\\ntions of the mechanical manufacture of common necessaries, that\\nwill prevent chronic depression of trade. The Fallacy of\\nSaving, pp. 113, 114. Cf. Sir Lyon Playfair, Contemporary Re-\\nview, March, 1888; David A. Wells, Contemporary Review,\\nJuly, 1887 Carroll D. Wright, in Report on Industrial Depres-\\nsions, Washington, 1886, pp. 80-90.\\n76", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0088.jp2"}, "89": {"fulltext": "THE PROBLEM OF CAPITAL\\nUnless these larger problems of the economic life\\nare heeded, it is quite possible that the increase of\\nsocial capital may outrun the development of social\\nwants and the provisions made for the use of cap-\\nital, because of poverty of resource, just as a private\\nincome may overtax the ability of its possessor to\\nconsume it intelligently.^*\\nAs the rare social virtues are highly rewarded\\nby social esteem, so the rare economic virtues are\\nhighly rewarded in economic returns. If the\\nthree economic powers of man, to labor, to save,\\nand to manage, are not properly proportioned, the\\nmost scarce of these powers will receive a high\\nreward at the expense of the other two. The\\nhuman race by laboring and saving has been shift-\\ning its burdens upon nature through the employ-\\nment of capital, but its mastery over nature\\nrequires the talent of management in an increas-\\ning degree.\\nWhen parsimony is rare it is highly paid in the\\nreturn given to capital when it becomes common\\nits rewards are reduced. The methods by which\\nthe individual advances his fortunes above those\\naround him, must not be confused with the meth-\\nods by which the economic life of society is prop-\\nerly regulated. Maxims of private wealth-getting\\ncannot be transformed directly into principles of\\n1* See J. S. Mill, Principles of Political Economy, Bk. I, Ch.\\nXI, Sec. 4. Mill says to be wealthy is for one to have a large stock\\nof useful articles which he can use, adds Mr. Ruskin, Unto This\\nLast. Essay IV).\\n77", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0089.jp2"}, "90": {"fulltext": "ECONOMIC CRISES\\npolitical economy.^^ If capital is accumulated more\\nrapidly than the field for its use is developed, the\\ntalents of the organizer are those demanded and\\na high remuneration will be given for organizing\\nability rather than for saving.^^ The liberal salaries\\nIS Smith was in error on this point. Bk. IV, Ch. II. See\\nMummery and Hobson, The Physiology of Industry, p. io6\\nalso Mill, Bk. I, Ch. V, Sec. 3. Dr. Chalmers recognized this dis-\\ntinction in the following way This question turns precisely on\\nthe balance between two appetites of his (the capitalist s) nature\\nbetween the appetite for eventual gain and the appetite for\\npresent comfort. Should the latter prevail, and prevail generally^\\ncapital would be kept down and profit be sustained. Should the\\nformer prevail, and also prevail generally, capital would be aug-\\nmented and profit be depressed. It does not affect this conclu-\\nsion, that the highway of fortune, on the part of the individual\\nmerchant, is to save as much and spend as Uttle of his revenue\\nas he can. It is true of every single capitalist that he is all the\\nricher by saving than spending and that under any given rate\\nof profit, or with any given general habit on the part of capital-\\nists. But it is not true that capitalists, collectively, will become\\nricher by saving than by spending for on their general habit,\\nthe rate of profit immediately and essentially depends. Politi-\\ncal Economy and the Moral State and Prospects of Society, p. 91.\\nSee also J. M. Robertson, op. cii., pp. 90-94.\\n1^ Upon the plethora of capital and lack of employment, Will-\\niam Smart very pertinently says: All labor in the present day\\nwaits, not on the capitalist that is a socialist mistake but on\\nthe entrepreneur, the organizer. The fact seems to be that\\nthe world s progress is continually outrunning its organizing power.\\nProduction of anything is so great that a few manufacturers speedily\\nsupply all the demand for their goods, and then, instead of wait-\\ning for the articles to win their way and make a market, they\\ndouble their production in order to cheapen it by a fraction and\\nundersell their rivals they glut the market and then throw the\\nworker on the street till things right themselves. All the time,\\nthe world is wanting and waiting for other things; when one\\n78", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0090.jp2"}, "91": {"fulltext": "THE PROBLEM OF CAPITAL\\nnow paid to men of superior organizing power, in\\ncontrast with the low rates of interest prevailing\\nupon the markets of the world, show the present\\nrelation between the supply and demand for these\\nqualities so necessary to social progress.\\nCapital, however, can be used to assist in the\\nsolution of its own problem. Wealth may be\\nused in the encouragement of science and in-\\nvention and in opening those lines of possible\\neconomic activity which are not generally appre-\\nciated. It may be used to promote the study of\\nnew markets, to disseminate information as to\\nmarket conditions, and to perfect all those means\\nof industrial control which would further a system-\\natic distribution of capital over the realm of indus-\\ntrial enterprise. But the most abundant return,\\nmeasured in terms of public welfare, will prob-\\nably result from the application of capital to the\\ndevelopment of the higher and more social eco-\\nnomic needs of man.\\nRESUME\\nI. A crisis may be caused by the accumulation cf unused or\\nimproperly used capital.\\nII. The existence of imused capital, indicated by decline of\\nrate of profits.\\nIII. Review of English economic theory on the tendency of\\nprofits to a minimum.\\n{a) Theory of Adam Smith.\\ndemand is supplied, if the same energy were turned on to supply\\nanother, there would be no over-production. The Dislocations\\nof Industry, Contemporary Review, May, 1888, Vol. LIU,\\npp. 695, 696.\\n79", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0091.jp2"}, "92": {"fulltext": "ECONOMIC CRISES\\n(p) Theory of Ricardo. The law of diminishing re-\\nturns. Wages an increasing share in dis-\\ntribution, profits a decreasing.\\n(c) Theory of John Stuart Mill. A closed field of\\nemployment leads to falling profits and un-\\nwise investments, causing crises.\\n{d) The field of employment and land. Employ-\\nment and use of capital.\\nIV. The existence of improperly used capital is indicated by\\ngluts.\\n{a) The existence of gluts unquestioned, {b) A par-\\ntial glut may cause a general glut, {c) A\\npartial glut indicates an inadequate distri-\\nbution of productive power.\\nV. The existence of tinused and improperly used capital\\nindicates a lack of managerial ability.\\nVI. Remedies.\\n{a) Distribution of capital in employment difficult.\\n(i) Effect of capital in different industries.\\n(2) Relation of capital to land and labor in\\ndifferent industries. (3) New capital barred\\nout of certain fields. (4) Psychology of\\noverdeveloped industries. (5) Industrial\\nwarfare and overinvestment. (6) Econ-\\nomies of production on a large scale.\\n(7) Plants closed by trusts.\\n(b) Investment must be coordinated with final con-\\nsumption.\\n(c) Relief given by destruction of capital, buying\\nluxuries, and supplying frontier markets.\\nNew uses of wealth must be developed.\\n{e) New and higher wants must be developed.\\nPrivate maxims of saving not principles of polit-\\nical economy.\\nii) Capital applied to solution of its own problem.\\n80", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0092.jp2"}, "93": {"fulltext": "CHAPTER V\\nCRISES AND THE WAGE SYSTEM\\nIn contrast with the previous study of crises,\\nfrom the point of view of production, the present\\nchapter deals with a source of industrial disorder\\nwhich has its seat in the process of distribution.\\nA theory of crises sometimes known as the Wages\\nTheory, has been developed, which directs atten-\\ntion to the share of the products of industry re-\\nceived by labor. No one can, in these days of\\nagitation and organization, remain ignorant of the\\nfact that there is a labor problem and a problem of\\nwages. The coincidence of the rise of crises with\\nthe inauguration of those general conditions which\\nhave distinguished the modern form of the wage-\\nearner s problem, has served to make the crisis\\nargument a convenient handle in many discus-\\nsions concerning wages.\\nThe first writer to furnish a consistent theory\\nof the relation between crises and the industrial\\nproblem generally was Rodbertus.^ That conserv-\\n1 A more deeply cutting criticism of the present economic\\norder with private property in land and capital, than that penned\\nby Rodbertus in Sociale Frage, pp. 116-119, has not been\\nbrought forward by any English or French socialist, nor yet by\\nG 81", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0093.jp2"}, "94": {"fulltext": "ECONOMIC CRISES\\native German jurist, early in his writing,^ furnished\\na most penetrating, though not entirely new criti-\\ncism of industry, which aimed to explain the\\neconomic causes of poverty as well as the recur-\\nrent spasms of crises.*\\nRodbertus assumed, without attempting proof,\\nthat all those goods which demand serious eco-\\nnomic consideration may be looked upon as prac-\\ntically the product of labor alone. They are\\nvalued solely as the products of labor. This being\\ntrue, he held that the ideal distribution of prod-\\nucts is such as will give to each laborer goods\\nexactly equal in value to the product of his labor,\\nexcepting only a reserve necessary to keep capital\\nintact and to provide maintenance for those per-\\nforming useful services for society, but who do not\\ndirectly participate in production. Such a system\\nof distribution is very far from being the present\\nreality. Departure from this ideal does more in\\nhis opinion than violate principles of justice it\\nviolates fundamental economic laws, and entails\\nEngels, Marx, or Lassalle. A. Wagner, Grundlegung, Bd.\\nII, p. 332. Wagner has called Rodbertus his great and honored\\nteacher. Grundlegung, Bd. I, p. 748.\\n2 The outlines of this system of thought appear in his first\\nimportant work, published in 1842, entitled, Zur Erkenntniss\\nunserer Staatswirthschaftlichen Zustande.\\nSee especially Anton Menger, Das Recht auf den vollen\\nArbeitsertrag in Geschichtlicher Darstellung, 2 Aufl., Stuttgart,\\n1 891, Sec. 8.\\nKapitar (Wagner-Kozak Ed.), p. 61. The connection\\nbetween crises and pauperism is not emphasized in Rodbertus*\\nearliest writings, but is dwelt upon later.\\n82", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0094.jp2"}, "95": {"fulltext": "THE WAGE SYSTEM\\nupon society a considerable part of the misery it\\nendures. From time to time the present erro-\\nneous principle of distribution brings industry to a\\nstandstill in the crisis. To point out the manner\\nin which this takes place, Rodbertus prepared the\\nfollowing analysis of the present capitalistic wage\\nsystem.\\nThe productive pov/er of labor is to be estimated\\nby the total annual product of goods. That the\\nproductivity of labor is increasing is evidenced by\\nthe increasing amounts of goods produced each\\nyear. The development of the mechanical arts\\nand the better organization of labor serve to in-\\ncrease the product resulting from each unit of\\nlabor. It is since the time when the inventions of\\nWatt, Fulton, Crompton, and Arkwright became\\neffective in multiplying the productive power of\\nlabor that crises have been prominent.^\\nRodbertus asserts that in modern society the\\ncondition of the wage-earning class is not deter-\\nmined by the productivity of its labor. He who\\nsells his toil can find employment only after he\\nhas complied with the exigencies of the present\\nindustrial system. This system is erected upon\\nthe basis of private property in the instruments of\\nproduction. In order that the laborer may be\\nsupplied with these necessary instruments, or to\\nput it plainly, that he may escape destitution, he\\nmust compete for employment. The capitalist\\nalone has the power of initiative in production by\\nHypothekennot, p. 217.\\n83", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0095.jp2"}, "96": {"fulltext": "ECONOMIC CRISES\\nreason of his property rights in capital. He\\nchooses to pay for labor, not according to its pro-\\nductivity, but according to the terms set by demand\\nand supply. The supply of labor will in the long\\nrun increase, if the wages obtained are more than\\nsufficient to provide what is looked upon by the\\nlaborer as the necessaries of life. If wages are\\nless, the supply of labor will diminish. Thus the\\ncontest upon the market develops the iron law\\nthat wages tend to remain at the lowest point at\\nwhich a sufficient supply of labor can be secured.^\\nLabor is sold for the cost of production. The\\nstandard of life which determines the acts of the\\nlaborer with reference to the future supply of\\nlabor is capable of change, but its elevation is\\ndifficult.\\nThe difference between the amount paid for\\nlabor and the product of labor is a surplus taken\\nby the capitalist. It is an historical fact, asserts\\nRodbertus, that the productivity of labor has in-\\ncreased more rapidly than have wages. Thus\\nwages become a relatively decreasing share in dis-\\ntribution, and an increasing surplus falls into the\\nhands of the capitalist. According to the analysis\\nof Rodbertus there are but two shares in produc-\\ntion one is wages with which labor is paid but\\nnot paid for the other share includes all income\\nobtained through the force of the right of private\\nproperty and without appreciable personal exer-\\ntion. This includes interest, rent in the ordinary\\nRodbertus, Kleine Schriften, p. 223.\\n84", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0096.jp2"}, "97": {"fulltext": "THE WAGE SYSTEM\\nsense, and profits. It is collectively designated by\\nRodbertus as rent. That such a share as this\\nexists is due, in the first place, to the existence of\\na surplus product of labor above what is necessary\\nto sustain the laborer and, in the second place, to\\nthe institution of private property which gives to\\na few the power to seize this surplus. Rent then\\nis, in plain language, robbery. The blame for the\\nexisting condition of things cannot of course be\\nplaced upon the shoulders of any individual or\\nclass.^ It is the legitimate product of the present\\nsocial and industrial system which has been pro-\\nduced by general social forces and which can be\\nmodified only by a gradual process of evolution.\\nThis reasoning is used by Rodbertus to account\\nfor the growing disparity of wealth between the\\ncapitalistic and the wage-earning classes and the\\nsharpening social contrasts which attend this\\ndivergence.\\nThe accumulation of a surplus of wealth in the\\nhands of the capitalist, which is increased by every\\nincrease in the productive power of industry, is a\\nprocess which obviously cannot continue indefi-\\nnitely. The sale of the products of industry\\ndepends chiefly upon the purchases of persons\\nother than capitaHsts. The use of capital increases\\nthe use of machinery and the importance of the\\nso-called machine industries. The assertion, which\\nKapital, p. 202.\\nKein Einzelner ist anzuklagen, Zur Beleuchtung (Wag-\\nner-Kozak Ed.), p. 185.\\n85", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0097.jp2"}, "98": {"fulltext": "ECONOMIC CRISES\\nis made on good authority, is therefore significant,\\nthat eighty per cent, of the machine-made goods\\nof the world are consumed by the laboring class.\\nThe cutting off of the laborer s share in distribu-\\ntion manifestly in an equal degree diminishes his\\npower to consume or to take the products of\\nindustry off the hands of the producer.\\nThe surplus which private property enables the\\ncapitalist to retain is not distributed in such a way\\nas to prevent the final clogging of industry.\\nRodbertus denied that the capitalists had either\\nthe desire or the ability so to consume this surplus\\nas to prevent it from stopping the wheels of indus-\\ntry. It seems clear that if this surplus were spent\\nin unproductive consumption it could not be\\naccountable for the plethora of unsalable prod-\\nucts found in a crisis.^ The capitalist is stimulated\\nby rivalries within his class to accumulate his\\nwealth. The income which he receives is largely\\nreinvested as capital to earn a further dividend.\\nIt results in an increased production. With these\\nsurpluses new mines are opened, new lands\\ncleared, and new industries equipped with\\nmachinery.\\nA most important effect of improvements in\\nindustry is to decrease the expense of providing\\nthe minimum of the necessaries and comforts of\\ns During the hard times of 1893, a meeting of women workers\\nwas held in New York City, at which the question was asked\\nwhat word should be sent to the women of the wealthy classes.\\nThe answer was, Tell them not to cut off their luxuries.\\n86", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0098.jp2"}, "99": {"fulltext": "THE WAGE SYSTEM\\nlife with which the wage-earning class may be\\ninduced to propagate.\\nThe increased power of production resulting\\nfrom the investment of the economic surplus does\\nnot necessarily meet with a corresponding expan-\\nsion of markets. The problem of disposing of\\nan economic surplus is not solved by investing it\\nin the means of further production. Rodbertus\\nspecifically asserted that speculation had nothing\\nto do with this unwarranted increase of produc-\\ntion.i\\nWhen the period arrives in which investments\\nare many of them proving unsuccessful and\\nprofits are everywhere curtailed, it is most natural\\nto practise retrenchment. The capitalist reduces\\ngeneral expenses, postpones repairs, and reduces\\nwages. By this process of retrenchment the buy-\\ning power of the masses is reduced. As the mar-\\nRodbertus says of speculation The part which speculation\\nplays is not worth mention. That is solely a local or temporary\\nmisadjustment of the market, caused either by sending goods\\nto a wrong market or by holding them until an unsuitable time.\\nSuch misadjustments are always partial, and do not in the slight-\\nest resemble the general breakdown of the market resulting from\\ncommercial crises. The source of the evil comes in connection\\nwith production, not speculation. Zur Beleuchtung, p. 185.\\nSee also p. 227. Hertzka, a follower of Rodbertus, agrees in\\nignoring speculation Now is shown also the remarkable regu-\\nlarity of the recurrence of these catastrophies, which have no\\nconnection with fraud and over speculation, but which are noth-\\ning less than the indispensable consequence of each increase in\\nproduction in a society, the economic system of which prevents\\nany enlargement of consumption beyond certain relatively narrow\\nboundaries. Die Gesetze der sozialen Entwickelung, p. 106.\\n87", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0099.jp2"}, "100": {"fulltext": "ECONOMIC CRISES\\nket becomes less capable of accommodating the\\nproducts thrown upon it, a further reduction of\\nprofits is unavoidable. In this manner industry is\\nseized by a vicious circle of influences which sup-\\nport and strengthen one another automatically.\\nIn order that industry may be prosperous, that\\nwhich is produced must be marketed at profitable\\nrates. The accumulation of a surplus implies a\\ncurtailment of the market. The attempt to\\nemploy this surplus productively calls for an\\nexpanding market, and if this is not found the\\nprofits of capital invested in production fall. So\\nlong as the capitalist attempts to prevent this fall\\nof profits by reducing wages, he reduces the\\ndemand for his own products and tightens the\\nnoose which strangles industry. Like the backing\\nhorse with the lines wound around the hub, every\\nmovement to comply with the apparent demands\\nof the situation only tightens the pressure.\\nA lessening dividend on capital not only gives\\nrise to the curtailment of various expenses, but it\\nenlarges and stimulates production, the principle\\nbeing to secure the economies of production on a\\nlarge scale. With one hand the buying power of\\nthe market is curtailed, with the other, quantities\\nof goods are thrown upon it. In the last stages of\\nthis steeplechase of industry colossal quantities\\nof goods are thrown upon the rapidly failing mar-\\nket because the relation between failing consump-\\ntion and a defective system of distribution is not\\nseen, or if seen is recognized as beyond the power\\n88", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0100.jp2"}, "101": {"fulltext": "THE WAGE SYSTEM\\nof any individual to rectify. Over-production is\\nthe result. This leads to widespread failures and\\ninsolvencies and finally to the abandonment or\\ndestruction of vast amounts of capital with conse-\\nquent unemployment and poverty. The explana-\\ntion is said to lie in the relatively decreasing portion\\nof the products of industry given to labor and the\\nconsequent cutting off of effective demand.^^\\nMany writers have analyzed the crisis in a simi-\\nlar manner as due to the growth of the productive\\nequipment of society too rapidly for its effective\\ndemand. As to the remedy for this condition,\\nvarious opinions have been held. John Stuart\\nMill pointed out that the waste of invested capital,\\ncaused by rash ventures in search of profits,\\n11 Theo. Hertzka thus presents the theory The exploitation\\nof labor through profits and ground rents explains the con-\\ntrast between the productivity of human labor and the wages of\\nlabor, between the possible and the actual well-being of the\\nmasses. The most important cause of the lack of an abundant\\npossible consumption for all lies in the misadjustment of pro-\\nductivity and production, i.e. potential and actual consumption.\\nMuch less is produced than the productive power of society\\nwould indicate, because production must regulate itself according\\nto demand, and this is held within narrow boundaries by the\\nexploitation, which limits the masses to bare necessities of life.\\nThe consumption of luxuries by the propertied classes can absorb\\nonly a small portion of the goods possible to produce in excess\\nof what is required for the existence minimum of the masses.\\nAlso the demand connected with investment is fixed within given\\nbounds by the range and character of production. Every attempt\\nto expand production beyond the demand for the purposes of\\nconsumption or investment leads to over-production and crises.\\nDie Gesetze der sozialen Entwickelung.\\n89", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0101.jp2"}, "102": {"fulltext": "ECONOMIC CRISES\\nbrought relief. Chalmers, Sismondi, and Robert\\nOwen suggested that less be saved and that more\\nbe expended, if need be, in luxuries. Rodbertus\\ncalls for a division of the growing surplus among\\nthe wage-earners, trusting that it will be expended\\nproperly by them.\\nAs to the remedial measures which may be\\ntaken to correct these tendencies of the present\\nindustrial order, Rodbertus was very conservative.\\nHis analysis classed him among the socialists, but he\\n12 Very nearly the same idea occurs in Malthus, Principles of Pop-\\nulation, Bk. I, Ch. V, Sec. II, p. 316 (7th Ed.). See also Bowen,\\nPrinciples of Political Economy, Ch. XVII, p. 267. U. H.\\nCrocker, in the work entitled, Excessive Saving a Cause of Com-\\nmercial Distress, p. 13, says: Let the economist point out, if he\\ncan, how the idle thousands can to-day be employed in producing\\nwealth except through such uneconomical measures as the crea-\\ntion of new comforts and new luxuries for those who are able to\\npay for them. Herkner states the effect of oversaving as follows\\nAs a rule, the portion of the social dividend devoted to capitali-\\nzation exceeds considerably the needs of industry for capital. While\\nnew investments create a demand for labor, and in so far add to\\nthe number of consumers with purchasing power, yet this purchas-\\ning power does not equal the increase of goods which is brought\\nabout by the new investment. Should the purchasing power of\\nthe newly employed laborers equal the net value of the product\\nof the new undertaking, there would be neither interest nor profit\\nfor the capitalist and undertaker. Precisely here is the point\\nwhen they have not the intention to consume interest, rent, and\\nprofits. If no corresponding increase of effective demand accom-\\npanies the increase of goods caused by the new capital investment,\\nthe circumstance that a class of people year after year devote large\\nsums to the increase of production, reserving it from consumption,\\nleads soon, in an isolated economic society, to a disturbance of\\nthe balance between production and consumption. Conrad s\\nHandworterbuch, Bd. IV, p. 897.\\n90", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0102.jp2"}, "103": {"fulltext": "THE WAGE SYSTEM\\nrefused to ally himself with them. He believed,\\nhowever, that the evils of the present were due to a\\nlaissez-faire policy which has left the problem of\\ndistribution to work itself out undirected by an\\nintelligent exercise of public thought.^^\\nThe need may sometime arise for interference\\non the part of the state, but any fundamental\\nchange must be slowly made. Because of the\\neducating and conserving effect of the institution\\nof private property, Rodbertus thought that prop-\\nerty rights could only be very slowly curtailed.^*\\nWe may confidently believe, however, that we are\\nin the midst of an evolution. Rodbertus thought\\nas in the past the right of private property has\\nbeen narrowed by extinguishing the right to own\\nhuman beings, so in the future land and capital\\nwill be emancipated and ownership will remain in\\nincome alone. Ultimately industry must be regu-\\nlated by a system whereby the total product of\\nindustry will be distributed to those creating it and\\nno part of the product be permitted to accumulate\\nand clog the industrial mechanism.\\ni3\u00c2\u00abKapitaV p. 6i.\\nErklarung, etc., Bd. II, p. 303. Upon this point his last\\nwork, Kapital, is more severe. The inconsistency of the posi-\\ntions here assumed by Rodbertus has been pointed out by Anton\\nMenger, Das Recht auf den vollen Arbeitsertrag, Sec. 8. Cossa\\naccounts for the confusion of Rodbertus thought on the theory\\nthat he had always two schemes for reform in mind, one for\\nimmediate and the other for ultimate realization. Rodbertus was\\nnot always clear in explaining which of these he had in mind.\\nCf. Cossa, Introduction to the Study of Political Economy,\\np. 542.\\n91", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0103.jp2"}, "104": {"fulltext": "ECONOMIC CRISES\\nThe most systematic manner of accomplishing\\nthis is through state control. The right of using\\nproperty as capital being reserved exclusively for\\nthe state, and the organization and control of in-\\ndustry resting entirely with the state, the manage-\\nment of economic affairs will be comparatively\\nsimple. Two fundamental estimates will be neces-\\nsary. The first estimate will be of the value of\\nthe products of industry during a given period of\\ntime the second will be of the number of hours\\nof labor necessary for their production. In esti-\\nmating the number of labor-time units necessary\\nto produce a given article, Rodbertus thought that\\nthe lowest grade of manual labor might be taken\\nas the standard of measurement, higher sorts of\\nlabor being reckoned as multiples of the standard.\\nIn an industrial society so planned, the products\\nof labor would be received into public storehouses.\\nAll labor expended in production would be paid\\nin labor-time checks good for a certain value of\\ngoods at the storehouses. The use of money would\\nbe rendered unnecessary. If computations were\\naccurate the value of all labor-time checks issued\\nas wages during a given period ought to exactly\\nequal in value all the products resulting from in-\\ndustry during that period, less whatever goods it\\nwas deemed necessary to hold in reserve to replace\\ncapital, enlarge the productive equipment, support\\nthe quasi-productive members of society or defray\\nthe expenses of non-productive forms of activity\\ndemanded by public policy. This statement is\\n92", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0104.jp2"}, "105": {"fulltext": "THE WAGE SYSTEM\\nonly true on the assumption that the values of\\ngoods equal their labor costs. Under such a\\nregime an increase in the productivity of labor\\nwould mean either a greater abundance of goods\\nfor the laborer to consume or a release from labor\\nby the shortening of the working day.\\nAs Rodbertus did not find it possible, in his\\nthinking, to reduce all necessary professional and\\nofficial services to measurement in terms of a unit\\nof manual labor, he provided in his scheme for a\\ntax which should support those rendering these\\nservices.\\nThe criticisms which suggest themselves in con-\\nnection with this theory may be briefly enumer-\\nated.^^ In the first place goods are not valued ac-\\ncording to the labor necessary for their production\\nor reproduction.^^ This is not a disproof of Rod-\\n1^ Some discussion of the difficulties which such a scheme as\\nthat of Rodbertus would meet in realization, is contained in Rod-\\nbertus Socialism, E. B. Andrews, Journal of Political Economy,\\nDecember, 1892; Scientific Socialism Rodbertus, Osgood,\\nPolitical Science Quarterly, Vol. I, 1886, p. 560 ff.; Adler,\\nStudie iiber Rodbertus.\\nA convenient presentation of the system can be found in Ru-\\ndolph Meyer s Der Emancipationskampf des Vierten Standes,\\nBerlin, 1874-75 (Bd. I, 2 Aufl., 1882) Dr. R. T. Ely, French and\\nGerman Socialism in Modern Times, New York, 1883; ^.Iso in\\nbrief outline in H. M. Hyndman, The Historical Basis of Social-\\nism in England, London, 1883; W. H. Dawson, German Social-\\nism and Ferdinand Lassalle.\\n16 The consideration of the error of this assumption of Rodbertus\\nis beyond the sphere of this discussion. It is best dealt with by\\nBohm-Bawerk in Capital and Interest, Bk. VI, Chs. I and II;\\n93", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0105.jp2"}, "106": {"fulltext": "ECONOMIC CRISES\\nbertus statement that an unequal distribution of\\nthe products of industry may be responsible for\\nan increase in production not accompanied by a\\ncorresponding increase in final consumption able\\nto precipitate a crisis. The idea that some uniform\\nrelation must exist between the productivity of\\nlabor and the rewards of labor in order that indus-\\ntrial distress may be avoided, is by no means\\nan exclusive tenet of the followers of Rodbertus.\\nVon Thuenen, in searching for a natural wage,\\nattached great importance to a certain formula\\nwhich to him represented justice. It was V^/.\\nIn this a represented the expenditure of the\\nlaborer for subsistence, and p the product of\\nCf. Karl Knies, Geld und Kredit, Part II; H. Dietzel, C.\\nRodbertus Adler, Studie iiber Rodbertus.\\nCohn thus discusses the theory of value adopted by Rodbertus\\nThe same sophisms which appeared in the first presentation of\\nhis theory of value are retained to the last. They are something\\nas follows He passes by in silence the fact that Ricardo, in fol-\\nlowing out Adam Smith s teachings, expressly declares that utility\\nis the necessary premise of exchange value based on labor. He\\noverlooks the fact that nature (material and force) is in an essen-\\ntial degree limited relatively to the wants of man, a principle\\nwhich Ricardo strongly emphasized as regards land, the economic\\ncharacter of which is thereby explained; therefore, the coopera-\\ntion of nature is not, as Rodbertus so often asserts, gratuitous,\\nbut is an element which must be taken account of in discussing\\nthe production of value. He is mistaken in regarding manual or\\n\u00e2\u0080\u00a2muscular labor as a sole reason for costs, and asserting in\\nregard to the share which mind has in production that this is\\nnot *an outlay. A History of Politioal Economy. Supple-\\nment to Annals of American Academy of Political and Social\\nScience, March, 1894, p. 87.\\n94", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0106.jp2"}, "107": {"fulltext": "THE WAGE SYSTEM\\nlabor. The square root of the product of these\\ntwo is the proper renumeration for labor. This\\nformula proposes a constant relation between the\\nproductivity of labor and the rewards of labor.\\nIt may be denied, however, that any surplus,\\nsuch as Rodbertus thought of, accumulates in the\\nhands of the capitalist. If such a surplus be\\nadmitted it may be denied that the capitalistic\\nclass reinvests this surplus to such an extent as to\\noverstock the market with the products of indus-\\ntry. These are questions of fact to be examined\\nas such.\\nFinally, if this theory of crises be admitted as\\nsound, it may be pointed out that the socialistic\\nscheme of production outlined by Rodbertus would\\nnot work justly, if indeed it could be made to work\\nat all. It provides no means for considering the\\ninfluence of any of the circumstances which de-\\ntermine marginal utility, excepting that of labor\\nas an element of cost. Adequate recognition is\\nnot provided for services in themselves valuable\\nbut remotely connected with production. Foreign\\n17 Mr. F. B. Hawley says: The claim that production and\\ninvestment are merely misdirected entirely ignores the existence\\nof a class whose main object in life is not consumption but accu-\\nmulation. Such a class will insist on investing a large portion of\\ntheir incomes, and will not allow their consumption to exceed\\na certain percentage of the share of products that falls to them.\\nThis class certainly exists in a proportion inconsistent with the\\nproper balance of society, and one cannot appeal to them with\\nnew wants. National Quarterly Review, October, 1879, p.\\n282.\\n95", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0107.jp2"}, "108": {"fulltext": "ECONOMIC CRISES\\ntrade would be rendered difficult and much of the\\nenterprise due to private ambition would be ex-\\ntinguished with the extinguishment of the right to\\nuse private property as capital.\\nRodbertus considered the standard of life rela-\\ntively immobile and despaired of the success of\\nany reforms aiming to bring about its elevation.\\nThe question may be asked therefore, Under a\\nsocialistic regime, if the productivity of labor was\\nto increase and this was to result in a more ample\\nreturn to each laborer, would not the ultimate\\neffect of the law of population be to bring into\\nexistence a large population to live at a low stand-\\nard of life Industrial progress under such con-\\nditions would mean an increase in the mass of\\nlow grade life.\\nBut if the standard of Hfe is not so incapable of\\nimprovement as is here represented, why cannot\\nall movements for the elevation of the standard of\\nlife of the wage-earning class be indorsed as help-\\ning so to distribute wealth as to enlarge effective\\ndemand more rapidly than productive capital is\\ninvested, and to directly prevent crises.^^ Labor,\\n18 Von Thiinen was among the first to adopt a broad view of\\nthe cost of producing labor. His position on education is thus\\nshortly stated by Dawson: Von Thiinen thinks that the only\\nway to raise the wages of labor is to increase the cost of bringing\\nup the laborer; and thus he advocates the better education and\\ntraining of the workmen s children, the requisite cost being re-\\ngarded as an indispensable need. The laboring classes must\\nlearn that the remedy for their unfortunate condition lies largely\\nwith themselves, for it is at bottom a question of population.\\n96", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0108.jp2"}, "109": {"fulltext": "THE WAGE SYSTEM\\nif paid a price equal only to the cost of production,\\nis so paid because the laborer has set his price at\\nthis point. An elevation of the wage-earner s\\nstandard will distribute the surplus liable to injure\\ntrade into channels which will stimulate the buying\\nmarket.\\nNo class in society has a right to call for eco-\\nnomic rewards without the exercise of a reasonable\\namount of economic virtue. Only after it has\\nGerman Socialism and Ferdinand Lassalle, p. 42. Cf. J. H.\\nvon Thiinen, Der isolirte Staat, Rostock, 1862, Bd. II, Ch. I,\\np. 37 ff. A short exposition of von Thiinen s position is contained\\nin Roscher s Geschichte der National-Oekonomik in Deutschland,\\nMiinchen, 1874, Ch. XXXII, Sec. 183.\\nSchippel looks to education to combat overpopulation. Das\\nModerne Elend, p. 313. The pressure of the increase of popu-\\nlation is considered by Alexander Everett, an American writer, as\\nthe origin of all progress. So also holds Schmoller, Lectures on\\nTheoretical Political Economy, Berlin, Summer Semester, 1894.\\n1* The benefit features of labor organizations deserve favorable\\nconsideration for the effect which they have in enforcing upon a\\nlarge scale a worthy standard of life. In the state of Indiana in\\n1893, th^ d^^s paid by members of labor organizations amounted\\nto 1 1.3 cents weekly. Ninety-six out of 212 organizations paid\\nsick benefits, 125 out of 217 paid death benefits. With a total\\nmembership of 19,081, the amount of sick benefit paid was\\n^8254, of death benefit, ^16,409. In commenting upon these\\nfigures, the chief of the Bureau of Statistics said: The mem-\\nbers of a vast majority of labor organizations tax themselves, that\\ntheir families may not be a public charge in case of their death\\nor disability, and in this regard expand to the full stature of good\\ncitizens. They make their orders life and accident institutions,\\nof vast value to the state, because they relieve the state of\\nburdens which in numerous instances would be imposed upon it\\nfor the care of widows and orphans. Report of Bureau of\\nStatistics, Indiana, 1893-94, pp. 118, 119.\\nH 97", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0109.jp2"}, "110": {"fulltext": "ECONOMIC CRISES\\nbeen shown that this virtue is systematically shorn\\nof its rewards should appeal to state interference\\nbe taken.2^ The state at present exercises innumer-\\nable influences through educational institutions\\nand the employment of its police powers to encour-\\nage education, thrift, and sobriety. More directly\\nthrough industrial legislation the wage-earning\\nclass is protected and favored. A most important\\ndevice for elevating and holding firm certain ele-\\nments in an elevated standard of Hfe is a system\\nof insurance such as is in force in Germany. The\\nGerman legislation provides against accident, sick-\\nness, old age, and invalidism. The fund for an old\\nage pension is recruited one-third each from the\\npublic treasury, the employer class, and the wage-\\nearning class. The sums contributed to provide\\ninsurance against sickness come one-third from\\nemployers and two-thirds from laborers. Accident\\ninsurance falls entirely upon employers.\\nA plan for systematic effort in raising the\\nstandard of Ufe of the wage-earning classes has\\nbeen formulated by the economist Professor Lugo\\nBrentano. It contemplates the voluntary adoption\\nby societies of wage-earners of a system of mutual\\ninsurance covering all the legitimate costs entailed\\nin the production of labor.^^ Were such insurance\\n20 Professor A. A, Issafev of St. Petersburg sanctions the inter-\\nference of the state to add to the number of those whose in-\\ncomes increase as the productivity of labor is increased. Revue\\nd Economie Politique, article Les Principales Causes des Crisis\\nEconomique, Tome VII, 1893, P- loo^^*\\n21 A list of the principal types of insurance favored by Brentano\\n98", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0110.jp2"}, "111": {"fulltext": "THE WAGE SYSTEM\\ncarried successfully it would entail such an expense\\nas would materially strengthen the demand for\\nhigher wages.\\nAny scheme for increasing the standard of life\\nof the wage-earning class must provide for an\\norganization sufficiently definite to give the move-\\nment consistency, put definite aims before its mem-\\nbers, secure simultaneous movement, and, in general,\\nmake the desired course of action one easy to\\nenter upon and difficult to abandon. More will be\\naccomplished by avowing educational and self-\\npreservative functions than by posing as aggres-\\nsive and revolutionary in design. The demands\\nmade should appeal to all as reasonable and the\\nmethods taken to enforce them, while persistent,\\nshould be inoffensive.\\nis given by him as follows In order that the cost of labor may\\nbe covered, six types of insurance are necessary for the laborer\\n1. Insurance of the cost of raising children, to apply in case\\nof a child s death.\\n2. Old age insurance.\\n3. Burial funds.\\n4. Invalid insurance or pension.\\n5. Insurance against sickness.\\n6. Insurance against loss of work, consequent upon crises and\\nover-production. Die Arbeiter u. d. Produktionskrisen.\\nWhile discussing the active measures which may be taken to\\nprevent crises, Adler says, Such a relief measure is the insurance\\nof the wage-earner against loss of work resulting from crises; for\\nthe realization of this project, all friends of the present social\\norder must therefore be united. Rodbertus, p. 58. More\\nrecently Adler has argued this more at length. Cf. Ueber die\\nAufgaben des Staates angesichts der Arbeitslosigkeit, Tiibingen,\\n1893.\\n99", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0111.jp2"}, "112": {"fulltext": "ECONOMIC CRISES\\nIn conformity with these principles, Professor\\nBrentano recommends the formation of voluntary\\ninsurance associations among the wage-earning\\nclasses, the object being to insure to one another the\\npreservation, intact, of every portion of a legitimate\\nstandard of life. All demands are addressed to\\nthe members of the associations. No chain of\\nreasoning regarding the origin of value is in-\\ndulged in no fundamental principle of the present\\neconomic order is attacked nothing is asked from\\nthe state further than to be let alone.^^ The ultimate\\naim is manifestly so to elevate the minimum stand-\\nard of life as to bring a pressure to bear upon wages.\\nThe necessity for such a movement is based\\nupon the observation that, in the purchase and\\nsale of labor upon the market, all the necessary\\nand legitimate costs of producing labor are not\\nprovided for in the wages received. Such trans-\\nactions are not complete economically, and do not\\nmeet the claims of social justice. Fair wages must\\ninclude more than enough to support the laborer\\nwhile working, and must cover compensation for\\nseasons of idleness due to sickness, old age, youth,\\n22 Professor Brentano argues that to avoid crises by socialistic\\nmeasures, it would be necessary not only to strictly control pro-\\nduction, but to as strictly regulate consumption. This would be\\nan unendurable intermeddling with private affairs. Some more\\nflexible plan admitting of individual initiative is necessary, yet of\\nsufficient strength to reach the present deep-seated evils of indus-\\ntrial society. Cf. Die Arbeitsversicherung gemass der heutigen\\nWirthschaftsordnung, especially the part upon Absatzkrisen\\nJahrbuch fiir Gesetzgebung, Die Arbeiter und die Produktions-\\nkrisen, Bd. II, N. F., 1878, pp. 565-567.\\n100", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0112.jp2"}, "113": {"fulltext": "THE WAGE SYSTEM\\nlack of work, or other causes beyond the control\\nof the laborer. Skill must be so paid for as to\\ncover the expense of education and the risk of\\nfailure. The wages of those who work should\\ninclude enough to support that proportion of every\\nnormal society of human beings which cannot or\\nought not to be earning wages.^ When one pays\\nfor a vase he pays not merely for the one given\\nhim, but for a part of those which have been ruined\\nin the making or broken in handling. So the cost\\nof labor should include the expense of those who\\ndie in youth or who, in age, live to be a charge\\nupon others. As the vase in fashion must pay for\\na part of a superseded stock, so wages must take\\naccount of superseded skill. If these elements in\\nthe social cost of labor are not provided for directly\\nby wage payments, they must be surreptitiously\\nadded as public or private charity. If withheld\\nentirely, the deterioration of the society concerned\\nis certain.^\\n23 Condorcet worked out an elaborate system of insurance, in-\\ncluding general, education, old age, widows and orphans insur-\\nance, with the purpose in view of decreasing inequalities in the\\ndistribution of wealth. This insurance, he thought, should be\\napplied primarily to the lower ranks of the wage-earning classes,\\nand should be controlled either by the state or, if that be imprac-\\nticable, by voluntary private associations. The plan presented by\\nCondorcet, in Esquisse d un Tableau Historique des Progres de\\nI Esprit Humain, is in many respects similar to that proposed\\nby Brentano.\\n2* A fine analysis of the elements composing the cost of labor\\nis contained in Ernst Engel s, Der Preis der Arbeit, Berlin,\\n1868, p. 36 ff.\\nlOI", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0113.jp2"}, "114": {"fulltext": "ECONOMIC CRISES\\nRESUME\\nI. Crises and the distribution of wealth to the wage-earners.\\nII. Rodbertus philosophy of industrial disorder.\\n(a) Goods should be distributed according to their\\nlabor cost, (d) The present distribution\\ncauses crises as follows: (c) The wage-\\nearner does not receive what he produces.\\n(d) But the minimum to satisfy him to re-\\nproduce, (e) The difference is a surplus\\nseized by the capitalist. As the pro-\\nductivity of labor increases more rapidly\\nthan the standard of life, wages are a de-\\ncreasing factor of distribution, (g) Effec-\\ntive demand depends largely upon wages.\\nThe capitalist invests his surplus and\\nincreases production more rapidly than effec-\\ntive demand increases, (i) The result is\\nover-production causing crises.\\nIII. Remedies.\\n1. Socialistic.\\n(a) Socialization of capital, issue of labor time\\nchecks equal in value to all goods produced.\\nRegulated production to prevent oversupply.\\nObjections Labor theory of value false.\\nHigher sorts of activities underestimated.\\nForeign trade would be impeded private\\nenterprise checked. Would not increased\\nwages encounter the Malthusian law of\\npopulation?\\n2. Attempts to elevate the standard of life.\\n(a) German state industrial insurance.\\n{d) Voluntary insurance of Brentano. Volun-\\ntary insurance associations of workmen.\\n102", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0114.jp2"}, "115": {"fulltext": "CHAPTER VI\\nCRISES AND LEGISLATION\\nCrises are socio-economic phenomena, and as\\nsuch direct attention to the character of the eco-\\nnomic relations which exist among the individuals\\nconstituting a society. One of the most important\\nways by which the social will regulates the charac-\\nter of these relations is legislation. Of all forms\\nof social control this is the most distinct and in-\\nflexible. The wisdom with which it is exercised is\\ntherefore of the greatest moment. It has been\\ntruthfully said that every problem has its legisla-\\ntive side and bears its relation to legislation. The\\nHterature of crises shows that every period of eco-\\nnomic distress has turned the attention of many\\nthinkers to the criticism of existing economic legis-\\nlation. Proposals for new laws and for revisions\\nand improvements of every description appear in\\nplentiful crops after every severe panic. A large\\nproportion of the remedies suggested for crises pro-\\npose some extension of state activity, either in the\\nform of legislation, agencies for investigation, or\\nactive government interference. It should be\\nborne in mind, however, that such economic legis-\\nlation as is enacted piecemeal can never afford\\n103", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0115.jp2"}, "116": {"fulltext": "ECONOMIC CRISES\\nadequate protection. The purposes of legislative\\ninterference will be defeated unless conditions less\\nartificial and unstable than those already existing\\nare established. A rational and comprehensive\\npolicy firmly adhered to (a thing so rare in mod-\\nern industrial legislation) is above all things desired.\\nIn judging of the importance of the considera-\\ntions embraced in this chapter, it should be remem-\\nbered that, notwithstanding steady improvements\\nmade in our code of commercial law, crises have\\nbeen steadily recurrent, and that those means\\nwhich now seem most promising for lessening the\\nseverity of crises are not legal remedies. During\\nthis century crises have been developing all\\ntheir peculiar characteristics in countries having\\ndiverse legal traditions and practices. Further-\\nmore, scarcely any two crises seem to have\\nstrained exactly the same portion of the net-\\nwork of legal restraint.\\nNo attempt will be made in this chapter to give\\na complete discussion of the relation of crises to\\nlegislation. That would involve repetition, inas-\\nmuch as some portions of such a discussion are\\nnecessarily presented in other chapters of this\\nwork. The present discussion will include the\\nfollowing topics monetary legislation, banks, cor-\\nporation law, and bankruptcy law.\\nMONETARY LEGISLATION\\nAs economic crises usually involve a serious dis-\\nturbance of the mechanism of exchange, it is only\\n104", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0116.jp2"}, "117": {"fulltext": "CRISES AND LEGISLATION\\nnatural that they should have drawn attention to\\nthe monetary system prevailing at the time and\\nplace of their occurrence.^ The diversity of mone-\\ntary conditions among the principal countries of\\nthe world, coupled with the fact that most of them\\nhave been visited by crises, warns us from attach-\\ning too much importance to details at this point.\\nThe liberty will be taken to present this subject in\\na very brief treatment, since the literature dealing\\nwith it at length is generally accessible. The sub-\\nject of the relation of monetary legislation to crises\\nis one which inseparably connects itself with that of\\ncredit which is presented in the chapter on Credit\\nand Speculation. It is as intimately connected\\nwith the subject of banking which follows this.\\nFinally, the monetary system of any country is\\nonly to be completely understood through a com-\\nprehensive study of the financial history of its\\ngovernment. This point may be sufficiently\\nproved by calling to mind the public financiering\\naccompHshed through the Bank of England and\\nthe Bank of France by England and France re-\\nspectively. In America it may be seen in the\\nhistory of the United States banks and in the ori-\\ngin of the national banking system, also in the\\npresent confusion between the fiscal and currency\\n1 A commercial crisis is always a monetary crisis as well, since\\nit is the reduction of the reserve of coin in the banks which gives\\nthe signal for the explosion. Juglar, in article Crises Com-\\nmerciales, Sec. 2, in Say s Nouveau Dictionnaire d Economie\\nPolitique.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0117.jp2"}, "118": {"fulltext": "ECONOMIC CRISES\\ntransactions of the United States treasury. No\\nexcursion will be made, however, away from the\\ntopic into the field of public finance.\\nThe essential elements of an ideal monetary sys-\\ntem were given by Mr. R. M. Widney before the\\nWorld s Congress of Bankers and Financiers at\\nChicago as follows sufBcient volume, safety, elas-\\nticity, convertibiUty, uniformity, and circulation.\\nThe necessity of maintaining the stability of the\\nstandard of value needs no argument. Recent\\nevents in the United States show the effects of\\neven a suspicion that a change in the standard\\nwill be made. A crisis emphasizes the primary\\nimportance of elasticity. No one proposes that\\nthe volume of note issue shall be so increased at\\nany time as to render the scaling down of inflated\\nand unreasonable values to a sensible figure a pro-\\ncess either easy or pleasant. What is proposed is\\nthat the trading community shall feel assured that\\ntho^e with proper securities can obtain money when\\nit is needed. The English and American bank-note\\nsystems fail in this regard. The Peel Bank Act of\\n1844 must be suspended in time of crisis to permit\\nthe issue of notes on securities. The American\\nsystem leads to stringency of the money market\\nand the hoarding of gold (a phenomenon unusually\\nprominent in 1893 for special reasons). This situ-\\nation of things is only to be relieved by such devices\\nas the issue of clearing-house certificates and the\\nsale of certified checks. The experiences of every\\ncrisis in the United States enforce the necessity of\\n106", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0118.jp2"}, "119": {"fulltext": "CRISES AND LEGISLATION\\nretiring the United States legal-tender notes, or of\\notherwise breaking up the endless chain by means\\nof which the government is forced to issue the\\nobligations which on the one hand come back to\\ndraw out the gold from the treasury, and on the\\nother coming in in payment of revenue, add noth-\\ning to the stock of gold.\\nBANKS 2\\nThe functions of a bank are pointed out by\\nF. A. Walker in his Money, Trade, and Industry\\nto be as follows: (i) to assist in public financier-\\ning (2) to provide good money (3) to facilitate the\\ncancellation of indebtedness (4) to remit money\\nand conduct exchanges (5) to provide a place of\\nsafe deposit (6) to serve as an intermediary in the\\nloaning of capital (7) to issue paper currency. Of\\nthese functions the first one and the last two call\\nfor special remark in connection with the present\\ndiscussion, but the function of a bank as an inter-\\nmediary in the loaning of capital is by far the most\\nimportant of the three.\\nBanks are the arena of the money market, and\\nwhat takes place on this market is conditioned in\\nan important manner by the constitution and cus-\\ntomary practices of banks. Yet the literature of\\n2 For a more extended discussion of some of the topics con-\\ntained in this section, see the author s monograph, The Relation\\nof Economic Crises to Erroneous and Defective Legislation, pub-\\nlished in Transactions of the Wisconsin Academy of Science, Arts\\nand Letters, Vol. X.\\n107", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0119.jp2"}, "120": {"fulltext": "ECONOMIC CRISES\\ncrises amply shows that their control of the course\\nof the money market and their responsibility for\\nall that occurs on it are greatly overestimated.\\nBanks are institutions of economic society which,\\nlike all other institutions, are adapted by the\\nsociety using them to the working out of its pur-\\nposes, just as the institution of the family is\\nadapted in different countries to the expression of\\nthe ideas peculiar to the people. Although the first\\nvisible signs of a coming crisis are to be detected\\nin the banks, and although the most spectacular\\nand distressing phenomena of crises are usually\\nenacted in connection with them, the rise of indus-\\ntrial storms is usually elsewhere than in the bank-\\ning system.\\nIt should be, of course, the aim of every intelli-\\ngent community to place all necessary safeguards\\nabout an institution so vital as that under con-\\nsideration yet here, as elsewhere, the burden of\\nproof lies with those who urge restrictions. It is\\nbest to trust as far as experience dictates to those\\nautomatic checks which arise from the operation\\nof self-interest and from the selective process of\\ncompetition.\\nTo enumerate a few suggested reforms applying\\nto the banks of the United States, and germane to\\nour subject, we may say in the first place that\\nadequate safeguards should surround the granting\\nof bank charters. An earnest effort should be\\nmade to secure uniformity in this regard among\\nthe states of the United States, and to provide for\\nio8", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0120.jp2"}, "121": {"fulltext": "CRISES AND LEGISLATION\\nan official examination and publication of accounts\\nwhich shall be efficient and uniform. The pub-\\nlished statements of banks can be made something\\nmore than a form if there is present in a trad-\\ning community a determination to have them so.\\nWhat is needed is a statement, plain and simple,\\nin answer to the question, Is this bank safe\\nBank statements should throw such light upon\\nthat question as the present financial condition of\\nthe bank can afford.\\nThe official examination of the national banks\\nas made by the comptroller of the currency may\\nserve as a model to state officers in the matter of\\nexaminations. It should be distinctly understood,\\nhowever, that such examinations are in no way\\nintended to relieve bank directors of their duties.\\nThe careful scrutiny into the affairs of a bank\\nmaintained by its directors is the chief safeguard\\nof its integrity. These duties of directors need\\ncareful definition. Every opportunity which will\\nnot work undue individual hardship should be\\ntaken to make more clear and strong the moral\\nidea of the duty of bank directors. We need a\\ngreater development of the conception of an honor\\noffice, or of the idea of duty as it is recognized\\nby the legal fraternity in the United States at the\\npresent time with reference to guardianships.^ A\\nA petition for a new banking law presented to the Wisconsin\\nstate senate in 1899 recites the condition of affairs with respect to\\nbank directors, and proposed a cure for the same as follows\\nI. It is often the case that men of prominence and responsi-\\n109", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0121.jp2"}, "122": {"fulltext": "ECONOMIC CRISES\\nslovenly and easy-going practice should not be\\npermitted in the matter of the bonds given by\\nbank ofificers and officers of loan and trust com-\\npanies. Restrictions are desirable upon the loans\\nand discounts made by a bank to its executive\\nofficers and employees, or to directors who are not\\nofficers.\\nBetween banks a form of control may be exer-\\ncised by a clearing-house. As stock exchanges\\ncan exercise much control over the business con-\\nduct of their members, and in a less degree of\\ncorporations by admitting their securities to the\\nmarket or rejecting them from it, so a clearing-\\nhouse may be made a valuable institution for\\ncontrol.\\nBefore closing this section of the topic it is\\nnecessary to take note of two important discus-\\nsions upon the principles of banking which are to\\nbe found in the literature of crises.\\nThe first is the discussion as to which is prefer-\\nbility permit themselves to be directors and ofBcers of banks\\nwithout having much interest in them and w^ithout incurring any\\nconsiderable liability in case of failure. Such men are mere figure-\\nheads or decoys to draw business to the banks, and have neither a\\nvoice in the management nor money at stake. Hence they never\\ntrouble themselves with the affairs of the bank, or know its condi-\\ntion. Every one who permits himself to be a director of a bank\\nought to be liable to depositors for something beyond his liability\\nas a stockholder. Make the directors liable to depositors for an\\namount equal to the capital stock of the bank. Thus, if the capital\\nof the bank is ^50,000, and there are five directors, make each\\ndirector liable for $10,000, in addition to his liability on stock; and\\nif the capital is $100,000, make each director liable for $20,000.\\nIIO", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0122.jp2"}, "123": {"fulltext": "CRISES AND LEGISLATION\\nable, a single bank of issue or competing banks.\\nIt was begun in France in 1848, in which year the\\nmonopoly of the Bank of France was completed.\\nIt was closed by the Franco-Prussian War of\\n1870-71, during which the managers of the\\nbank by their patriotism excited the general ad-\\nmiration of France. The gist of the argument\\nas it relates to crises may be given as follows\\nThose who uphold the monopoly of note issue\\ngranted to the Bank of France, point to its record\\nand to the great immunity which France has\\nenjoyed from financial panics as an evidence of\\nthe soundness of the system. The single bank\\nsystem, it is urged, has the great advantage of\\nlocating responsibility in a definite place. It puts\\nan unmistakable duty upon those in whose hands\\nthe course of monetary affairs rests, and makes\\nimpossible the negligence and irresponsible ven-\\nturesomeness observable with a multitude of com-\\npeting banks. Public opinion is able to exercise\\na powerful influence when concentrated upon one\\nmanagement through publicity of accounts. The\\nvery independence of a bank with monopoly privi-\\nleges removes from it all temptation, such as might\\nbe presented in competition with rivals, to extend\\nits issues beyond the limit of safety. As the strug-\\ngle to earn dividends is absent the bank may order\\nits policy to secure public welfare.\\nA competing bank, it is urged, must outdo com-\\npetitors to obtain trade, and it must therefore be to\\nan undue extent subordinated to the desires of its", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0123.jp2"}, "124": {"fulltext": "ECONOMIC CRISES\\npatrons. The effect of competition is to reduce\\nthe reserves maintained for redemption of notes\\nbelow the point of safety. When such is the case,\\nthe presentation of large quantities of notes for\\nredemption or any other unusual demand upon the\\nresources of the bank finds the funds insufficient\\nto sustain the great issue which has been reared\\nupon them. Distrust spreads the demand to other\\nbanks in a similar condition, and the system,\\nhoneycombed by competition, falls into ruins.\\nSuspension of banks, stringency of the money\\nmarket, and a panic ending in a depreciated or\\nworthless paper currency are the results. Each\\nbank endeavors to save itself at whatever cost to\\nits competitors. No bank is strong enough to\\nextend assistance and command confidence.\\nHere again the champions of the monopoly of\\nnote issue urge the advantage of the power of a\\nsingle great estabhshment. Its connection with the\\ngovernment gives it position and solidity and in-\\ncreases the effect of its mere financial resources in\\ninspiring that credit which is the object of all search\\nin times of crises.* Then it is preeminently that a\\ngreat bank can put forth its powers, or, as has\\nbeen the case in the history of the Bank of Eng-\\nland, reestablish confidence by the mere prospect\\nof its assistance.\\nE. Nasse, Ueber die Verhiitung der Productions- Krisen durch\\nstaatliche Fiirsorge, in Jahrbuch fiir Gesetzgebung, Bd. Ill,\\nN. F. Also A. Wagner, Geld- und Credittheorie der Peel schen\\nBankacte, p. 193 ff.\\n112", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0124.jp2"}, "125": {"fulltext": "CRISES AND LEGISLATION\\nA considerable school of French writers has\\nheld views opposed to those we have just con-\\nsidered, maintaining that the cause of economic\\ncrises lies in the abuse of power on the part of\\nprivileged banks of issue. It is held to be an\\ninevitable accompaniment of a privileged bank\\nunder state control that there should be a political\\nfaction opposed to it. The bank is therefore never\\nentirely out of politics, and at the worst may be\\nthe foot-ball of parties.\\nOut of a close relation of a bank to public\\nfinances other evils may arise. If the government\\nis often strengthened, the bank is as often weak-\\nened. The course of bank-notes becomes subject\\nto all the influences affecting the pubHc credit.\\nA privileged bank, owing its peculiar privileges to\\nthe state, cannot resist the demands of the state as\\ncan independent banks. And it has less reason\\nfor doing so, since, if its resources are overtaxed\\nand it finds itself unable to redeem its notes, it is\\nsure of protection from the state in laws restrict-\\ning the redemption of notes or suspending it en-\\ntirely. As Lord Overstone said, a private banker,\\nif he mismanage affairs, must suffer the penalty\\nand be bankrupt, but if the Bank of England is\\nguilty of mismanagement it can save itself at the\\nexpense of the entire country.^\\nThe history of the Bank of France and of the\\nBank of England has been cited as proof of these\\nReport of Committee of House of Commons on Commercial\\nDistress, 1847-48, N. 5192.\\n113", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0125.jp2"}, "126": {"fulltext": "ECONOMIC CRISES\\nassertions. The recognized connection existing\\nbetween the government and the Bank of France\\ncaused distrust of the notes of the latter when the\\ninvading armies entered France in the winter of\\n1813-14. A legal restriction of the amount of\\nnotes that could be presented for daily redemption\\nfollowed. Similarly in England the war with\\nFrance caused the government to make such\\ndemands upon the Bank of England that in 1 795\\nits credit was impaired and specie payments were\\nsuspended, not to be resumed until 1821.^\\nAgain it is argued that a single bank of issue,\\nbecause it receives very large deposits, tends to\\nextend a note issue depending upon them as a\\nredemption fund. This issue cheapens the price\\n6 M. Chevalier says in reviewing Horn s book, La Liberie des\\nBanques, in Journal des Economistes, Vol. Ill, 1866, p. 357:\\nWith an analytical spirit the distinguished M. Horn has sought for\\nthe reason why the great privileged banks have been so often in\\ndefault. He has stated the cause; a cause which, it is necessary\\nto say, is very uniform, and which one finds identically the same in\\nboth hemispheres. That cause is the interference of government\\nin the affairs of the banks. To speak with greater precision, the\\ncauses are the accommodations which governments have demanded\\nfrom the banks, the great advances which the banks have been\\nforced to make, when in theory a bank should only make advances\\non commerce. The privileged banks have not been able to refuse\\nthese accommodations, because of the very fact that they are privi-\\nleged. Cf. Horn, La Liberte des Banques, p. 395. A. Wagner,\\nLehre von den Banken, p. 15, says that if the state always came\\nto the rescue of competing banks with a grant of legal-tender\\npowers in case of financial difficulty, as is done with privileged\\nbanks, it would not be difficult for them in like manner to bring\\nback their finances to a state of order.\\n114", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0126.jp2"}, "127": {"fulltext": "CRISES AND LEGISLATION\\nof money and throws some portion of private\\ncapital out of investment. This flows into the\\nvaults of the banks and serves in turn as the basis\\nof an extension of note issue. The cheapening of\\nthe price of money ruins private banks, and the\\nbusiness of banking becomes more and more con-\\ncentrated. Thus a process of displacement goes\\non, during the progress of which an enormous\\nnote issue is built up, erected upon an uncertain\\nbalance of deposits. The end of the progression\\nis that some unexpected turn causes a heavy draft\\nupon the state bank and at once precipitates a\\nfinancial crisis. Under a system of free banking\\nit is urged that these evils are avoided. Every\\nattempt to realize an undue profit in the issue of\\nnotes, if successful, attracts new capital, and com-\\npetition is increased until the same level of profits\\nis reached in selling money as can be secured in\\nany other branch of competitive industry.^\\nEach competitive bank has the check of redemp-\\ntion thrust constantly upon it by other banks en-\\ndeavoring to extend their issues.^\\nBefore passing from this subject it is well to\\nrecall the fact that banks are simply commercial\\ninstitutions, subject to the same stimulating and\\n^Coquelin, Revue des Deux Mondes, Vol. XXIV, 1848, pp.\\n457-470. Precisely the same theory and explanations are to be\\nfound in H. C. Carey s Credit Systems, pp. 57-58 and 66.\\nCoquelin recognizes Carey s work, and commends it highly.\\n8 Courcelle-Seneuil, Journal des Economistes, Vol. XLIII, p,\\n163. A better explanation may be found in Report of the Mone-\\ntary Commission of the Indianapolis Convention, 1898, pp. 325-327.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0127.jp2"}, "128": {"fulltext": "ECONOMIC CRISES\\ndepressing influences which play upon the com-\\nmunity in general. As Professor Sumner has well\\nsaid in his History of the American Currency\\nIt is a very easy method of explaining mercantile\\nand industrial movements to ascribe them entirely\\nto expansions and contractions of the (furrency,\\nbut, on a currency even nominally convertible, the\\ncurrency inflation does not lead off. The mania\\nfor sudden riches gets possession of the com-\\nmunity, and the banks fall in with, aid, and stimu-\\nlate it. The blame cannot be simply thrown upon\\nthe banks for causing the trouble.\\nThe second discussion to which reference has\\nbeen made is that carried on in England from the\\nbeginning of this century down practically to date,\\nand centering in the Peel Bank Act of 1844.^\\nThe Enghsh Bullion Committee was appointed\\nin 18 10 to inquire why there was a depreciation of\\nbank-notes during the Bank Restriction Period,\\nwhen the Bank of England did not redeem its\\nnotes. This committee maintained that a suffi-\\ncient regulation to maintain paper money at par\\nwith gold was to insure its constant convertibility.\\nAs reasonable as this proposition now seems, it\\nwas disputed. A group of thinkers appeared\\nsomewhat later, known as the Currency School,\\nwho asserted that if there was no paper money\\nSumner, History of American Currency, p. 124.\\n1 The text of this act is printed in H. V. Poor s Money and its\\nLaws, 2d ed., pp. 297-298, also in The English Manual of\\nBanking, by Arthur Crump, 4th ed., London, 1897, pp. 286-289.\\n116", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0128.jp2"}, "129": {"fulltext": "CRISES AND LEGISLATION\\neach country naturally attracted the amount of\\nthe precious metals corresponding to the amount\\nof business done within it. This ebb and flow is\\nthe natural and desirable state of affairs. To\\nmaintain it when paper currency is issued, the\\nconvertibility of the paper is not sufficient. There\\nmust be a device so arranged that as coin is with-\\ndrawn from circulation a like amount of paper is\\nwithdrawn, and vice versa. Otherwise, it was\\nclaimed, silver and gold might leave a country,\\nand paper take its place in circulation. Under\\nsuch circumstances, prices will not respond to the\\ndrain of precious metals. Not only will the proper\\nrelation between the amount of the precious metals\\nin the country to that in other countries be dis-\\nturbed, but also that between the paper and the\\ncoin in circulation. It was believed that con-\\nvertible paper could be so overissued, and coin\\nreserves so depleted, that the final readjustment\\nto proper conditions would be violent and destruc-\\ntive.\\nOn the substitution of notes for gold in the cur-\\nrency, Pitt said, when introducing his bill The\\ndifference may not be immediately perceived nay,\\nthe first effect of undue issue, by increasing prices,\\nmay be to encourage further issues and as each\\n11 References on this point are Pitt s speech in Parliament;\\nTooke, History of Prices, Vol. IV, p. 187; Vol. V, pp. 507-512;\\nTorrens, Inquiry into Renewal of Charter of the Bank of Eng-\\nland, pp. 48-50; James Wilson, Capital, Currency and Banking,\\npp. 58, 59; A. W^agner, Peel schen Bankacte, various citations.\\n117", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0129.jp2"}, "130": {"fulltext": "ECONOMIC CRISES\\nissuer, when there is unlimited competition, feels\\nthe inutility of individual efforts at contraction,\\nthe evil proceeds until the disparity between gold\\nand paper becomes manifest, confidence in the\\npaper is shaken, and it becomes necessary to\\nrestore its value by sudden and violent reductions\\nin its amount, spreading ruin among the issuers of\\npaper, and deranging the whole monetary transac-\\ntions of the country. It will be observed that this\\npresents a theory of crises. We shall not consider\\nthe fallacious reasoning in regard to the nature of\\nconvertible paper money contained in it, but will\\nconfine ourselves to the relation of this discussion\\nto crises.\\nThis theory was responsible for the Peel Bank\\nAct of 1844, which has regulated the business of\\nthe Bank of England since the time of its passage.\\nThe bank is divided into an issue department and\\na banking department. Notes can be obtained from\\nthe issue department only by the deposit of a cor-\\nresponding amount of gold by the banking depart-\\nment with it to insure redemption. When the\\nbanking department is called upon for deposits,\\ntherefore, it is obliged to present notes to the issue\\ndepartment to secure the gold, thus withdrawing\\npaper from circulation. This brings about a close\\ncorrespondence between the movement of gold\\nand notes in and out of the bank.\\nThe effect of this provision has simply been that\\nduring financial panics, when bank accommodation\\nis most anxiously sought for, individual depositors\\n118", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0130.jp2"}, "131": {"fulltext": "CRISES AND LEGISLATION\\ndraw out their deposits from the bank and that\\ninstitution is obliged to relentlessly withdraw its\\nnotes from circulation pari passu with the with-\\ndrawal of the gold from its vaults. Such an auto-\\nmatic stranghng of the money market has been\\nfound intolerable. In 1847, within three years\\nafter the passage of the act, the law was sus-\\npended to permit the bank to relieve the strin-\\ngency of the money market by issuing notes upon\\nsecurities.^2 The relief in this instance was imme-\\ndiate. In the stringency of 1857 the act was sus-\\npended, and discounting allowed at 10 per cent.\\nAt this time the permitted issues of notes but\\nslightly exceeded the legal limits. In 1866 the\\nact was suspended for the third time, but the mere\\nassurance that notes could be had was sufficient,\\nand no actual infringement of usual rules was\\nfound necessary.\\nCORPORATION LAW\\nThe forms into which capital is combined for\\nthe furtherance of business purposes are of con-\\nsiderable importance in determining the tendencies\\nmanifested by business enterprise. These forms,\\nmore especially corporate forms, are partly under\\nthe control of legislation, since they owe their\\norigin to the grant of legal powers given by the\\nstate. Some of these forms have shown them-\\nselves to be fitted for certain classes of under-\\n12 An Austrian copy of Peel s act underwent the same fate.\\n119", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0131.jp2"}, "132": {"fulltext": "ECONOMIC CRISES\\ntakings only, and through some of them the spirit\\nof overspeculation and dishonesty has been able\\nto work itself out much more easily than through\\nothers.^^\\nThe study of the organization of joint stock\\ncompanies has been introduced into the literature\\nof crises chiefly through the experiences of Ger-\\nmany and Austria after the close of the war of\\n1870-71, culminating in the so-called Vienna\\ncrash of 1873.^* In Germany, by the middle of\\n1870 there were 410 joint stock companies having\\na capital of 3,078,000,000 marks. In the four years\\nfollowing, 857 new companies were organized with\\na capital of 4,290,000,000 marks. That the growth\\nwas abnormal was amply shown by the insolvencies\\nof the following years. Attention was thereby\\ndrawn to the laws controlling joint stock business.\\nThe United States has suffered from unsound and\\nunscrupulous methods in the organization and con-\\ntrol of corporations, and has had this as a contribu-\\ntary cause of economic crises.^^\\n12 The juristic person is now too often used as the persona\\nonce was in Rome as a mask to hide the true actors. Corpora-\\ntion methods would in many cases be immediately recognized as\\ninfamous if they were merely transferred to the sphere of private\\nactions and relations. Cf. Report of Eleventh Kongress deutscher\\nVolkswirthe, 1869.\\n1^ The principal writers who have contributed to the discussion\\nare Wagner, Schaffle, Wiener, Oechelhauser, Kleinwachter, and\\nEmminghaus.\\n15 For an excellent concise enumeration of the advantages and\\ndisadvantages of the joint stock form see Schaffle in Tubinger\\n120", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0132.jp2"}, "133": {"fulltext": "CRISES AND LEGISLATION\\nThe system of granting charters by special legis-\\nlative enactment which prevailed in Germany dur-\\ning the period mentioned has always shown itself\\nto be inadequate, open to favoritism, and without\\nproper uniformity in its operation. Experience\\nhas shown the wisdom of comprehensive legisla-\\ntive enactments under which companies are to\\nbe organized. Such laws may restrict the joint\\nstock form to those businesses in which experience\\nhas proven it to be useful, and may provide those\\npeculiar safeguards necessary for each grand divi-\\nsion of corporations, dividing them according to\\nthe characteristics displayed by them when in\\noperation.\\nAs far as possible speculative incorporations\\ndesigned to exploit the investing market by the\\nsale of stock should be discouraged. Any profit\\nwhich may arise to any one from the mere process\\nof founding and financing a company should be\\nclearly understood and formally stipulated between\\nthose who organize a company and those who\\ninvest their money in it. As far as possible, re-\\nmuneration for valuable knowledge, inventions,\\nor other services, when made to the organizers,\\nshould be in a form to attach the interest of the\\nrecipients to the permanent success of the busi-\\nness. This may be done by means of royalties.\\nZeitschrift, 1869, pp. 336-338. Cf. Conrad s Lectures, 3d ed.\\n(privately printed), pp. 67-68; Rogers, Industrial and Commer-\\ncial History of England, Series I, Ch. VII; Roscher, Nationalo-\\nkonomik des Handels und Gewerbfleisses, 2 Aufl., Sees. 28, 29, 30.\\n121", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0133.jp2"}, "134": {"fulltext": "ECONOMIC CRISES\\nIn general the interests of organizers should be\\ncompelled to depend upon the prospects of legiti-\\nmate and continuous business.\\nThe management of corporations seems to show\\nthat a continuous and active control of a corpora-\\ntion by its stockholders, if they are more numerous\\nthan can get their heads together in a private office\\nor around a consultation table, is difficult to put in\\noperation. Because of this difficulty the sphere of\\ncorporate business, unless under special state super-\\nvision, appears to be those businesses which require\\na large proportion of fixed capital and in which the\\nmanagement, when once inaugurated, is largely\\nautomatic.^^\\nSo far as the principles governing corporate busi-\\nness permit of being expressed in a few words, the\\nevils of mismanagement appear to originate from\\nabandoning in a greater or less degree the demo-\\ncratic principle. The concentration of great dis-\\ncretionary power in the hands of directors, without\\nan easy means of appeal and investigation open\\nto the stockholders, diminishes the feeling of\\naccountability in the former and of interest in\\nthe latter. Manipulations upon the stock market\\nto drive the smaller stockholders to sell are natu-\\nral when a bare majority of stock gives control.\\nIt may be suggested that the voting power of\\nshares should be decreased in proportion to their\\nconcentration in a few hands. A maximum of the\\ni\u00c2\u00bb Adam Smith s Wealth of Nations, Bk. V, Ch. I, Part III,\\nArt. I, Sees. 36, 51-59.\\n122", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0134.jp2"}, "135": {"fulltext": "CRISES AND LEGISLATION\\nvotes to be cast by one person may be specified.^*^\\nA time should be stipulated within which share-\\nholders shall meet to elect directors, after organi-\\nzation. It may be found advisable to adopt a\\nplan of minority representation on the board of\\ndirectors.\\nMany American railway corporations have se-\\ncured the greater part of the money with which\\ntheir roads were built from bonds. As the voting\\npower is restricted to stock, such companies have\\nbeen in the hands of a few insiders. These\\ncorporations are miscreations, due to the fact that\\nlegislatures have allowed stock to be issued for a\\nmerely nominal cash payment and have given un-\\nlimited borrowing power. The borrowing power\\n1 The distribution of the voting power in the First and Second\\nBank of the United States was as follows\\nFor every one or two shares i vote\\nFor every additional two shares up to lo .1 vote\\nFor every additional four shares from lo to 30 i vote\\nFor every additional six shares from 30 to 60 i vote\\nFor every additional eight shares from 60 to 100 i vote\\nFor every additional ten shares from 100 up i vote\\nNo person, copartnership, or body politic to have more than\\nthirty votes.\\nFirst Charter I, Sec. 7, Second Charter I, Sec. ii.\\n1^ See Von der Leyen, Die Finanz- und Verkehrspolitik der\\nNordamerikanischen Eisenbahnen in Archiv fur Eisenbahn-\\nwesen (published by the Prussian Department of Public Works),\\nHeft I, 1894, especially the heading Die Griindung einer Ameri-\\nkanischen Eisenbahn. See also Van Oss, American Railroads\\nas Investments (New York, 1893), S^- Upon the abuse of\\njoint stock business forms in relation to crises see A. Wagner,\\nKrisen, in Rentzsch s Handworterbuch, p. 531.\\n123", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0135.jp2"}, "136": {"fulltext": "ECONOMIC CRISES\\nof a corporation should be limited to a certain\\nfraction of the capital actually paid in. No com-\\npany should be allowed to purchase its own shares,\\nor sell them at a discount.^^ The issue of stock\\ndividends should be forbidden and also of divi-\\ndends drawn from capital. The financial atmos-\\nphere would be greatly cleared, and the secret\\nmachinations of schemers which so disquiet trade\\nand discourage honest industry would be largely\\nstopped, were a public record required with the\\nregister of deeds for each purchase or transfer\\nof corporation shares. Finally the laws govern-\\ning corporate business may define the manner in\\nwhich the assets of a company are to be reached\\nfor the payment of its debts through the machinery\\nof bankruptcy law.\\nBANKRUPTCY\\nThis brings us to the subject of bankruptcy, in\\nregard to which a few points may be noticed. It\\nis obvious that a very considerable influence must\\nbe exerted upon the general course of business by\\nthose regulations which determine what shall be\\ndone when a person s assets are not equal to his\\nliabilities. The character of a bankruptcy law will\\ndetermine in some degree how severely the effects\\n1^ The lack of a provision to this effect in French law led to the\\nmanipulations on the stock market carried on by the Union\\nGenerale. This was shortly followed by its failure in 1882, pre-\\ncipitating a severe financial crisis, one of the few to which France\\nhas been subjected.\\n124", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0136.jp2"}, "137": {"fulltext": "CRISES AND LEGISLATION\\nof an economic crisis are felt by those immediately\\nconcerned in bringing it about. Through its pro-\\nvisions there will be expressed the attitude of trade\\ntoward such practices as are supposed to lead up\\nto crises.\\nIt is desirable that a sharp distinction should be\\ndrawn between the laws used to enforce the pay-\\nment of ordinary debts and those used in set-\\ntling commercial indebtedness. There are debtors\\nwhose business necessarily involves them in the\\ncredit mechanism of trade to such an extent that\\ntheir solvency depends not alone upon their busi-\\nness and moral characteristics, as in the case\\nof farmers, wage-earners, and professional men.\\nThere are many businesses the solvency of which\\ndepends in a very important degree upon the gen-\\neral course of trade and the occurrence and dura-\\ntion of credit storms in short, upon circumstances\\nbeyond the control of their managers. For the\\ninsolvent commercial creditor special provisions\\nare therefore justifiable.\\nIn its action a bankruptcy proceeding may be\\nlikened to a crisis. Insolvency with bankruptcy is\\nindeed a crisis for one business, while a general\\ncrisis is the simultaneous occurrence of many in-\\nsolvencies. The scramble for liquidation which\\nmarks the crisis is analogous to the race of dili-\\ngence among creditors, which is set up when a\\nsuspicion of embarrassment attaches to a debtor.\\nBankruptcy, like a crisis, may be a healthy check\\nand restorative, when appHed at an early stage.\\n125", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0137.jp2"}, "138": {"fulltext": "ECONOMIC CRISES\\nBut either, when delayed, may be a dreaded cut-\\nting down to actual conditions.\\nThe aims which should control legislation upon\\nbankruptcy may be stated to be, as regards the\\ncreditor, a just, speedy, and economical distribu-\\ntion of the debtor s property; as regards the\\ndebtor, either to restore him as far as possible\\nto an independent position or to administer pun-\\nishment for neglect and fraud, as the facts may\\nindicate. Sometimes one of these aims, sometimes\\nthe other, has been the dominant one in legisla-\\ntion. If a state of insolvency is considered chiefly\\nas due to misfortune, the most fair and economical\\nmethod of clearing the score and giving the debtor\\na new chance in business is the thing desired. If,\\non the other hand, a suspicion of negligence or\\ndishonesty usually attaches to insolvency, a fair\\ntrial, with suitable provision for punishment, should\\nbe the main aim. Undoubtedly there is room for\\nboth these points of view in the correct concep-\\ntion. The problem is to preserve the proper bal-\\nance between them. On the one hand, undeserved\\nhardship to debtors must be reduced to the small-\\nest possible minimum. On the other hand, the\\ninfluence of bankruptcy legislation upon business\\nmorality must not be forgotten.\\nThe most important aim of bankruptcy legisla-\\ntion is to discourage insolvency. But it is not\\nthe most severe legislation which always has the\\ndesired repressive effect, as the entire history of\\ncriminal law proves. Beccaria points out in his\\n126", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0138.jp2"}, "139": {"fulltext": "CRISES AND LEGISLATION\\ngreat work, Crime and Punishment, that a law\\nwhich is too severe revolts the mind, and becomes\\na dead letter. This principle applies to the case\\nin hand. Business men or firms maintaining nu-\\nmerous commercial connections will not employ\\nbankruptcy proceedings when to do so creates a\\nvery general prejudice against them in the busi-\\nness community. The effect of great severity in\\nlegislation is similar to an error on the side of\\nundue liberality.\\nA law which is too favorable to the debtor may\\nbe used as a menace by him in dealing with\\ncreditors to compel further advances and secure\\na continuation of unsound methods of doing busi-\\nness. The trouble with the state banks of issue\\nin the United States between 1812 and 18 18 arose\\npartly from a wretchedly loose practice with refer-\\nence to bankruptcy. An ever ready way of retreat\\nwas open for dishonest bankers, a fact which\\nundermined commercial morality.\\nWe ought by no means to overlook those con-\\nditions of modern business which render it impos-\\nsible, at certain times, for even conservative\\nbusinesses to maintain their solvency. While the\\nbankruptcies of certain periods indicate a general\\nbreakdown of the industrial system rather than\\nindividual dishonesty, nevertheless no contrivance\\nshould be set in operation, through the provisions\\nof bankruptcy, which removes from the abuser of\\ncredit the force of the law, The way of the trans-\\ngressor is hard. The counterfeiter, by his dis-\\n127", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0139.jp2"}, "140": {"fulltext": "ECONOMIC CRISES\\nhonesty, throws doubt upon the authenticity of the\\ncoin of the country, but the man who abuses credit\\ninjures that which facihtates business even more\\nthan coin in the trade of the modern world. The\\ncounterfeiter of coin puts an expense upon all who\\ndeal in coin, the abuser of credit injures all who\\nare affected when trade abandons any measure\\nof the economy and convenience of credit. If the\\ncondition of credit was once a private matter, while\\nthe issue of coin was a public affair, those times\\nhave passed, for both are now equally matters of\\npublic concern.\\nIn the construction of a law of bankruptcy it\\nseems to be wise to permit both voluntary and\\ninvoluntary proceedings, that is, to permit applica-\\ntion to be made either by the debtor or by his\\ncreditors. In connection with crises the determina-\\ntion of what shall prevent the discharge of an in-\\nsolvent person is a most important point. The\\nprincipal hindrances to discharge in France are ex-\\ntravagance in personal or household expenses, spec-\\nulation upon the stock market, the adoption of ruin-\\nous methods to delay bankruptcy, or the attempt\\nto favor any creditor unduly. In England, in addi-\\ntion to other impediments, no insolvent person can\\nbe discharged whose estate does not amount to\\nfifty per cent of his liabihties. According to the\\nUnited States law of 1867, evidences of fraud, or\\nfraudulent gifts or conveyances, were a bar to\\ndischarge, also losses through gaming and the\\nfailure to keep proper books. If an estate did not\\n128", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0140.jp2"}, "141": {"fulltext": "CRISES AND LEGISLATION\\nyield thirty per cent, the concurrence of a majority\\nof the creditors, both as to number and the value\\nof claims, was required to secure discharge. In\\nsecond bankruptcy the minimum necessary for\\ndischarge was placed at seventy per cent. The\\nAct of 1898 provides that the commitment of acts\\npunishable by imprisonment under the bankruptcy\\nlaw and the failure to keep books, or the destroy-\\ning or removing of the same to conceal material\\nfacts, shall bar discharge.\\nCONCLUSION\\nIn conclusion it may be said that the task of the\\nstate in enacting wise laws to regulate economic\\ninterests is becoming continually more important\\nand more difficult of performance. This means\\nthat more ability is being required of legislators.\\nIn view of this it is not encouraging to contem-\\nplate the types of men being returned to the vari-\\nous state legislatures of this country nor even the\\ntypes in Congress. The indirect and unexpected\\neffects of legislation have so often afforded a\\nsevere surprise to the interests affected by them\\nthat it is time the lesson should be learned and\\nthese matters be made the subject of careful and\\ncomplete study prior to legislative action. It is\\nan encouraging sign that elaborate legislative in-\\nvestigations are becoming the rule in this country,\\nas they have long been in England.\\n129", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0141.jp2"}, "142": {"fulltext": "ECONOMIC CRISES\\nRESUME\\nThe importance of legislative enactments not to be over-\\nestimated.\\nI. Monetary legislation.\\nEssentials of an ideal monetary system.\\nII. Banks their relation to crises.\\n(a) General considerations.\\nFunctions of a bank.\\nCare in granting charters.\\nExaminations and publication of statements.\\nDuties of directors.\\nControl through clearing-houses.\\n{d) Should competition be permitted in the issue of\\nbank-notes\\n(c) Peel Bank Act of 1844.\\nIII. Corporation Law abuse of corporate privileges.\\nRestriction of privilege of incorporation.\\nSpeculative incorporations to be discouraged.\\nFinancial claims of organizers to be made definite.\\nRoyalties.\\nControl by stockholders.\\nThe democratic principle distribution of voting\\npower.\\nIV. Bankruptcy.\\nTwo motives\\nTo discharge the honest debtor.\\nTo punish the dishonest insolvent.\\nCitation of impediments to the discharge of debtors.\\n130", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0142.jp2"}, "143": {"fulltext": "CHAPTER VII\\nTHE PERIODICITY OF CRISES\\nIf we consider the long series of crises which\\nhave marked the progress of industry, from the\\ntime when crises first began seriously to attract\\nthe attention of economic writers in the latter\\npart of the eighteenth century down to the pres-\\nent, it can scarcely escape the observation of any\\nperson that these events have been distributed\\nchronologically with a certain uniformity of inter-\\nval. In the economic life of Western Europe and\\nthe United States the coming of a crisis has never\\nbeen very long delayed nor have full-fledged\\ncrises of the first degree of intensity been at\\nany time developed within at least six or eight\\nyears of one another. This general tendency to\\nan evenness of spacing between crises has sug-\\ngested to some students of the subject that there\\nmust be a law in the recurrence of these phenom-\\nena, tending to establish a definite periodicity. If\\nsuch a law could be discovered and its nature\\nexplained, it would of course throw light directly\\nupon the causes of crises.\\nTo grant that a phenomenon is of periodic\\noccurrence does not necessarily imply that the\\n131", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0143.jp2"}, "144": {"fulltext": "ECONOMIC CRISES\\nforce which causes it is spasmodic or lacking in\\ncontinuity. A regularly operating force, when at\\na certain point its cumulated effects disturb the\\nequilibrium under which the force has up to that\\ntime operated, may manifest itself only periodically\\nin certain of its aspects. The simplest illustra-\\ntions of this are the intermittent spring and the\\ngeyser. We know that muscular and nervous\\nactivity is intermittent in character. Periodicity\\nhas been declared to be a fundamental character-\\nistic of all individual physical and intellectual\\nactivities of human beings. But it does not neces-\\nsarily follow from this that all social phenomena\\nare periodic or even intermittent. Social activities\\nmay be sustained continuously by a group of indi-\\nviduals, a part of whom are continually being\\nreplaced by others. The argument concerning\\nphysical or nervous exhaustion as derived from the\\nstudy of the individual, cannot without further\\nproof be applied to all classes of social action.\\nThe work of a factory may continue uninter-\\nruptedly while the individuals connected with it\\nare regularly replaced before exhaustion incapaci-\\ntates any one from rendering service.\\nWhile, therefore, social forces are capable of a\\ncontinuity of which individual activities are not,\\nnothing is of more common observation than that\\nin the irregular and intermittent character of their\\nlife history social movements continually remind\\nus of individual activities. There is clearly enough\\na periodicity of economic phenomena resting upon\\n132", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0144.jp2"}, "145": {"fulltext": "THE PERIODICITY OF CRISES\\nthe succession of the seasons. The spring is the\\nseason for plans, the summer for activity in carry-\\ning them out, the fall for settlement and liquida-\\ntion, the winter for the conservative discharge of\\nmerely necessary economic functions. Every\\nseason has a character of its own.\\nBut there are other periodic social phenomena\\nwhich appear to indicate certain peculiarities in\\nthe social psychology. It has been noticed that\\nmovements for reform in municipal affairs in cer-\\ntain American municipalities have been not only\\nspasmodic but regularly recurrent.\\nIf one may venture upon a theory to explain\\nthis, it may perhaps be said that the steadily oper-\\nating force is the self-interest of those in politics\\nfor what there is in it, and that the progressive\\nexhibition of this self-interest at length exhausts\\nthe patience of the citizens and leads to the pre-\\ncipitation of a crisis in municipal affairs. But the\\nreform spirit not having the enduring power of\\nthe motive of self-interest soon dies out and a\\nnew cycle is entered upon.\\nIt has been noticed that the movement of settle-\\nment westward across the American continent has\\nnot been continuous, but has been accompHshed by\\na succession of waves of population moving on to\\nnew territory. As Professor F. W. Taussig has\\nsaid The process of settHng the country and\\ntaking up the new lands of the United States has\\nnever taken place by regular and steady steps. It\\nhas taken place by spells of great activity fol-\\ni33", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0145.jp2"}, "146": {"fulltext": "ECONOMIC CRISES\\nlowed by periods of dulness and reaction, in which\\nthe advance for the time being has almost ceased.\\nAt intervals of ten years, more or less, the popu-\\nlation has gone west too fast, and then has waited\\nto recover and take breath for a new effort.\\nIn many kinds of social activity it appears to be\\nnecessary that a certain lapse of time should occur\\nbetween the application of any given stimuli in\\norder that there shall be a strong social reaction\\nto them. The lapse of time between presidential\\nelections in the United States refreshes the public\\nthought and results in an intensity of interest in\\nthese political contests which is probably some\\nfunction of the interval. The patriotic enthusiasm\\nexhibited by the American people in the recent\\nwar was in part due to the slumber of these\\nsentiments for thirty-five years.\\nIn the sense above indicated the crisis is an\\nintermittent phenomenon. Many writers have\\ngone further than this, however, and claimed for\\ncrises a periodic law. The literature of the sub-\\nject shows that the manner in which a writer\\nexplains crises has controlling weight in determin-\\ning whether he is able to see evidences of perio-\\ndicity in the string of crises or not. As the idea\\nof periodicity accommodates itself in a remark-\\nable way to most theories of crises, its recognition\\nis quite general. The first to remark upon the\\n1 The Silver Situation in the United States, publication of\\nAmerican Economic Association, Vol. VII, p. 104.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0146.jp2"}, "147": {"fulltext": "THE PERIODICITY OF CRISES\\nperiodicity of crises was probably Sir William\\nPetty. Walter Stanley Jevons, the English econo-\\nmist, made this the foundation stone of his expla-\\nnation of crises, and Bagehot, like Jevons, admits\\nperiodicity, urging that it is due to the influence of\\nfluctuations in harvests upon the financial market.\\nThe same view is held by the Italian economist,\\nBoccardo.^ The socialist writers who consider the\\ncrisis as an outcome of the individuahstic character\\nof present production on the one hand, and of an\\nunjust distribution of wealth on the other, which\\ncuts off the buying power of the consumers as it\\nincreases the products depending on their demand,\\nbelieve that crises will be periodic until the present\\nindustrial system is fundamentally changed. Such\\nviews are found in the writings of Marx, Rodber-\\ntus, Friedrich Engels, and others. Writers like\\nWagner and Schaffle, who consider crises as due\\nto the erection of a vast business structure upon\\na credit basis, consider the period of crises to\\ndepend upon the psychology of credit, and the\\nlength of time required to fabricate an overgrown\\ncredit industry. John Stuart Mill, in his theory of\\nthe tendency of profits to a minimum, puts forth a\\ntheory of crises which leads necessarily to the\\nadmission that their occurrence is periodic. He\\nalso said that the recurrence of crises might be\\ndue to the growth of certain tendencies of mind.\\nOther exponents of the periodicity of crises who\\n2 Economia Politica, 6th ed., Vol. II, Part XXXV, p. 156.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0147.jp2"}, "148": {"fulltext": "ECONOMIC CRISES\\nagree in recognizing the fact, but differ in their\\nexplanations of its cause are Loehnis, Fregier,\\nJuglar, and John Mills.\\nThat there is any evidence of periodicity has,\\nhowever, been quite as distinctly denied by some\\nwriters as it has been affirmed by others. Roscher,\\nrecognizing as he does a great variety of causes of\\ncrises, considers the idea of periodicity unscientific.\\nEmile de Laveleye denies the periodicity of crises.^\\nMr. M. L. Scudder, Jr., in his Congested Prices,\\ntells us that the entire discussion of periodicity is\\ndue to a general tendency of the minds of investi-\\ngators toward well-rounded and neatly subdivided\\nportions of any study which group the facts\\ninto easily comprehended and, apparently, final\\nrelations.\\nThe best course, probably, is simply to set down\\nthe years of crises for the chief industrial states of\\nthe world, leaving to the reader to pass judgment\\non the evidence. But even the compiling of a list\\nof crises is a difficult undertaking, since no precise\\nline of demarkation can be drawn between general\\nand partial crises, or between crises and other\\ntypes of price fluctuation.\\n8 E. de Laveleye, who is thoroughly familiar with the economic\\nhistory of England as well as of France, says Crises return often,\\nsince the causes which produce them tend, as we have shown, to\\nappear more and more frequently. But, as we have pointed out in\\nour study, each crisis has its own peculiar determining causes,\\nand does not result in a necessary manner from the periodic return\\nof certain circumstances. La Marche Monetaire, Annexes\\nXI, De la Periodicite des Crises, p. 290.\\n136", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0148.jp2"}, "149": {"fulltext": "THE PERIODICITY OF CRISES\\nList of Economic Crises\\nUnited States\\nEngland\\nFrance\\n1792-93\\n1796\\n1804\\n1810-II\\nI8l2\\n1813\\n1815\\n1818\\n1818\\n1825\\n1825\\n1825\\n1830\\n1837-39\\n1836-39\\n1836-39\\n1847\\n1847\\n1847\\n185s\\n1857\\n1857\\n1857\\n1866\\n1869\\n1873\\n1873\\n1873\\n1882\\n1884\\n1884-85\\n1890\\n1890\\n1890\\n1893\\n1893\\nIn this list there are embraced economic disturb-\\nances of heterogeneous character, such as have\\npassed under the names of panics, or crises. There\\nare included crises due to failure of harvests\\n(England, 1847); purely financial panics (United\\nStates, 1869); and disturbances originating in a\\nsingle line of trade (England, 1836-39). The\\n137", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0149.jp2"}, "150": {"fulltext": "ECONOMIC CRISES\\nFrench list, which includes the crises enumerated\\nby Juglar,* embraces a number of dates on which\\nthere was merely a trade depression, or a financial\\nstringency of more or less consequence.\\nIn regard to the periodicity of crises, we have\\ntwo principal theories to consider. It has been\\npointed out by those who are familiar with the\\npart which the use of credit has played in bringing\\nabout certain crises, that crises in general must\\nstand as far apart as the period required to build\\nup a credit structure. If the attractions of credit\\nwhich lead to its use, lead ultimately to its abuse,\\ntime must be given for this force to build up an\\novertowering structure, the destruction of which\\nis the crisis. After the reverses of a crisis have\\nwarned the community of the dangers of unsound\\nbusiness, a stated lapse of time is required for\\nbusiness men to make the intellectual change\\nnecessary before the practices which lead to crises\\ncan again become common. Time is required to\\nforget and to let hope gradually rise again, and\\nthe mind become busied in plans in which hope\\nchanges to confidence, and this as gradually blos-\\nsoms into rashness. The period of crisis will then\\nbe set, as J. S. Mill suggested, by certain peculiar-\\nities of the human mind, or as Wagner expresses\\nThe list given in the text may be found in Juglar, Des Crises\\nCommerciales, p. 141. Juglar states that for the most part crises\\nin France have fallen upon the same years as in England. Cf.\\nCrises Commerciales, in Say s Nouveau Dictionnaire d Econo-\\nmie Politique, Tome I, Sec. i.\\n138", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0150.jp2"}, "151": {"fulltext": "THE PERIODICITY OF CRISES\\nit, by psychological law, in which an organic defect\\nof human nature is betrayed.\\nIn the completion of this theory a suggestion\\noriginating from another quarter may be added.\\nIt has been maintained that the periodicity of\\ncrises rests upon the procession of economic gen-\\nerations. The replacing of an older generation by\\na younger is continually going on in the business\\nworld, as elsewhere. It is held that in ten years\\nafter some trying experience the change in the\\npersonnel of business leaders will have been so\\ngreat that the new men will be influential enough\\nto permit a reappearance of dangerous practices\\nsuch as the experienced generation, partly sup-\\nplanted, would not tolerate. This view does not\\nimply that a new generation entirely replaces the\\nold one every ten years; still less does it mean\\nthat at any particular time there is any unusual\\nreplacing of one generation by another. It simply\\nasserts that in ten years not only will the keenness\\nof the lesson of crises be somewhat dulled to those\\nwho have passed through the experience, but that\\nthe new leaders, untamed by this chastisement, will\\nbe so large a faction as to exert material influence\\nin permitting dangerous practices to be adopted.^\\nA theory of crises, the foundation stone of which\\nis the recognition of periodicity, is the sun-spot\\nand harvest theory of Walter Stanley Jevons.\\n6Cf. The Nation, September 25, 1873, Vol. XVII, p. 207,\\nand J. E. T. Rogers s article Causes of Commercial Depression,\\nPrinceton Review, Vol. Ill, N. S., p. 223.\\n139", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0151.jp2"}, "152": {"fulltext": "ECONOMIC CRISES\\nAs its name indicates, the theory is devoted to an\\ninvestigation of the relation between sun-spots,\\nharvests, and economic crises. The idea was\\nsuggested by the striking coincidence in length of\\nthe period between the English crises of 1837,\\n1847, 1857, 1866, and 1878 and the periodic varia-\\ntion in the frequence of sun-spots.\\nTo ascertain what causal relation, if any, existed\\nbetween these two sets of phenomena, Mr. Jevons,\\nin 1862, undertook a series of investigations. He\\nbegan with the study of certain annual trade fluc-\\ntuations. The first to attract his attention was the\\ninfluence of the quarter-day, at which time in\\nEngland it is customary to settle accounts, pay\\nrents, etc. Having calculated from the records of\\nthe Bank of England the effect of these settlement\\ndays, and taking the year as the period of study,\\na remarkably persistent set of annual fluctuations\\nin the accounts of the bank was discovered, show-\\ning a distinct autumnal pressure upon the money\\nmarket and the institutions of credit generally. In\\nthe fall of the year a considerable amount of money\\nis paid out for harvest labor and in the purchase\\nof harvests^ and the settlement of country and vil-\\nlage accounts. This money is more than usually\\ndistributed into the hands of the people and hence\\n6 Jevons, Currency and Finance, pp. 1-12. The purchase and\\nmoving of American harvests has been found a matter of impor-\\ntance in the history of American currency and banking. See\\nTaussig, The Silver Situation, pp. 14, 23, 67, 68, 89; also Sum-\\nner, History of American Currency, pp. 217, 218, 219.\\n140", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0152.jp2"}, "153": {"fulltext": "THE PERIODICITY OF CRISES\\nabstracted from the banks. Expenditures previ-\\nously made in travel or for building have not yet\\nreturned to the banks, and the purchase of winter\\nstocks requires money. The fall quarter-day is\\ntherefore an important date, for at that time rent\\nand dividend payments at other times left on\\ndeposit are drawn from the banks for various uses.\\nIf at such a period as this the banks are not in\\nexcellent condition, or if for any reason an unusu-\\nally large demand is made for bank accommoda-\\ntion, a breakdown of the credit system may occur,\\nwhich, in the ignorance of the true nature of the\\nexcessive draft, may cause a sudden demand for\\nliquidation and precipitate a crisis, or at least a\\nfinancial panic. Since expenditure for subsistence\\nrepresents about fifty per cent, of the ordinary\\nperson s expenditures, it can easily be seen that\\na rise or fall in the price of food will control the\\ndirection of a very considerable part of the pur-\\nchasing power of society. An increase in the cost\\nof food will withdraw the buying power upon which\\nthe prosperity of many lines of industry has rested.\\nA decrease in the cost of food will release a large\\nbuying power, which, before the direction of its\\ndemand is known, will serve as a strong speculative\\ninfluence. Nor need the fluctuations in harvests\\nbe great to generate considerable price fluctua-\\ntions. Gregory King s tables on the relation be-\\n7 Cf. Max Wirth, Geschichte, 3d ed., pp. 5, 247; A, Wagner,\\nZur Lehre von den Banken, p. 205; Rodbertus, Meyer Briefe,\\nBd. I, p. 102.\\n141", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0153.jp2"}, "154": {"fulltext": "ECONOMIC CRISES\\ntween quantity and price fluctuations may be\\nrecollected in this connection. They show, for\\nexample, that to decrease the quantity of a com-\\nmodity by fifty per cent, would increase its price\\nby more than fifty per cent.^ Finally, as the\\nmodern money market is organized, an unusual\\ndemand for cash may sometimes occasion serious\\nconsequences. In the words of Mr. Bagehot\\nAny sudden event which creates a great demand\\nfor actual cash may cause, and will tend to cause,\\na panic in a country where cash is much econo-\\nmized, and where debts payable on demand are\\nlarge. In such a country an immense credit rests\\non a small cash reserve, and an unexpected and\\nlarge diminution of that reserve may easily break\\nup and shatter very much, if not the whole, of that\\ncredit. It was Mr. Jevons s idea that if the peri-\\nodicity of sun-spots could be shown to have a\\ncounterpart in a fluctuation of harvests, and if this\\nfluctuation of harvests through an unusual pres-\\nsure on the autumnal money market could be\\nshown to be the cause of crises, he would have\\nexplained the law of periodicity. More fully\\nstated, the chain of reasoning which it was hoped\\nto establish was as follows A periodicity in the\\nfluctuation of sun-spots has been clearly proven.\\n8 Tooke, History of Prices, Vol. I, pp. 12-14. In this con-\\nnection Tooke enumerates as the three most important causes of\\nfluctuations in prices, the effect of the seasons, war, and changes in\\nthe currency.\\nWalter Bagehot, Lombard Street, Ch. VI.\\n142", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0154.jp2"}, "155": {"fulltext": "THE PERIODICITY OF CRISES\\nThe periods of maximum appearance are separated\\nby an interval of about 10,45 years. This period\\nis within a fraction of the average lapse between\\nthe well-known English crises of 1837, 1847, iS57\u00c2\u00bb\\n1866, and 1878. This coincidence of periods\\nraises something of a presumption that there is\\na causal connection between the two. There is a\\ntheory that numerous sun-spots indicate a greater\\nactivity upon the surface of the sun than exists at\\nperiods of minimum spots. This activity must\\ninfluence the radiation of heat. If more heat is\\nradiated at one time and less at another there will\\nbe a consequent variation in the amount of heat\\nreceived by the earth. A period of relatively cold\\nseasons, when less than the ordinary amount of\\nlight and heat is received, will be one of cloudy,\\nwet weather, insufficient warmth for ripening\\ncrops, hence one of poor crops and relatively\\nhigh prices for agricultural products. The suc-\\nceeding period, as influenced by fluctuations in the\\nsolar radiation, will be of opposite character, and\\nso in succession each period will be followed by its\\nopposite.\\nThe investigations of Mr. Jevons were for the\\npurpose of proving whether or not the harvest\\ncycle was marked enough in its influence on\\nprices to justify the belief that it was the cause\\nof the crises cycle. Early English price records\\nwere first examined by him, and although some\\nsHght evidences of a periodicity in price fluctua-\\ntion were obtained, no conclusions could be based\\n143", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0155.jp2"}, "156": {"fulltext": "ECONOMIC CRISES\\nupon them. The tables of merchandise exported\\nfrom England to India also failed to give any testi-\\nmony. In this connection the history of famines\\nin India was examined, and a striking and signifi-\\ncant periodicity was observed. Records of exports\\nfrom Maryland and Virginia to England between\\n1700 and 1770 exhibited periodic variations, though\\nbroken at one or two points. In the examination of\\nthe English records of this time, Mr. Jevons found\\nthat the South Sea Bubble and the crisis of 1721\\nwere exactly at the interval between the eleventh and\\ntwelfth sun-spot period, reckoning back from 1837.\\nStudying carefully each period between these two\\ndates, and registering every crisis year, as well as\\nevery year showing special commercial distress or\\nunsound activity, Mr. Jevons constructed a list\\nwhich certainly shows all that the history of Eng-\\nlish crises can be made to prove for the theory of\\nperiodicity, and probably claims much more than\\nthat history, fairly interpreted, will justify. The\\nlist is as follows, unimportant business disturb-\\nances being indicated by a question mark (1701\\n171 1, 1721, 1731-32,(1742.? 1752.?), 1763, 1772-73,\\n1783, 1793,(1804-5.?), 1815, 1825, 1836-39, 1847,\\n1857, 1866, 1878.\\nIt must be very apparent to every one that an\\n10 Jevons, Currency and Finance, pp. 216, 236-238. Some\\ntestimony on this point is adduced by Mr. Cornelius Walford in his\\npaper, On the Famines of the World Past and Present, pub-\\nlished in the Journal of the Royal Statistical Society for Septem-\\nber, 1878, Vol. XLI, p. 521.\\n144", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0156.jp2"}, "157": {"fulltext": "THE PERIODICITY OF CRISES\\nargument of this sort is extremely liable to abuse\\nunless in the hands of an unusually conscientious\\nexpert, and unless, also, a rigid criterion is adopted\\nas to what may be allowed as constituting a crisis\\nfor the purpose of supplying a missing link in a\\nseries like the above. Even the best of reasoners,\\nif once possessed of an idea of this sort, are liable\\nto overestimate the importance of certain phenom-\\nena which help to prove their theories. The histor-\\nical proof must certainly be said to be inconclusive.\\nThe objections to this theory are both numerous\\nand vital. In the first place there has been diffi-\\nculty in the investigation of sun-spots, and uncer-\\ntainty as to the sun-spot period. It was first\\ncalculated to be ii.ii years, but was later changed\\nafter more careful observation to 10.45 years.\\nThe facilities for accurate observation have been\\ngradually improving so that modern records can-\\nnot be compared with the work of a former period\\nwithout due allowance. Again, no substantial\\nagreement has yet been reached among astron-\\nomers regarding the cause of sun-spots and their\\n11 Nathan T. Carr shows that neither Newcomb, Secchi, Faye,\\nnor Young was able to hazard an explanation of sun-spots. The\\nlatter rejects the influence of planetary bodies, which theory is\\nfounded upon the coincidence of Jupiter s revolution with the ten-\\nyear sun-spot period, and to which Jevons referred. Carr considers\\nsun-spots as periodic bursting forth of imprisoned gases, which,\\nbeing steadily generated within the sun s mass, gradually increase\\npressure against the obstructions confining them. The Sun; Its\\nConstitution; Its Phenomena; Its Conditions, New York, 1883,\\nSec. 25.\\nL 145", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0157.jp2"}, "158": {"fulltext": "ECONOMIC CRISES\\nmeteorological significance. It throws doubt upon\\nthe ten-year argument to know that if almost any\\nother number of years is chosen, it can be shown\\nto correspond with the price fluctuations in many\\ntables. The French economist Juglar has noted\\ncycles of five and six years in the accounts of the\\nBank of France.^^ Jevons himself says In 1875\\nI made a laborious reduction of the data contained\\nin Professor Thorold Rogers s admirable History\\nof Agriculture and Prices in England from the\\nYear 1259. I then believed I had discovered the\\nsolar period in the prices of corn and various\\nagricultural commodities, and I accordingly read\\na paper to that effect at the British Association\\nat Bristol. Subsequent inquiry, however, seemed\\nto show that periods of three, five, seven, nine, or\\neven thirteen years would agree with Professor\\n12 Juglar, Journal des Economistes, 1856. Schaffle relies on\\nJuglar in saying that every six or seven years a general liquidation\\nappears to be necessary in France, in order to allow trade to enter\\nupon a new period of growth. Roscher, Ansichten, Bd. II,\\np. 381, mentions on the authority of Fregier that crises occur in\\nFrance every three or five years.\\nAll these contradictory statements most effectually dispose of one\\nanother. Concerning English conditions Friedrich Engels has tes-\\ntified as follows in the introduction to his work, The Condition of\\nthe Working Classes in England in 1844, pp. x, xi: The recur-\\nring period of the great industrial crises is stated in the text as five\\nyears. This was the period apparently indicated by the course of\\nevents from 1825 to 1842. But the industrial history from 1842\\nto 1868 has shown that the real period is one of ten years, that the\\nintermediate revulsions were secondary, and tended more and more\\nto disappear. Since 1868 the state of things has changed again\\n146", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0158.jp2"}, "159": {"fulltext": "THE PERIODICITY OF CRISES\\nRogers s data just as well as a period of eleven\\nyears in disgust at this result I withdrew the\\npaper from further publication. A further com-\\nplication attends from the fact that there are other\\nclimatic periods, that these price investigations\\ngave evidences of larger price cycles, and that the\\nrecords of sun-spots vary not only in a short cycle\\nof years but through a much longer one. From\\nobservations made upon glaciers, geographers have\\nnoted a climatic period of about thirty-five years.\\nThe maxima of these climatic periods have fallen\\nin the years 1767, 18 14, 1840, in neither of which\\nthere has been a crisis. In regard to a larger\\nsun-spot cycle, Professor Balfour Stewart says It\\nappears that these eleven-yearly oscillations are\\nnot always of the same magnitude sometimes\\nthey are large, and sometimes small. They were\\nprobably sm.all about the middle of the last cen-\\ntury, becoming large toward the end of it; they\\nwere again small about the early part of the\\npresent century. They have recently been large,\\nand we may suspect that in the future there will\\nagain be a falling off. This corresponds with\\nthe conclusions of Carrington, as shown in the dia-\\ngrams pubhshed in his Observations of Solar\\nSpots.\\nAnother objection to this theory is the lack of\\nproof that sun-spots exert an important determina-\\ntive influence upon climate. Sir William Herschel\\n18 Currency and Finance, p. 225.\\n147", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0159.jp2"}, "160": {"fulltext": "ECONOMIC CRISES\\nsaid I think we may reasonably conclude that\\nthere must be a manifest difference in the emission\\nof light and heat from the sun. With regard\\nto the contemporary severity and mildness of the\\nseasons, it will hardly be necessary to remark that\\nnothing decisive can be obtained. Considering\\nthe distribution of land and water masses on the\\nearth, the effect of the declination of the earth s\\naxis, of nearness or remoteness to the equator, of\\nmountain chains, variations in the soil and its\\nvegetable covering, the prevailing directions of\\nthe winds and other atmospheric phenomena, it\\nis not a simple thing to say what the effect of a\\ngiven variation in the amount of heat radiated\\nto the earth would be upon the climate of any\\ncountry. The effect of an increase in the solar\\nheat received during a summer might improve the\\nharvests of England, but diminish those of Egypt.^^\\n1* Philosophical Transactions of the Royal Society for 1801,\\nVol. XCI, p. 310.\\n15 It is very probable that the excess of sunshine which pro-\\nduces drought and famine in India has an opposite effect on the\\nprosperity of England and all other countries lying between the iso-\\nthermal lines, and that the more moderate degree of sunshine\\nwhich may suit the Indian cultivator is insufficient to properly\\nripen English wheat and other produce (oats excepted). Mr.\\nJohn Kemp, in Commercial Crises and Sun-Spots, Nature,\\nDecember 5, 1878, Vol. XIX, p. 97. A reciprocal climatic relation\\nbetween countries and in connection with sun-spots is indicated by\\nsome barometric records. See article On the Barometric See-\\nSaw between Russia and India in the Sun-Spot Cycle, in Na-\\nture, March 18, 1880, in which Mr. H. F. Blanford makes the\\nfollowing statement There is a reciprocating and cyclical oscilla-\\n148", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0160.jp2"}, "161": {"fulltext": "THE PERIODICITY OF CRISES\\nMr. Jevons himself admitted that changes due to\\nsolar radiation would have little or no traceable\\ninfluence upon the complicated climate of Europe.\\nAt least no success has been attained in showing\\nperiodicity in the variations of the price of either\\nEuropean or English grain for recent times. These\\nconsiderations suggest that if the climates of various\\nregions of the earth are in any degree reciprocal,\\nthe modern growth of the means of transportation\\nhas so expanded as to distribute the surplus of\\nabundantly supplied areas over those less well sup-\\nplied and neutralize price fluctuations which might\\notherwise result. The principal European markets\\nreceive wheat from all parts of the world and dis-\\nplay great stability of prices. This equalizing\\neffect of commerce has been greatest during this\\ncentury, but it is precisely during this century that\\neconomic crises have been most acute and most\\nsteadily recurrent.\\nWe may still further object to the sun-spot\\ntheory, not only that the sun-spot phenomena are\\nimperfectly understood and that their relation to\\nclimate remains to be defined, but that the relation\\nbetween variations in harvests and crises is not\\nmore satisfactorily explained than any of the other\\ntion of atmospheric pressure, of such a character that the pressure\\nis at a maximum in Western Siberia and Russia about the epoch\\nof maximum sun-spots, and in the Indo-Malayan area at that of\\nminimum sun-spots. But this idea of reciprocal relations cannot\\nbe safely pressed very far. See E. Reclus, The Earth and its\\nInhabitants; North America, Vol. Ill, The United States,\\np. 254.\\n149", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0161.jp2"}, "162": {"fulltext": "ECONOMIC CRISES\\nsteps in this chain of influences. We are told on\\nthe one hand by Jevons that abundant harvests\\nhave often aroused a speculative spirit as the result\\nof prosperity and have led to ill-advised business\\nactivity and eventually to crises. On the other\\nhand, the English crisis of 1847 is included by\\nJevons among others upon which he places reliance\\nto found his periodical series. This disturbance\\nwas brought on, however, in part by harvest fail-\\nures which compelled England to send her gold\\nto the United States for provisions. This drain\\nof gold under the working of Peel s Bank Act\\ncaused a stringency of the money market. The\\nharvest theory appears to be holding to both horns\\nof the dilemma.\\nFinally the incidence of crisis years and of maxi-\\nmum or minimum sun-spot years is not identical.\\nThe investigations of Schwabe showed that the\\nyears of maximum sun-spot frequency were 1828,\\n1837, 1848, i860, and 1871. The minimum years\\nwere 1833, 1844, 1855, 1867. But during this period\\nthe English crises fell, as we have already seen,\\nin the years 1825, 1836-39, 1847, 1857, 1^66, 1873.\\nThe series of crises as it stood some years ago pre-\\nsented more of a foothold for an argument con-\\ncerning periodicity than it does at the present time,\\nsince the last two or three crises, both in England\\nand the United States, have broken up the rather\\nremarkable rhythmic succession of the earlier part\\nof the series. As President A. T. Hadley has said,\\nThe Civil War in the United States quite broke\\n150", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0162.jp2"}, "163": {"fulltext": "THE PERIODICITY OF CRISES\\nup the regular ten-year round of crises, and, as it did\\nnot have any appreciable effect on the sun-spots,\\nit may be said to have broken up the theory also.\\nBut even if the character of the crises prior to this\\nmost recent period be considered with care, it will\\nbe seen that while a harvest theory might help to\\nexplain the occurrence of some disturbances, its\\napplication to others is absurd. One might per-\\nhaps admit some proof in connection with the\\nEnglish crises of 1825 or 1847, or the American\\ncrises of 1836-39, but how shall the international\\ncrises of 1857 and 1873 be explained The har-\\nvest theory is inapt as an explanation of the appear-\\nance of John Law and the insane hopes built upon\\nprospects of colonial trade which led to the crisis\\nof 1720. This theory does not apply to the Eng-\\nhsh crisis of 18 15 which hung upon the termination\\nof the Napoleonic wars, nor to the financial situa-\\ntion in London in 1866. It affords no explanation\\nof Black Friday in 1869, nor of the Baring and\\nCopper Syndicate failures in 1890, and it does not\\naccount for the crisis of 1893.\\nRESUME\\nI. Theories of crises have been suggested by the fact that\\ncrises are distributed with a certain uniformity of\\ninterval.\\nII. Intermittent character of social phenomena.\\nDue to the seasons.\\nPeriodic reforms.\\n16 Johnson s Universal Cyclopgedia, article Commercial Crises.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0163.jp2"}, "164": {"fulltext": "ECONOMIC CRISES\\nSettlement of western America.\\nTable of crisis years.\\nIII. Periodicity of crises and credit.\\nThe gradual expansion and final overgrowth of credit.\\nReplacement of generations of business men.\\nIV. Harvest and Sun-Spot theory.\\nInfluence of the quarter-day.\\nTheory of the influence of sun-spots.\\nMr. Jevons s futile search for periodic price fluctuations.\\nHis list of crisis years.\\nObjections Apparent existence of numerous price\\ncycles no correspondence between crisis years\\nand years of maxima or minima sun-spots com-\\nplexity of climate and the equalization of prices\\nthrough commerce. Recent crises have broken\\nthe regular succession of some earlier ones.\\n152", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0164.jp2"}, "165": {"fulltext": "CHAPTER VIII\\nCREDIT AND SPECULATION\\nOne of the most constant characteristics of the\\npre-crisis period is an abnormal extension of credit.\\nIt is significant that historically the appearance of\\ncrises is practically simultaneous with the growth\\nof our present system of credit economy. The\\ndistribution of crises between nations also corre-\\nsponds with the extension of the use of credit.\\nCredit creates between the members of industrial\\nsociety an economic bond of primary strength,\\nmaking the uncertainties which influence one party\\nof vital concern to every other. The relations of\\ndebtor and creditor in modern society have been\\nlikened to the life cords used to bind together a\\ncompany of mountain tourists. It is certain that\\nat least in times of distress credit and money are\\nthose agencies of the market which make men\\nreahze the economic interpretation of the saying,\\nFor none of us liveth to himself, and no man\\ndieth to himself.\\nCredit serves to separate by an interval of time\\nRomans xiv. 7. In 1844 Joseph Mazzini said, Credit nowa-\\ndays is no longer a national, but a European, institution. It may\\nnow be considered a world institution.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0165.jp2"}, "166": {"fulltext": "ECONOMIC CRISES\\nthe two parts of a complete act of exchange, and\\nit serves to hold the market in a state of suspense\\nas to what the effect of the postponed part of the\\ntransaction will be, or, indeed, whether the transac-\\ntion will ever be completed or not. In the balancing\\nof demand and supply, particularly with reference\\nto money, this uncertainty in the element of time\\nis a very important consideration. The economist\\nRoscher has shown that in a money and credit\\neconomy, demand and supply cannot be looked\\nupon merely as two sides of the same thing, as\\nsome writers have asserted.^\\nThe transfer of money or money s worth, facili-\\ntated by credit, involves the confidence on the part\\nof the creditor that the debtor is able and willing\\nto repay the loan and to execute in a proper man-\\nner whatever other conditions are agreed upon or\\nimplied. It is true that in many forms of credit\\ntransactions specific evidences of indebtedness are\\ncreated and certain rights and titles to property\\nare given the creditor to afford a partial basis for\\nhis confidence, but considering the methods by\\nwhich business is usually transacted, it is obvious\\nthat a large portion of credit transfers rest chiefly\\nupon personal security in short, upon probity or\\nhonor. The effect of such transactions is as vari-\\nous as the circumstances under which credit is\\ngranted and the character of the parties involved.\\nAs language will serve to convey the noblest or the\\n2 Roscher, Ansichten, Bd. II, Zur Lehre von den Absatz-\\nkrisen, Sec. 3.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0166.jp2"}, "167": {"fulltext": "CREDIT AND SPECULATION\\nbasest of thoughts, so credit will serve to enhance\\nor diminish the economic well-being of the users.\\nThe effects of credit vary as the uses to which the\\nwealth transferred is put. It has been called the\\nhighest triumph and the shadow-side of modern\\nculture. As Lorenz von Stein has said, it resembles\\nthe press in the world of thought, aUke a minister\\nto good and evil.\\nThe widespread growth of the system of credit\\nis ample evidence that it performs useful services.\\nIt is usually thought an advantage to be able to\\ntransfer capital easily into the hands of those\\ndesiring to use it. Industry is certainly rendered\\nmore efficient by whatever facilitates the placing\\nof capital in the hands of those best fitted to\\nmanage and employ it. But in so far as crises\\nmay be considered the result of unwise credit,\\nthey may be looked upon as evidence that capital\\ndoes not through credit seek out with sufficient\\ncertainty the ablest managers. It is the law of\\nnature that a man shall go through the educat-\\ning and subduing process of earning wealth before\\nbearing the responsibility of its management.\\nHow far we can safely suspend this law is a\\nquestion. Credit increases in some persons the\\ndesire to save by affording in advance an easy\\nsolution of the question of investment. It pre-\\nvents wealth which is saved from being hoarded\\nand gives industry the largest proportion of the\\nsum saved. Credit assembles small savings to\\nmake up the amounts necessary to carry through\\n155", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0167.jp2"}, "168": {"fulltext": "ECONOMIC CRISES\\ngreat undertakings. When it is said that credit\\nfacilitates the transfer of values, it is implied that\\nit saves the use of money. Adam Smith said that\\nif money serves as a highway of trade, credit may\\nbe likened to a highway through the air which\\npermits the release of a portion of the precious\\nmetals for other uses.^ It also saves the time,\\ntrouble, and expense which would otherwise be\\nnecessary to make separate and complete pay-\\nments in every business transaction.\\nThe dangers and abuses which have connected\\nthemselves with credit have by no means escaped\\nthe attention of economic writers who have given\\nattention to crises. John Stuart Mill and Adolph\\nWagner have so far emphasized the part played\\nby credit as to favor the use of the phrase credit\\ncrises. Schaffle, Michaelis, Von Mangoldt, Fliir-\\nscheim, and Von Stein, together with Juglar in\\n8 By these means it increases the amount of disposable capital.\\nVon Stein makes the growth of credit the last and real ground of\\ncommercial crises. He says The causes of commercial crises lie\\nin the causes which check payments. As payments result from\\nsales, a lack of sales is the first cause of crises. The cause of a\\nlack of sales lies in the fact that production suddenly outruns con-\\nsumption, because of which naturally a portion of the product\\nremains unsold. The cause of this sudden increase of production\\nlies in the rapid increase of productive capital, and since this is\\noccasioned by credit, the rapid increase of credit, interest not\\nbeing considered, is the cause of commercial crises. Credit, as it\\nis the source of progress, is also the source of danger. It is in the\\neconomic world what the press is in the world of thought. No-\\nwhere is the good more closely connected with the evil. Lehr-\\nbuch der Volkswirthschaft, p. 228.\\n156", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0168.jp2"}, "169": {"fulltext": "CREDIT AND SPECULATION\\nFrance and Macleod in England have pointed\\nout the sensitiveness of credit and have indicated\\nsome of its prevalent abuses.*\\nTo understand the dangers inhering in the use\\nof credit it is necessary to observe the sensitive-\\nness of the instrument. Depending as it does\\nupon confidence, it is as changeable as the course\\nof public thought.^ Credit facilitates a system\\nof exchanges which money is incapable of main-\\ntaining unaided. The extension of credit is ac-\\ncompanied by a realization that if any large part\\nof the mechanism of trade should meet with\\ndisaster capable of shaking confidence, the result\\nwould be the withdrawal of credit and a conse-\\nquent stringency in the money market. A ner-\\nvous watch is therefore maintained for such\\noccurrences, and the dread of the headlong rush\\nfor liquidation, in which some must inevitably be\\ncrushed, always lurks in the background of modern\\nindustry.^\\nFew writers deny that important connections exist between\\ncrises and credit and speculation. Those writers who hold the\\nRodbertus theory of crises tend to deny or minimize these connec-\\ntions, however. See Theodor Hertzka, Die Gesetze der socialen\\nEntwickelung, Bd. I, Ch. VIII, pp. 95-106.\\n5 Cf. Bagehot, Lombard Street, Complete Works, Vol. V, pp.\\n182-183. O^ P- 48 he says, Every banker knows that if he has\\nto prove that he is worthy of credit, however good may be his\\narguments in fact, his credit is gone, See also Mechem on\\nAgency, Sec. 209, p. 136, Detroit, 1888.\\nA description of unsound credit so neat and delicate as to\\nscarcely admit of translation is given by Schafifle in the following\\nwords Ein Kreditgebaude muss sich in die Luft zimmern, so", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0169.jp2"}, "170": {"fulltext": "ECONOMIC CRISES\\nThe specific circumstances which may lead to\\nthe destruction of credit are innumerable. Credit\\nmay be called upon to procure the means for\\nunproductive and unwise consumption or for the\\ncarrying through of reckless schemes of produc-\\ntion. The more sudden the demand for capital,\\nthe more certain it is that the demand will be\\naccommodated through credit instrumentalities. In\\nso far as credit brings savings to investment, it\\nlessens the reserve funds both of money and com-\\nmodities which remain unentangled from the\\nproductive mechanism and which may be drawn\\nupon in case that mechanism falls into disaster.\\nIt is said that capital lengthens the act of produc-\\nleicht, dass ein Windhauch es endlich zusammen blasen kann.\\nGeht ein einziges Glied aus der Fuge, so stiirzen alle anderen,\\nbleibt eine Zahlung aus, findet nicht ganz genau der kalkulierte\\nAbsatz zur kalkulierten Zeit und zum kalkulierten hohen Preise\\nstatt, so fallt dann mit einem Ringe die ganze papierne Kette\\nauseinander. Gesammelte Aufsatze, Bd. II, p. 26, 1886.\\nBagehot points out that the borrowing of spendthrifts is in-\\nsignificant compared with the entire amount of credit transfers.\\nSpendthrift borrowing, he says, is now only likely to occur, on any\\ngreat scale, in public finance. Complete Works, Vol. V, p. 438.\\nFor the opposite view, that frivolous expenditure is less likely to\\noccur in public than in private finance, see Cohn, Finanzwissen-\\nschaft, pp. 182-185. This discussion seems to hinge on how war\\nexpenses are classified. Bagehot cites the expenses of the Seven\\nYears War to France. Held says that war expenses can only\\nbe considered unproductive from a purely economic standpoint.\\nKredit, in Bluntschli s Staatsworterbuch, Loning ed., Bd. II,\\np. 424. Wagner attempts something of a justification even upon\\neconomic grounds. Finanzwissenschaft, 3 Aufl., Bd. I, pp. 73,\\n416-418.\\n158", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0170.jp2"}, "171": {"fulltext": "CREDIT AND SPECULATION\\ntion and renders it more roundabout. In so far\\nas credit facilitates the use of capital, it assists in\\nlengthening the forecast of the market which\\nproducers must make, and so increases uncer-\\ntainty while it multiplies the number of interests\\ninvolved in every transaction.\\nThe realization of the force of coming obliga-\\ntions is always more indistinct the more distant\\nthey are in the future. It is partly because they\\nbelieve that patrons will buy somewhat more\\nliberally when buying on account that mer-\\nchants consent to be harassed with the costly\\nand annoying credit system. Because of this\\ninability to realize fully the future, the chattel-\\nmortgage, lightning-rod shark of the past was tol-\\nerated and the instalment plan now proves a means\\nof extortion in dishonest hands. It is a well-known\\nfact that while strikes against a reduction of wages\\nare frequent, laborers can seldom be united to\\nstrike against unhealthful conditions which do\\nnot indeed reduce wages for the moment, but\\nwhich mean future loss in sickness and hastened\\ndecrepitude. The public shows itself relatively\\nindifferent in regard to the expenditure of funds\\nwhich are provided by the creation of public debt,\\nthe redemption of which is placed in the indefinite\\nfuture.^ There is a false feeling of opulence\\n8 Mr. Albert S. Bolles well says, Nothing ever chills the desire\\nto spend money, especially for the benefit of the public, so quickly as\\nan immediate demand for it. Lalor s Cyclopaedia, Finance,\\nVol. II, p. 187.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0171.jp2"}, "172": {"fulltext": "ECONOMIC CRISES\\nattending the removal of one s obligations to the\\nfuture. The borrower has to deal with an instinc-\\ntive feeling that as the result of his transaction\\nhe has in some way made a gain which will per-\\nmit of a little carelessness or generosity. The\\nforce of this may in an individual instance be\\ngreat or small, but the widespread use of credit\\nmakes even the minor characteristics of borrowing\\nimportant, if they can be shown to be constant.\\nCredit should be granted for short periods only,\\neven if often renewed. Long credits work a grad-\\nual insensibility to the idea of obligation and lead\\nto practices not harmonious with the position of\\na debtor. Punctuality, one of the most funda-\\nmental of economic virtues, is in any industrial\\ncommunity largely regulated by the practice of\\nthe banks. It may not be true that punctuality\\nis the parent of all virtues but unmistakably is\\nprocrastination the mother of every vice, whether\\nin social or personal character. There is nothing\\nfor making duty easy like bringing men sharply\\nup to it, and firmly holding them there. On the\\nother hand, obligations grow heavier and heavier\\nthe longer they are put off. What was first pro-\\ncrastinated, it is soon sought to evade self-respect\\nwilts under the reproaches of the creditor; dis-\\nOn the general topic of the realization of distant results, see\\nSpinoza, Ethics, Propositions IX and X. For the application to\\neconomics, see Bohm-Bawerk, Positive Theory of Capital, Bk. V,\\nCh. I, Present and Future in Economic Life, and Ch. Ill,\\nUnderestimate of the Future.\\ni6o", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0172.jp2"}, "173": {"fulltext": "CREDIT AND SPECULATION\\nhonest suggestions arise unrebuked in the mind\\nthat would once have thrust them indignantly out.\\nThe advantage which the bank confers on the com-\\nmunity by introducing a rigid standard of punctu-\\nality cannot be overrated.\\nIt need not be pointed out that in the case of\\nadvances of money which rest upon honesty and\\nbusiness reputation, precaution has to be con-\\nstantly taken against men who are without means\\nand are willing to put money obtained by credit\\nto unusual risk, the loss of which they could not\\nbe compelled to make good, since the profits, if\\nany, can be retained. A materialistic age places\\nstrong inducements before the ambitious to make\\na dash for wealth, in spite of the fact that the\\ngame is often simply the dishonest one of Heads\\nI win, tails you lose. The voice of public opin-\\nion is rendered equivocal on such matters by call-\\ning those exceptional ones who succeed by these\\nmethods smart, and by giving prestige to wealth\\nregardless of its origin. With a loan the creditor\\nbuys an interest in the debtor s ability and moral\\ncharacter, and the motto caveat emptor is as much\\nmore significant in such transactions than in ordi-\\nnary buying as character and ability are more dif-\\nficult to judge than goods. Loans made at the\\naverage rates of interest contemplate only the\\naverage difficulty of collection. If the loan is one\\nof the transient kind made in the course of busi-\\nness, without security, justice would seem to de-\\nF. A. Walker, Money, Trade, and Industry, p. 252.\\nM 161", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0173.jp2"}, "174": {"fulltext": "ECONOMIC CRISES\\nmand extraordinary caution on the part of the\\ndebtor not to disable himself for meeting his\\nobligations.\\nThe chief credit institution of modern society is\\nthe bank. When crises have been thought to be\\ndue to the misuse of credit, nothing has been more\\ncommon than at once to fasten the guilt upon the\\nbanks and condemn this or that feature of the\\nprevailing bank system. The mistake of many\\nwriters upon crises has been to confine attention\\ntoo narrowly to some one form in which the abuse\\nof credit manifests itself. A comparative study of\\ncrises will show that they occur under the most\\nvaried systems of banking and currency.^^ Banks\\nare the servants of trade and are subject to the\\nsame influences which affect it. The abuses con-\\nnected with credit which fasten attention upon\\nbanks, and which inflict upon them the greatest\\ninjury, are not always nor yet generally due to\\ncircumstances connected with the banking system\\nitself.ii\\nA rising credit should rather be considered like\\nThe possibility of overspeculation is correctly referred to\\nthe misuse of credit, but again and again will the common mistake\\nbe made of pointing out some one particular form of the use of\\ncredit and some one particular sort of credit institution as the sole\\ncause of overspeculation and the abuse of credit. Wagner, in\\nRentzsch, Handworterbuch, p. 533.\\n11 Speaking of the misuse of banking institutions, Horace White\\nsays Excessive issues and excessive credits are invariable con-\\ncomitants of the swelling gale of prosperity which precedes and\\nushers in a crisis. They are part and parcel of the speculative\\nfever which pervades the community, but are no more to be ac-\\n162", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0174.jp2"}, "175": {"fulltext": "CREDIT AND SPECULATION\\na rising tide the pressure of which breaks through\\nan only too weak wall of moral restraint. At one\\nplace the abuse of credit may centre in the bank-\\ning policy, at another in joint stock companies at\\none time it may be a fault in the bankruptcy laws,\\nand at another it may be a reckless issue of paper\\nmoney. To patch the crevices of industrial legis-\\nlation, as new experiences show new defects, is\\nindeed necessary and is valuable as far as it goes,\\nbut it does not kill the central evil nor prevent it\\nmanifesting itself in ever new forms.\\nThe use of credit has proven especially danger-\\nous in times when, owing to some gratifying\\ncircumstance, the tone of business is unusually\\noptimistic. It has also proven dangerous in lines\\nof trade in which trade estimates are unusually\\nspeculative and results are uncertain. The history\\nof mining, invention, and foreign trade is replete\\nwith failures partly due to easy credit.\\nTo prevent the growth of unsound business, it\\nbehooves every giver of credit to maintain a sharp\\nscrutiny of the conditions under which it is given.\\nCredit, like esteem, is to be given only to the virtu-\\nous. Backbone is quite as necessary in the cred-\\nitor to enable him to say no, as in the debtor to\\nenable him to resist the temptation to risk dishon-\\nestly the possessions of another. It is true that\\nthe force of competition presses upon the creditor,\\ncounted the cause of it than the excessive multiplication of spindles\\nand of railways going on at the same time. Commercial Crises,\\nin Lalor s Cyclopaedia, Vol. I, p. 525.\\n163", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0175.jp2"}, "176": {"fulltext": "ECONOMIC CRISES\\nwhether an individual or a bank, to compel unwise\\naccommodation, but in the same way that labor\\nshould resist the tendencies leading to the de-\\nbasement of the standard of life, so should capi-\\ntal resist the tendencies working to debase the\\nstandard of credit. An unwise credit is like an\\nunwise charity, full of ill consequences for all par-\\nties involved. As with everything else, credit\\neasily gotten is lightly prized. The first credit\\noperations of a series should always be most\\nclosely scrutinized, as they tend to compel suc-\\nceeding advances through the force of courtesy\\nor business connections. Business accommodation\\nand business standing once granted are not lightly\\nto be broken off or ruined. The situation com-\\npelling it js to be avoided by merchants and\\nbanks desirous of escaping costly and disagreeable\\nantagonisms. ^2\\nWhatever agencies facihtate the accurate esti-\\n12 A banker may have a very shrewd suspicion that his cus-\\ntomer is overtrading, but, as he has no access to his customer s\\nbooks, it may be very difficult for him positively to ascertain the\\nfact. And if a banker acts upon insufficient grounds, and v^ithout\\nsure cause ruins his customer, he will get himself into very bad\\nodor, and may do himself much injury. Of course, the greater the\\nmerchant, the more difficult it is to deal with him. And great mer-\\nchants who have numerous and powerful connections can manu-\\nfacture bills to an incredible extent to cover up losses, and keep\\nthemselves afloat by extracting fresh funds from their bankers to\\nspeculate with; until, when the final collapse comes, it is found\\nthat their assets are almost all eaten away, and left perhaps a shil-\\nling or two in the pound to meet the masses of paper. MAC-\\nLEOD, The Theory of Credit, Vol. II, Ch. XVI, Sec. 4, pp. 709-710.\\n164", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0176.jp2"}, "177": {"fulltext": "CREDIT AND SPECULATION\\nmation of character and financial standing render\\na useful service in directing credit. Such are\\nbanks, mercantile agencies, trade lists, collection\\nagencies, business men s protective associations,\\nand the like. Credit implies trust, and what is\\nnecessary for that is realized when we say trust-\\nworthiness. It means a great deal that the\\ncharacteristics of modern business are such as\\nincreasingly to demand honesty and impose that\\nas the condition of all success on a large\\nscale.\\nThe modern growth of credit has for the first\\ntime made speculation socially dangerous. When\\nwe consider speculation in its broadest sense, we\\nhave not simply to do with the activities of stock\\nexchange operators, but with a necessary tenta-\\ntiveness of judgment affecting in some degree\\nevery human calculation. That sort of specula-\\ntion which is merely a rational provision against\\nfuture contingencies, all understand and appreci-\\nate. Adam Smith has pointed out that speculative\\nreturns constitute a part of all wages, especially of\\nthose in the higher occupations where considerable\\nrisk of failure has been run. Although specula-\\ntion involves the presence of uncertainty, it seems\\ndesirable to distinguish it from gambling or oper-\\nations on a basis of pure chance. Gambling has\\nonly the evils and none of the virtues of specula-\\ntion. Throwing patient industry to the wind, it\\nfascinates those who engage in it by an unending\\nseries of shallow uncertainties and thoughtless sur-\\n165", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0177.jp2"}, "178": {"fulltext": "ECONOMIC CRISES\\nprises fit to tickle the feeble wits of savages and\\ndegenerate types of the human family.\\nIt would promote business integrity and pre-\\ncision in ethical judgments to distinguish between\\nspeculation and gambling. A clear distinction\\nwould remove from gambling the protection now\\nafforded to it by confusion with certain forms of\\nspeculation which are useful and honorable. The\\nexistence of gambling is of relatively minor impor-\\ntance for crises. The grasping and dishonest\\nspirit which draws on the crisis is of too calcu-\\nlating a nature to be long absorbed with what\\nremains persistently within the realm of chance.\\nAn absolute distinction cannot be made between\\nspeculation and gambling. Both deal with chance.\\nChance is merely a name by which we designate\\ncauses when they are too subtle and complex to\\nbe understood and followed by human reason at\\npresent. It does not imply the absence of causes.\\nHence the realm of chance is lessened by every\\nfresh acquisition of the human intellect. The\\ngambler accepts the results of chance as final and\\ninexplicable and allows them to amuse or excite\\nhim. Speculation is characterized by a constant\\nand strenuous endeavor to penetrate the riddle of\\nchance and to discover some clew by which to read\\nthe future. It is suggestive at least that the word\\nspeculation is commonly used not merely to\\nindicate the investing of money at a risk of\\nloss, on the chance of unusual gain, but to\\nsignify profound meditation or the deep and\\ni66", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0178.jp2"}, "179": {"fulltext": "CREDIT AND SPECULATION\\nthorough consideration of a theoretical ques-\\ntion. 13\\nThe chief service which is performed by specu-\\nlation is in connection with the study of uncertain\\nconditions. So long as the results of the best esti-\\nmates in regard to certain business contingencies\\nare more than usually uncertain, we speak of them\\nas speculative, and transactions based upon these\\ncontingencies are speculations. The tendency of\\nspeculative estimates is to become more and more\\naccurate. In this way the influence of speculation\\n1* Century Dictionary.\\nCohn says Speculation is not merely, as Lassalle asserted, a\\nguess as to the results which unknown circumstances will cause.\\nIt is more than that. It is the warfare of intelligence, equipped\\nwith the knowledge of known forces, against the barbaric dominion\\nof chance. Finanzwissenschaft, p. 463. And Bowen, Specu-\\nlation then, as McCulloch remarks, is only another name for\\nforesight. Principles of Political Economy, p. 429. This\\ncorresponds with the view of P. J. Proudhon, who enumerates four\\nfactors of production, namely labor, capital, commerce, and specu-\\nlation. Of the latter he says Speculation is nothing else than\\nthe intellectual conception of the different ways in which labor,\\ncredit, transportation, and exchange can unite in production. It is\\nspeculation which discovers riches, which invents the most eco-\\nnomic means of securing them, and which multiplies them by new\\nforms or combinations of credit, transportation, circulation, and\\nexchange, by creating new wants or by the incessant redistribution\\nof fortunes. Manuel du Speculateur k la Bourse (Paris, 1854),\\np. 54. Compare Adam Smith, Wealth of Nations, Bk. IV, Ch.\\nV, after the heading Digression concerning the Corn Trade and\\nCorn Laws, Sees. 7 and 8. See also Spencer, Social Statics,\\nabridged ed., p. 104. J. S. Mill gives an excellent account of\\nthe useful office of speculation when it is confined in proper chan-\\nnels. Political Economy, Bk. IV, Ch. II, Sec. 5.\\n167", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0179.jp2"}, "180": {"fulltext": "ECONOMIC CRISES\\nis to carry the object of its calculations over into\\nthe field of ordinary certainty, while the speculative\\nspirit is led on to attempt the prediction of ever\\nmore complex and uncertain phenomena. The\\nhazard money placed on the life of sailors in the\\nseventeenth century, though at first little better\\nthan gambling, led to the formation of life tables\\nand the founding of life insurance, than which few\\nindustrial enterprises are now more certain. The\\neffect of true speculation is to eliminate itself. A\\nfundamental part of the struggle of civilization is\\nto lessen the domain of chance and to extend the\\nfield in which we can operate intelligently. A\\npart of the advance guard in this struggle are the\\nbetter elements engaged in speculative enter-\\nprises.^* But in the field of business uncertainty,\\nas in the shadow land of science, there are found,\\nside by side with honest investigators, those\\n1* F. A. Lange has thus spoken of the effects of the better sort\\nof speculative enterprise Speculation, though in the first place\\npursuing its own interests, has so greatly contributed to provide\\nEurope with the means of communication, to regulate commerce,\\nto give more solid and real character to business, to keep down the\\nrate of interest, to extend and consolidate credit, to limit usury, to\\nmake fraud more uncommon, that no prince, no minister, no phi-\\nlosopher, no philanthropist, actuated by the principle of self-deny-\\ning activity, of benevolent instruction, of wise legislation, could\\nexert anything like the same influence that has been exercised by\\nthe gradual removal of the barriers that opposed themselves to the\\nfree activity of the individual in the feudal arrangements of the\\nMiddle Ages. History of Materialism, 2d ed. (Boston, 1879-\\n81), Vol. Ill, Sec. 4, Ch. I, p. 252. Similar statements are made\\nby Wagner in Rentzsch, Handworterbuch, p. 530.\\n168", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0180.jp2"}, "181": {"fulltext": "CREDIT AND SPECULATION\\nwho succeed by bold dishonesty and cunning in-\\ntrigue.\\nSpeculation in its proper sphere tends directly\\nto prevent fluctuations in price by anticipating\\nevents. It softens the intensity with which eco-\\nnomic forces work by lengthening the time over\\nwhich their influence extends. Speculation en-\\nforces present economy in the face of probable\\nfuture want, and so has been called the best pre-\\nventive of famine. It permits present plenty in\\nthe prospect of future abundance, and thus avoids\\nwaste and extravagance. It evens supply both\\nchronologically and geographically, and so directs\\nthe energies of production as to achieve the maxi-\\nmum of ease and certainty afforded by the circum-\\nstances governing the economic Hfe.^^\\nIt may therefore be clearly understood that all\\nLexis defines speculation as follows The objective purpose\\nof speculation is an estimate of the probable future conditions of\\nthe market, made for the purpose of guiding to the best purpose\\nthe movement of goods. Schonberg s Handbuch, 2d ed.,\\nBd. II, Ch. XXI, Sec. 46, p. 727.\\nIn agreement with this Michaelis further develops the idea\\nKnowledge of the future is profitable for trade, and is of supreme\\nimportance for the public good. To secure this profit and advan-\\ntage is the aim of speculation. If the common investigation, the\\nworking together of human instincts and human minds which is\\nbrought about in speculative trade, did not find place, all investment\\nof capital and all trade would take on the character of a game\\nof chance. Faucher s Vierteljahrsschrift, Bd. IV, pp. 171, 172.\\nIn public finance the effect of speculative estimates is gradually to\\nchange extraordinary into ordinary expenses. Cf. Cohn, Finanz-\\nwlssenschaft (Stuttgart, 1889), p. 189; also Bastable, Public\\nFinance, pp. 124, 125.\\n169", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0181.jp2"}, "182": {"fulltext": "ECONOMIC CRISES\\nthat class of operators whose influence upon the\\nmarket is to increase or prolong fluctuations of\\nmarket prices and render conditions less rather\\nthan more dependable, deserves no good name.\\nThey are market brigands.\\nThe perverted forms of speculative activity are\\nexceedingly dangerous to the credit institutions of\\nmodern business. The uncertainty which inheres\\nin all speculative transactions is the fundamental\\nelement of danger in them which makes it neces-\\nsary to guard carefully the delicate mechanism of\\ncredit, dependent as it is upon confidence, from\\nclose alUance with them. The connection of the\\nbanks of New York with the stock market, through\\ninvestments made in call loans secured by deposits\\nof stock-exchange securities made by brokers, has\\nseveral times proven dangerous. An editorial in\\nthe Washington Post, some time since, affirmed\\nThere is a growing demand for the old-fashioned,\\nstingy banker, who is not disposed to be accommo-\\ndating. It may perhaps be said that our banks\\ncould safely be more liberal in the period immedi-\\nately succeeding a crisis and more conservative in\\nprosperous times, when the crisis of eight or\\nten years back has been forgotten.\\nTo this uncertainty which characterizes spec-\\nulation, there must be added the tendency of\\nhuman nature to overestimate its ability to pre-\\ndict and its power to control the market. Adam\\nSmith remarked upon the overweening confi-\\ndence in their own abilities possessed by the\\n170", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0182.jp2"}, "183": {"fulltext": "CREDIT AND SPECULATION\\nmajority of men. This observation upon human\\nnature finds an important application in specula-\\ntion. It is a blind confidence in one s ability to\\nread the markets that furnishes the lambs of\\nthe stock exchange. The same weakness from\\ntime to time brings down the most expert oper-\\nators. This optimism and intellectual pride is\\nmost inopportunely thrust into prominence at those\\njunctures where caution is most desirable, viz. in\\ndealing with uncertainties.\\nIt is asserted by operators that they merely back\\ntheir own opinions and that they take advantage\\nof the conditions of the market, but do not create\\nthem. It is claimed that it is a result of the prin-\\nciple of the division of labor that the study of the\\nconditions of the market is carried on by a dis-\\ntinct body of men and thus a necessary task is\\nsystematically performed. No occupation can be\\njustified which does not render a social service.\\nMuch of the work of the stock market is use-\\nful and justifiable. But the justification of the\\nprinciple of speculation does not excuse many\\nquestionable practices which have become very\\ngenerally connected with it. Dealings in fu-\\ntures, and dealings in which no real delivery is\\never contemplated, and transactions in which the\\nsums deposited are so small a proportion of the\\ntotal values involved that vast personal interests\\nare made to hang upon shght fluctuations in the\\nIS Spencer, First Principles (New York, 1873), p. 479. Mi-\\nchaelis, in Faucher s Vierteljahrsschrift, 1865, Bd. II, pp. 108, 109.\\n171", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0183.jp2"}, "184": {"fulltext": "ECONOMIC CRISES\\nmarket render no social service and consequently\\nhave no justification. It is by such practices and\\nby the schemes of rings of operators to manipu-\\nlate the management of corporations with which\\nthey are connected and bring about the success of\\ntheir private speculations, that the stock exchange\\nhas gotten a hard name.^^\\nWhile the creation of the stock market has\\nprovided the arena for the display of the evils of\\nspeculation, it has not originated them, except in\\nthe sense in which one can say private property\\nhas originated robbery. The stock exchange pro-\\nvides the economy of centralization just as any\\n17 The London Economist (Vol. LII, Part I, p. 418) con-\\nsiders that three-fourths of all transactions upon the stock exchange\\nare dealings in margins.\\nArthur Crump says It may be readily conceded that a very\\nlarge number of those who are ruined, or greatly injured, by stock-\\nexchange speculation, would never operate at all if they were\\ncalled upon even to make a deposit before the purchase was effected.\\nBut when it is considered that to abolish time-bargains would be\\nto ruin at once half of the brokers in existence, the difficulty of\\neffecting what from one point of view would be a most salutary\\nchange of custom, will be understood. The great mischief is done\\nby the facilities afforded by time-bargains to operators who have\\na little money, just sufficient to enable them to keep afloat as specu-\\nlators in fair weather. The first serious disturbance that violently\\nagitates prices sweeps them away in a shoal. The Theory of\\nStock-Exchange Speculation, pp. 3, 4.\\n1^ Instance the proved venality of a portion of the French press.\\nSee Charles T. Congdon, The Adulteration of Intelligence,\\nNorth American Review, Vol. CXXXVI, January, 1883. Hunt s\\nMerchant s Magazine, Vol. VIII, p. 459. An illustration of the\\nevil influence of speculative interests upon courts and legislatures\\nis given by C. F. Adams in A Chapter on Erie.\\n172", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0184.jp2"}, "185": {"fulltext": "CREDIT AND SPECULATION\\nother market does. A considerable part of the\\ntransactions which take place there are as legiti-\\nmate as those upon any other market. The very\\nfact of organization, furthermore, makes possible\\na more efficient control of speculation than would\\notherwise be achieved. Writers upon agriculture\\nare urging that the opportunity of regulating the\\nconditions of stock raising which is presented by\\nthe concentration of business in the stock yards,\\nshould be seized, and that yard regulations be\\nformulated to suppress diseases among cattle, and\\nto accomplish other desired ends. In an analo-\\ngous way, the undesirable practices connected with\\nspeculation may be repressed through the govern-\\nment of the stock exchange.\\nIt may be found desirable that stock exchanges\\nshould be subject to public control, but so long as\\nthey remain simply private associations their vol-\\nuntary regulations must be depended upon very\\nlargely. The exchange may exercise a sharp scru-\\ntiny of the persons admitted to its membership by\\npersonal examinations. Candidates for member-\\nship may be required to make a deposit to insure\\nconformity to the rules, as is required in France,\\nor members proposing a candidate may be obliged\\nto make such deposit, as in England. The estab-\\nlishment of a mutual life insurance, amounting in\\nNew York to 10,000, and forfeitable upon failure\\nto comply with rules, exerts an obvious influence.\\nIn its specification of what works forfeiture of\\nmembership, the stock exchange possesses great\\n173", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0185.jp2"}, "186": {"fulltext": "ECONOMIC CRISES\\npower to define for the business community the\\nmeaning of the terms honorable and dishonor-\\nable. A great influence may also be exerted by\\nrefusing to deal in the securities of concerns known\\nto be dishonestly managed.^^\\nA few specific regulations designed to restrict\\nspeculation may be mentioned. Speculation in\\ngovernment securities is made illegal in England\\nby the provisions of Sir John Bernard s Act.\\nAll dealing in options on government securities is\\nprohibited. Bear or short sales of bank\\nshares in England were prohibited in 1837. Con-\\ntracts made with a view of establishing a corner\\non the market are void in the United States. A\\nbroader statute is that in England against enhanc-\\ning the price of stocks to the damage of the pur-\\nchasing public. Numerous enactments have been\\npassed both in England and the United States for\\nremoving cognizance of law from all gaming and\\nwagering contracts. The German Empire, on May\\n19, 1885, enacted a law levying a tax of ^i.oo on\\n1^ The London stock exchange distinguishes between brokers\\nand jobbers, the latter not being permitted to deal on their own\\naccount, in order that they may be disinterested salesmen of the\\nsecurities called for. The applicant for membership is rigidly\\nexamined, and must be guaranteed in the sum of five hulidred\\npounds each by two members against default within four years.\\nApplicants must show that they are not engaged in any other than\\nexchange business, and are not connected with institutions dealing\\nwith stocks. All members are elected annually, and may be re-\\njected on good grounds. General control is in the hands of an\\nexecutive committee. No members of the exchange are permitted\\nto advertise.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0186.jp2"}, "187": {"fulltext": "CREDIT AND SPECULATION\\nevery 10,000 worth of stock transfers made upon\\nthe stock exchanges of that country. The United\\nStates War Revenue Act of June 13, 1898, pro-\\nvides an annual tax of fifty dollars on brokers, a\\ntax of ten cents on brokers notes or memoranda\\nof sale and a tax of two cents on each sale or agree-\\nment to sell stock amounting to one hundred dol-\\nlars face value or fraction thereof. There is also\\na tax upon sales of merchandise on produce ex-\\nchanges which amounts to one cent for each one\\nhundred dollars of face value. Such a tax is cal-\\nculated to reduce the sensitiveness of the stock\\nmarket. The same effect may be produced by\\njobbers charges when it is customary, as in Eng-\\nland, for brokers always to deal with jobbers.\\nThese turns or fees, ranging from one-six-\\nteenth to one-half per cent., obviously amount to a\\nheavy tax. Certain writers upon public finance,\\nnotably Adolph Wagner, maintain that the taxa-\\ntion of stock-exchange deals rests upon the\\nsame basis as an inheritance tax. It rests upon\\nthe principle that the state is justified in appropri-\\nating a part of those economic gains falHng to\\nindividuals because of a peculiarity in the existing\\neconomic order, but which are only in a subordi-\\nnate degree the result of the recipient s own pro-\\nductive exertions.\\nAfter all has been said, the problem of credit\\nand speculation lies only in a secondary degree in\\nparticulars. It consists rather in the problem how\\nto produce that general integrity and intelligence\\n175", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0187.jp2"}, "188": {"fulltext": "ECONOMIC CRISES\\nof public thought which will dictate the character\\nof business.^^ If this commercial public opinion is\\nproperly developed, the problem of making its force\\nfelt in any part of the business field will not be\\nexceedingly difficult, but if it is weak and insuffi-\\n20 Upon the importance of public opinion Holtzendorff says\\nIn addition to the attention which the statesman always pays to\\npublic opinion, the jurist must not deny the fact that the economic\\nlife is strongly influenced by the state of public opinion; in so far\\nthat the condition of public credit, the value of paper money, and\\nthe recurrence of economic crises seem dependent upon it. The\\ngreat stock-exchange regions of the European and American conti-\\nnents are under its influence. Wesen und Werth der Oeffent-\\nlichen Meinung, p. ii. Differences in public opinion in various\\ncountries he touches on p. 29. In regard to honor-debts in France\\nJoseph Cook said French public sentiment so unflinchingly con-\\ndemns a man who acquires the name of bankrupt, either by rash\\nspeculation or by purposed commercial mischief, that it has been\\nknown again and again that a son would submit to the most pinch-\\ning poverty for years, practising more than the proverbial French\\nthrift, in order to take a stain off the name of a father Say,\\nif you please, that all this is carrying this too far; it remains true\\nthat panics are few in France, although the spots on the physical\\nsun affect her as much as us. Boston Monday Lectures, So-\\ncialism, pp. 34, 35. C. L. von Haller, in his Restauration der\\nStaatswissenschaften (Winterthur, 1820-34), Bd. VI, p. 519,\\nshows that in Geneva for several generations nothing was lost\\nthrough honor-debts among the higher classes, because public\\nopinion closed positions of honor to sons who left their fathers\\ndebts unpaid.\\nSome very suggestive material in regard to the way in which\\nhonor-debts are considered in various countries is contained in a\\nreport upon Debts of Honor in the Consular Report for\\nAugust, 1893, Vol. XLII. Cf. Lalor s Cyclopaedia, Commercial\\nCrises, Vol. I, p. 530; Schaffle in Tiibinger Zeitschrift, Bd. XXX,\\n1874, pp. 92, 93; British Quarterly Review, Vol. LXIII, Janu-\\nary, 1876, p. 55.\\n176", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0188.jp2"}, "189": {"fulltext": "CREDIT AND SPECULATION\\ncient, technical and administrative hindrances to\\nreform will spring up like giants on all sides.^i It\\nis in a large measure due to the strict integrity\\nenforced by public opinion in France and Holland,\\nand especially in Switzerland, that these countries\\nhave kept so clear from overspeculation and eco-\\nnomic crises.^ Almost every text-book that has\\n21 Schaffle Deutsche Vierteljahrsschrift, 1858, Heft I, pp.\\n419, 420) lays special emphasis upon freedom, responsibility, and\\npublicity as commendable for the business as well as for the social\\nand political world.\\nBy means of the German system of police registration a man s\\npast business record can be quickly gathered in detail when needed\\nfor any purpose, as, for example, before he is permitted to do busi-\\nness permanently in a new city. The pressure exerted by such a\\nsystem of police bookkeeping is obvious.\\nA registration for this country which would make it possible to\\nlocate the ownership of capital stock would unravel a great many\\nmysteries and prevent a great deal of dishonesty.\\n22 The business integrity and conservatism which has brought\\nthis about in Switzerland is strongly emphasized by Schaffle, Vier-\\nteljahrsschrift, 1858, Heft I, pp. 375, 376. In a large measure the\\nsame applies to Holland. Of the Holland merchants he says:\\nMynheer trades much with John Bull, has an extensive commerce\\nwith Brother Jonathan, strong connections with Hamburg, North\\nGermany, and Scandinavia, he has banks and bankers, but remains,\\nnevertheless, usually intact on all sides, which renews the proof\\nthat not institutions nor environment condition the national indus-\\ntrial fortune or misfortune of a country, but the self-control exer-\\ncised by its people. pp. 376, 377.\\nThere seems to be a retrogression noticeable in Germany. On\\nthis we quote Nasse We think two points will be granted by\\nevery unprejudiced student of the moral life of our nation; first,\\nthat the enforcement of an objective moral law of duty and moral\\nresponsibility until recently rested, among our lower and middle\\nclasses, upon religious grounds; secondly, that in the last decade\\nN 177", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0189.jp2"}, "190": {"fulltext": "ECONOMIC CRISES\\nhad occasion to explain the nature of credit has\\nbrought clearly into prominence the fundamental\\ntruth that credit rests upon one man s belief in the\\nability and willingness of another to meet his obli-\\ngations. No discussion of an abuse of credit,\\ntherefore, can end without at last coming back to\\nthe fundamental thing, honesty. Credit has been\\ncalled a great teacher and the discipline of com-\\nmerce is truly a civilizing force. If this be true,\\ncrises may be looked upon as chastisement for\\nmistakes and bad faith. The convulsions of mod-\\nern business would seem to indicate that the credit\\nstructures which have been raised in the business\\nworld are too lofty for the basis of integrity we\\nhave at present to offer. The remedy lies at every\\nman s door. Civilization cannot merely migrate\\nfrom country to country as it has done in the past\\nwe must learn how to intensify the economic and\\nsocial bonds without self-destruction and without\\nthe increase of those economic wastes of which\\ncrises form a part.\\nRESUME\\nI. Crises have appeared with the development of credit, and\\nvisit countries using credit.\\n{a) Credit creates economic solidarity.\\nRests upon honesty.\\n{c) Uses of credit.\\nthis foundation has been completely shattered with the uncultured\\nwage- earning classes, and has not been replaced by an equivalent.\\nUeber die Verhiitung der Produktions-Krisen, in Jahrbuch\\nfur Gesetzgebung, Bd. Ill, N. F., pp. 162, 163.\\n178", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0190.jp2"}, "191": {"fulltext": "CREDIT AND SPECULATION\\nFacilitates transfers of capital.\\nMakes investments easy.\\nSaves money and expenses of doing business.\\nDangers of credit.\\nCredit depends upon a state of mind, con-\\nfidence.\\nMay support extravagance and unwise invest-\\nments.\\nLessens the money reserve.\\nLengthens and complicates pecuniary obliga-\\ntions.\\nThe underestimation of the future.\\nSafeguards.\\nShort-time credits.\\nPunctuality.\\nSharp definition of the moral aspect of risking\\nloss of another s money.\\nConservatism in optimistic times.\\nDisentanglement from speculative businesses.\\nMaintain the standard of credit.\\nScrutiny of the first credit advances.\\nII. Speculation coupled with credit becomes dangerous.\\n(a) Definition.\\nSpeculation in the broad sense.\\nGambling, distinct from speculation, charac-\\nteristics of each.\\nService of speculation.\\nLessens the domain of uncertainty.\\nPrevents price fluctuations.\\n(c) Dangers.\\nAlliances of banks with stock market dangerous.\\nOverestimation of one s ability.\\nDealings in futures.\\n(d) The functions of the stock market, control pos-\\nsible through it.\\nIII. The abuse of credit and speculation is primarily a moral\\nproblem.\\n179", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0191.jp2"}, "192": {"fulltext": "CHAPTER IX\\nTHE PSYCHOLOGY OF CRISES\\nPolitical economy is in an important sense\\napplied psychology. As this science treats of a\\nportion of the social activity of men, it must re-\\nceive as a part of its premises the statement of the\\npsychologist regarding the individual and social\\npsychology of man, and apply it in the explana-\\ntion of economic society.\\nAs we have already seen, the causes of economic\\ncrises are numerous. No sufficient explanation of\\nthem can be made which does not take into account\\nthe working of the industrial and legal machinery\\nwhich society employs in achieving its purposes,\\nbut neither can any view of crises be sufficient\\nwhich leaves out of account the human nature\\noperating through this machinery and exhibiting\\nitself in it. Thus far, few writers have touched in\\nany adequate way upon this aspect of the subject,\\nalthough there are not lacking numerous assertions\\nthat its study is necessary and fundamental. Mr.\\nJohn Mills, who, in his pamphlet entitled Credit\\nCycles, has contributed more than any other per-\\nson to this part of the theory, says, The subject\\nof commercial fluctuations will acquire a new dig-\\ni8o", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0192.jp2"}, "193": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nnity if it be found striking its roots far below the\\nlevel of its physical particulars, and proving itself\\ncognate with the sciences of mind. In similar\\nvein Yves Guyot expresses himself In economy,\\nas in all other social phenomena, psychological\\nfacts play an important part. It is because they\\nhave not been sufficiently taken into account that\\nwe have had so many erroneous explanations of\\ncommercial crises. In the explanation of the\\ndepression which follows a crisis, Horace White\\nobserves The pendulum will swing back in time\\nthese undulations of trade, of alternately high\\nand low prices, of alternate activity and depression\\nin business, have their root in the mental and moral\\nconstitution of mankind. Interest has been\\ntaken in these aspects of the subject by William\\nLangton, and by the Italian economist Catteneo, as\\nwell as by the chroniclers of similar phenomena,\\nCharles Mackay, Isaac Taylor, and C. F. Adams.\\nBut the literature of crises scarcely brings us fur-\\nther than such general statements as have been\\njust quoted.\\nIt is intended in this discussion to place before\\nthe reader an outline of what are, in the estimation\\nof the writer, the chief psychological phenomena\\nof crises.\\nA word may be prefixed regarding the chief\\n1 Credit Cycles, p. 13.\\n2 Principles of Social Economy (translated by Lippington)\\n2d ed., Ch, III, p. 239.\\nLalor, Cyclopaedia, Commercial Crises, Vol. I, p. 524.\\n181", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0193.jp2"}, "194": {"fulltext": "ECONOMIC CRISES\\ntheories of crises now accepted, considering them\\nfrom the point of view of their psychology. Some\\nsort of a psychology is of necessity assumed by\\nwriters upon social subjects, and consequently by\\nthose who have constructed theories to explain\\ncrises. This fundamental psychology is frequently\\nin the literal sense an assumption, being adopted\\nwithout careful thought. It is consequently often\\ninconsistent or at least weak and defective. Those\\nsocialists who explain crises as a part of an inevi-\\ntable evolution of industry, and who hold the ma-\\nterialistic philosophy of history, subordinate the\\nconsideration of all moral forces to the evolution\\nof the technique of industry. The pictures which\\nthey draw contrasting the depravity of the present\\nwith future perfectibility, rest upon the assumption\\nof a plastic human nature an assumption which\\ntheir ironically critical attitude and urgent moral\\nappeals belie.\\nThe wages theory of crises enunciated by Rod-\\nbertus presents a curious picture of society when\\nlooked at from the point of view of its psychology.\\nIt shows us a wage-earning population, frugal and\\nindustrious, producing a surplus beyond what is\\nneeded to satisfy its needs, yet permanently held\\ndown through the power of capital by a class pos-\\nsessing neither frugality nor the ability to guide\\nproperly the industrial forces in their charge. The\\nimplication is that the relation between capacity\\nand achievement can be completely sundered.\\nWhen credit is discussed in connection with\\n182", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0194.jp2"}, "195": {"fulltext": "THE PSYCHOLOGY OF CRISES\\ncrises, it leads through the defects of social prac-\\ntice almost immediately to the consideration of the\\nindicated defects of human nature. It points to\\nan intense ambition to be rich which leads to the\\noveruse of credit instrumentalities in building up\\nbusiness, and to a lack of keenness in ethical dis-\\ncrimination in realizing the ethics of risking the\\nloss of another person s money. It indicates an\\ninabiHty to realize fully the force of future obliga-\\ntions, and overconfidence in one s judgment and\\neconomic strength leading to the overtaxing of\\none s economic power and hence to failure.\\nIn the discussions of this chapter let us examine\\nthe psychological elements of crises directly and\\nfor their own sake and not merely as an adjunct\\nto some other explanation.\\nThe general characteristics of crises are already\\nsufficiently familiar. They may be reviewed briefly\\nin the words of Lord Overstone, State of quies-\\ncence, improvement, growing confidence, prosper-\\nity, excitement, overtrading, convulsions, pressure,\\nstagnation, distress, ending again in quiescence.\\nThis description presents to us a succession of\\nstages through which business passes during the\\ncomplete crisis-period. For each of these stages\\nthere is a special and characteristic mental state.\\nEach stage indicates a view taken of the course of\\ntrade and of business prospects generally.* The\\ngeneral change which marks the progress up to\\nJohn Mills, Credit Cycles, p. 17.\\n183", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0195.jp2"}, "196": {"fulltext": "ECONOMIC CRISES\\nthe crisis is a gradual growth of optimism. There\\naccompanies this a gradual increase in activity and\\na perceptible and constant quickening of interest\\nworthy in its later stages to be called a profound\\nemotion. With this, as the pre-crisis period ad-\\nvances, comes a decline of criticism and an increas-\\ningly unsound business judgment. These changes\\ngive expression to themselves by what appears to\\nbe a rapidly expanding business in which an in-\\ncreasing use is made of credit in all forms.^ The\\nactivity noticeable before a crisis is a function of\\nthe feeling of confidence prevailing, for the simple\\nreason that when people who want money believe\\nit is being made, they redouble their exertions to\\nget it. This leads to the vis a tergo behind the\\nwhole process, which is the desire for wealth. It\\nis this constantly operating force which erects the\\neconomic machinery destroyed in the crisis and\\nwhich operates it in such a way as to lead to the\\ncrisis.\\nThe question arises. Why does the desire for\\nwealth miscarry in satisfying itself and lead to\\nsuch wastes as are involved in a crisis We know\\nthat a gradually approaching prospect of satisfy-\\ning a desire excites emotion. A piece of good\\nMacleod, speaking of the growth of unsound credit, says\\nSuch quantities of credit cannot accumulate in a day. A certain\\ntime is required under ordinary circumstances to produce a crisis,\\njust as a certain time is necessary to generate an abscess or a tumor\\nin the human body. Theory of Credit, Vol. II, Part II, Ch.\\nXVI, Sec. 20, p. 724.\\n184", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0196.jp2"}, "197": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nfortune happening to one person which brings near\\nthe prospect of wealth to others will often craze\\nan entire industrial community. This is well illus-\\ntrated by the history of prospecting for metals.\\nIn California, after the first discoveries in 1849,\\nstate was searched from end to end for gold. The\\nreported finding of a ledge of pure silver brought\\non a craze for silver in 1858-59. When a rich but\\nshallow vein of copper was discovered at Copper-\\nopolis in Calaveras County in i860, a copper mania\\nwas inaugurated which culminated in 1863. Dur-\\ning the great oil speculations in Pennsylvania a\\npetroleum fever seized the state.^ Now it is\\nequally well known that a high state of feeHng\\nprecedes and accompanies a crisis and slowly sub-\\nsides after it. The existence of these stages of\\nfeeling gives us the hint to examine the effect\\nwhich the concentration of desire in an extraordi-\\nnary degree upon an object and the accompanying\\nof this with strong feelings have upon the judgment\\nand the conduct.\\nIn examining the influence of such a mental\\nstate, we shall find it convenient first to consider\\nthe individual psychology, then the social psychol-\\nogy. And we shall begin by distinguishing the\\neffect of strong desire accompanied by emotion\\nupon the interpretation of matters of recollection\\nand upon anticipations. The guiding principle is\\nthis a powerful emotion tends to bring all the\\n6 H. H. Bancroft, History of California, Vol. VII.\\n185", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0197.jp2"}, "198": {"fulltext": "ECONOMIC CRISES\\noperations of the mind into harmony with itself\\nand to banish from the mind all considerations\\nout of harmony with itself. This unbalancing of\\nthe mind leads to destructive individual and social\\nactivity.\\nFirst, then, turning our attention to the psy-\\nchology of the individual, let us note the effect of\\na powerful desire upon recollection. It exhibits\\nitself in four ways which may be here distin-\\nguished, (a) The force of the original impression\\nwhich is later to be recalled, depends upon what\\nour interest in the matter was at the time and\\nwhat our appreciation of the significance of the\\noccurrence was. We do not see things as they\\nare, but as they appear through the media of our\\neducation and interests. As James Sully says\\nRecollection is a selective process, and this truth\\nis strikingly illustrated in the growth of our endur-\\ning representations of things. What stamps it-\\nself on my memory is what surprises me or what\\ndeeply interests me at the moment. (d) There\\nis a tendency to confuse the recollection of exter-\\nnal actualities with that of subjective states due\\nto imagination and desire. The tendency is to\\nassume in recollection that all impressive mental\\nstates result from a sufficient external cause. An\\nexample of this given by one psychologist is as\\nfollows: One dreams of seeing snow fall. He\\nawakens and sees snow lying on the ground.\\nIllusions, p. 314.\\n186", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0198.jp2"}, "199": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nLater he asserts that he saw it fall and saw it\\nlying on the ground. The more frequently this\\nassertion is made, the more invincible will become\\nthe belief. A further illustration may be found in\\nthe memories of liars. It is well known that pre-\\nvarication rapidly confuses and distorts one s rec-\\nollections so that even with the best of intentions\\na return to the truth becomes difficult for a chronic\\nliar, if not well-nigh impossible, {c) There is a\\ncontinual selection of details in the act of recall-\\ning. If we have been influenced by strong desires,\\nwe have been recalling and dwelling upon such\\nmatters as have harmonized with these desires.\\nThe sharpness and vividness of an act of recalling\\ndepends upon how frequently the matter has been\\nrecalled. Thus one becomes more convinced in\\nregard to a matter as it passes into memory. A\\ntheory to explain the circumstance is formed.\\nThe recollection of details not agreeing with or\\nfitting into this theory, and at first easy, fades little\\nby little, leaving only such details as are custom-\\narily recalled because they correspond with the\\nviews we have taken. The selective process\\nmakes firmer the view first taken, whatever that\\nmay be. Matters which are, as we say, banished\\nfrom recollection tend to fall out of mind entirely.\\nThe operations of the selective memory may be\\ntraced in some parents who out of the details of\\nthe lives of their children choose elements which\\nform a picture of winning and precocious childhood,\\nwhile their neighbors may retain recollections of\\n187", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0199.jp2"}, "200": {"fulltext": "ECONOMIC CRISES\\nan entirely different sort. A somewhat analogous\\nprocess is that social one by which a nation little\\nby little constructs from the life of a departed\\nleader the picture of an all-round hero, (d) Finally,\\nat any moment of recollection the tendency is, if\\none is influenced by a strong desire, to permit only\\nsuch recollections to develop themselves and ab-\\nsorb the attention as harmonize with the present\\nstate of mind.\\nThis distortion of recollection, performed in the\\nways which we have enumerated, tends to destroy\\nthe basis of sound judgment. In falsifying memory\\nit renders nugatory the results of experience.\\nThe effect of a strong desire upon expectation\\nis equally remarkable. In an act of anticipation\\nthe judgment is to a certain extent freed from the\\ncorrectives and checks which restrain us from\\nerror in realizing the present and recalling the\\npast. There is thus range for a greater degree\\nof error due to prejudice. And these errors may\\neverywhere be observed in acts of anticipation.\\nThe mind tends to restore the equilibrium between\\npain and pleasure and to renew its vigor by con-\\ntrasting the expectation of a pleasing future\\nthe joys of hope with a dismal past or unsatis-\\nfactory present. In so far as the course of the\\nfuture is uncertain, our beliefs regarding it are\\nlikely to be formed according to our desires. We\\nknow that subjective states exercise more control\\nover the imagination than over any other activity\\nof mind. The field of imagination lies close to", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0200.jp2"}, "201": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nthat of expectation. In so much as the tendency\\nof imagination is to picture what is desired, opti-\\nmism characterizes one s views of the future gen-\\nerally. This, according to an authority upon\\nstock markets, characterizes the speculator. The\\nmost brilliant good fortune which may result from\\nthe operations of a speculator generally fall below\\nhis anticipations, when the operations are reduced\\nto figures. It appears that the imagination gets,\\nas it were, diseased by feeding on the contempla-\\ntion of very rapid gains and that whatever may\\nbe the reality of a hypothetical gain, the mind gets\\nbewildered and fails to estimate as an element of\\nloss the surrounding husks in which the fruit is\\nenclosed. What we may logically expect in the\\nfuture, from analogy with the past, is not what we\\ndo actually expect. We all know that a person\\nplans for a certain period of the future more work\\nthan he will be able to accomplish. A man pic-\\ntures to himself greater success and happiness than\\nis likely to be his actual lot. And this results in\\nconsiderable part from the influence of an absorb-\\ning desire. What is vividly imagined and intensely\\ndesired tends to become, little by little, a matter\\nnot only wished for, but planned for, and finally\\nexpected with more and more confidence. All this\\nmay take place without the addition of any new\\nconfirming objective reality.^ Shakespeare often\\n8 Arthur Crump, Theory of Stock-Exchange Speculation, p. 3.\\nUpon this source of error in expectation Sully says, Even\\nsupposing the expectation to have originated from some rational\\n189", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0201.jp2"}, "202": {"fulltext": "ECONOMIC CRISES\\nput his finger upon this weakness of human char-\\nacter. When Prince Henry, supposing his father\\ndead, takes the crown from the brow of the sleep-\\ning king, and his father calls him to account, the\\nprince says, I never thought to hear you speak\\nagain. The king, responds, Thy wish was\\nfather, Harry, to that thought. Similarly Caesar\\nin his Gallic Wars says Multae res ad hoc con-\\nsilium Gallos hortabantur superiorum dierum\\nSabini cunctatio, perfugae confirmatio, inopia ci-\\nbariorum, cui rei parum diligenter ab iis erat pro-\\nvisum, spes Venetici belli, et quod fere libenter\\nhomines id, quod vohmt, credunt. Young said,\\nWhat we ardently wish we soon believe, and\\nBacon, Men s thoughts are much according to\\ntheir inclination, and again in Novum Organum,\\nLib. I, Aph. XLIX, Quod mavult homo verum\\nesse, id potius credit. Lester F. Ward has well\\nstated the same truth The reason is perpetually\\ncalled upon to subdue extravagant expectations.\\nEven in man those individuals are rare whose\\nsource, as from a conscious inference from past experience, or from\\nthe acceptance of somebody s statement, the very habit of cherish-\\ning the anticipation tends to invest it with an automatic self-suffi-\\ncient character. Illusions, p. 302. And again he says, on\\np. 306: There are, I conceive, good reasons for saying that any\\nkind of vivid imagination tends to pass into a semblance of an\\nexpectation of a coming personal experience, or an event that is\\nabout to happen within the sphere of our own observation. It has\\nlong been recognized by writers, among whom I may mention\\nDugald Stewart, that to distinctly imagine an event or object is to\\nfeel for the moment a degree of belief in the corresponding reality.\\n10 Henry IV, Part II, Act IV, Sc. IV. n Essays, XXXIX.\\n190", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0202.jp2"}, "203": {"fulltext": "THE PSYCHOLOGY OF CRISES\\njudgments are of any value against their interests.\\nPrediction of results is in most cases nothing better\\nthan betrayal of preferences. Men as a rule\\nbelieve that that will happen which they wish to\\nhappen. No one is capable of balancing\\nthe profits and losses of life. The lower in the\\nscale of intelligence the more complete this inca-\\npacity. This optimistic picturing of the future\\nleads, in passive natures, to waiting for some-\\nthing to turn up, and in strong natures to various\\nforms of ill-advised activity.\\nThe application of this to the subject of crises\\ncomes through the study of the effect which an\\nintense desire to accumulate wealth will have upon\\nthe conduct of the individual in economic matters.\\nThe active and energetic and self-reliant, who\\nnaturally become the leaders in industrial society,\\nare of the intellectual type most prone to optimistic\\nexaggeration.^^ Experience proves that, to the\\noptimistic, gambling is particularly easy.^* Certain\\nit is that credulity begets extravagance and fur-\\n12 The Psychic Factors in Civilization, p. 66, Boston, 1893.\\nSee also Literary Remains of the Late William Hazlitt, Essay\\nIV, Belief whether Voluntary, New York, 1836.\\n^3 Commenting upon the cause of the crisis of 1 85 7, Wagner\\nsays The chief blame, in our opinion, should be laid to the wild\\ngo-ahead spirit of the Yankee. The matter was on this occa-\\nsion made especially easy by the indiscreet and overplentiful offer\\nof credit made by Europe, namely, England and Germany.\\nDie Geld-und Credit-theorie der Peel schen Bankacte, p. 263.\\n1* Cf. James Oliphant, Westminster Review, The Ethics of\\nGambling, Vol. CXXXVII, pp. 521, 522.\\n191", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0203.jp2"}, "204": {"fulltext": "ECONOMIC CRISES\\nnishes the harvest for fraud.^^ The exaggeration\\nof economic prospects begets not only activity, but\\nfalsely directed activity, the result of which is to\\nerect a commercial structure which at some point\\nin its building up must fall with disastrous ruin\\nbecause of its inherent error. If too much of our\\nthought and interest is concentrated upon the\\nstruggle for wealth and our reasoning holds true,\\nwe have the explanation of the optimism and reck-\\nlessness which may be seen in pre-crisis periods\\npreparing the conditions for a future crash. That\\nsuch an overconcentration of interest in material\\nwealth as will bring on these results does exist in\\nthe chief nations which have passed into the stage\\nof industrial freedom is a matter of most positive\\naffirmation on the part of many of the most in-\\nfluential thinkers of our day. It would be indeed\\n1^ The good times, too, of high price almost always engender\\nmuch fraud. All people are most credulous when they are most\\nhappy; and when much money has just been made, when some\\npeople are really making it, when most people think they are mak-\\ning it, there is a happy opportunity for ingenious mendacity.\\nAlmost everything will be believed for a little while, and long\\nbefore discovery the worst and most adroit deceivers are geo-\\ngraphically or legally beyond reach of punishment. Bagehot,\\nLombard Street, Works, Vol. V, p. 103.\\n1^ Lord Overstone founded crises in human nature. So long as\\nhuman nature remains what it is, and hope springs eternal in the\\nhuman breast, speculations will occasionally occur, and bring with\\nthem their attendant train of alternate periods of excitement and\\ndepression. Storms and tempests are not more certain and inevi-\\ntable in the material world than are the periodical convulsions of\\ncommercial affairs; and they both answer similarly useful pur-\\nposes. Management of the Circulation, Tracts, pp. 131, 132.\\n192", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0204.jp2"}, "205": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nstrange if it could be shown that the passion for\\nthe accumulation of wealth not only robs social\\nlife of many of the nobler forms of enjoyment, but\\ndefeats itself in its purely utilitarian purpose not\\nonly through the neglect of the art of consuming\\nwealth, but through the misadjustment of produc-\\ntion and the destruction wrought by economic\\ncrises.\\nThe belief that this is true is fortified by history,\\nwhich shows that an undue concentration of inter-\\nest on other than economic matters has been fol-\\nlowed by social maladies in many ways analogous\\nto crises. It has been asserted that the New Eng-\\nland religious epidemics and witchcraft scares were\\nthe result of an undue concentration of thought\\nalong the lines of religious contemplation. Prof.\\nC. F. Adams, after describing the terroristic type\\nof theology and preaching accepted in New Eng-\\nland, says It would have been inconsistent with\\nany accepted theory of human nature that the\\nmoral conditions, continually and systematically\\ndeveloped by the treatment which had been pre-\\nscribed, should not periodically have broken out\\nin phases of acute mania. At first the acute at-\\ntacks of the mania took the forms of ordinary reli-\\ngious persecutions, finding vent against Baptists and\\nQuakers then it assumed a much more interest-\\ning phase in the Salem Witchcraft craze of 1691-92.\\nThe New England historians have usually re-\\ngarded this curious and interesting episode as an\\nisolated phenomenon, to be described as such, and\\no 193", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0205.jp2"}, "206": {"fulltext": "ECONOMIC CRISES\\nthen palliated by reference to the far more fero-\\ncious and unthinking maniacal outbreaks of like\\nnature in other lands at about the same time.\\nThis is simply to ignore its significance. The\\nmania of 1691-92 in Massachusetts was no isolated\\nor inexplicable manifestation on the contrary, it\\nwas a most noticeable instance of the operation of\\nlaw. 17\\nThese epidemics developed at about equal inter-\\nvals of time from one another, and later under\\nsomewhat changed conditions gave place to a simi-\\nlar succession of revivals. The series was broken\\nup when a new interest was created in the Revolu-\\ntionary War, though in some instances the reli-\\ngious epidemics reappeared later. Crises and\\nreligious epidemics are alike evidences of unbal-\\nanced interests. Similarly the undue concentration\\nof interest upon political matters, as in Greece and\\nthe South American states and in France, has been\\nconducive to instability of government rather than\\nthe reverse. A further evidence that crises are\\nthe result of an undue concentration of interest\\nupon economic affairs is offered by the fact that\\nwhen war absorbs the interest of a people, the cri-\\nsis cycle frequently lapses. The same thing has\\nbeen noticed in the relation between crises and\\npolitical elections. The suggestion of this is\\napparent. If we could cultivate other interests\\n17 Massachusetts, p. 85. See also R. G. Thwaites, The Colo-\\nnies, p. 191 ff.\\n18 C. F. Adams, Massachusetts, p. 89.\\n194", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0206.jp2"}, "207": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nsufficiently to right the intellectual balance, the cri-\\nsis period might lapse indefinitely.\\nWe have seen that a strong desire exercises a\\ngreater influence over acts of recollection and\\nexpectation than over the simple primary judg-\\nments of the present. Our industrial age, produc-\\ning wealth as it does by means of long-enduring and\\ncomplex processes, brings into the closest relations\\nthe economic past and future with the present.\\nOur methods of production fit us into a chain of\\ninfluences and activities which was begun in the\\npast and for the consummation of which we must\\nlook to the future. Expectation and forecast play\\na more important economic role to-day than ever\\nbefore, and business demands the exercise of those\\nintellectual faculties which are most distorted by\\nan overdeveloped desire for wealth.\\nWe have seen that desire will largely shape expec-\\ntation where objective data for judgment are defec-\\ntive and the matter is involved in uncertainty. It is\\nnot necessary to assert that the course of modern\\nbusiness is uncertain in the extreme. As business\\nventures must be based on future contingencies,\\nas the market widens, and the number of competi-\\ntors increases, uncertainty must increase. This was\\nsufficiently enlarged upon in the chapter on The\\nOrganization of Industry. Those lines of business\\nwhich have been conspicuous for their uncertainty\\nhave, many of them, been conspicuous also for the\\ncrises suffered in them. An element of uncer-\\ntainty is prominently connected with most crises.\\n195", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0207.jp2"}, "208": {"fulltext": "ECONOMIC CRISES\\nIn 1 719, in France, at the time of the Mississippi\\nScheme, the issue was upon the probable future\\nvalue of an exclusive privilege given by France to a\\ncompany to trade in the little known region of the\\nEast Indies, China, and the South Seas. In 1720,\\nin England, it was upon the probability that the\\nSouth Sea Company would obtain exclusive grants\\nof trading privileges from Spain, and as to the\\nvalue of these. In Holland, from 1634-36 the uncer-\\ntainty was what the demand of the world would be\\nfor certain varieties of tulips. The industry of the\\npresent finds the requisite degree of uncertainty\\nin the complex conditions which determine the\\ncourse of the world s markets. Foreign trade has\\nalways been noted for its uncertainties, and it has\\nbeen equally noted for the extravagancies which\\nhave been connected with it.\\nThere seems to be, in the human mind, a neces-\\nsity for a belief or theory of some sort and an\\nunwillingness to keep the mind in suspense for\\nmore data.^^ Therefore a temporizing, conserva-\\n1^ A very remarkable analysis of the beliefs arising during the\\nprocess of gambling is given in the following extract from an arti-\\ncle which appeared in the Spectator, October 4, 1873, and which\\nis quoted at length in Arthur Crump s Theory of Stock-Exchange\\nSpeculation, pp. 52, 53: And what was that experience? This\\nchiefly, that I was distinctly conscious of partially attributing to\\nsome defect or stupidity in my own mind every venture on an\\nissue that proved a failure; that I groped about within me for\\nsomething in me like an anticipation or warning (which, of course,\\nwas not to be found) of what the next event was to be, and gener-\\nally hit upon some vague impulse in my own mind which deter-\\nmined me; that whenever I succeeded, I raked up my gains with\\n196", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0208.jp2"}, "209": {"fulltext": "THE PSYCHOLOGY OF CRISES\\ntive, and restraining policy is easily forsaken for\\none which embodies an optimistic theory, and the\\nerror of a theory cannot at once be made appar-\\nent. The organization of business is now such\\nthat it does not furnish an immediate check to\\nunwise activities. The system is one which per-\\nmits the inflations of values and an overdraft of\\ncredit for a period long enough to give an impe-\\ntus to such undertakings and give an unfounded\\nfeeling of success to operators who may be, as a\\nmatter of fact, on the straight road to disaster.\\na half-impression that I had been a clever fellow and had made a\\na judicious stake, just as if I had really moved a skilful move at\\nchess; and that when I failed, I thought to myself: Ah, I knew\\nall the time I was going wrong in selecting that number, and\\nyet I was fool enough to stick to it; which, of course, was a pure\\nillusion, for all I did really know was that the chance was even, or\\nmuch more than even, against me. But this illusion followed me\\nthroughout. I had a sense of deserving success when I succeeded,\\nand of having failed through my own wilfulness, or wrong-headed\\ncaprice of choice, when I failed. When you win at one time,\\nand lose at another, the mind is almost unable to realize steadily\\nthat there is no reason accessible to yourself why you won and\\nwhy you lost. And so you invent what you know perfectly well\\nto be a fiction the conception of some sort of inward divining rod\\nwhich guided you right when you used it properly, and failed only\\nbecause you did not attend adequately to its indications.\\n20 Natural optimism is sufficient in many instances to account for\\nthis feeling of success. There has never been a successful gam-\\nbler who has not believed that his success (temporary though such\\nsuccess ever is, where games of pure chance are concerned) has\\nbeen the result of skilful conduct on his own part; and there never\\nhas been a ruined gambler (though ruined gamblers are to be\\ncounted by thousands) who has not believed that when ruin over-\\ntook him he was on the very point of mastering the secret of suc-\\n197", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0209.jp2"}, "210": {"fulltext": "ECONOMIC CRISES\\nWe have thus far discussed individual psychol-\\nogy. Let us turn to the examination of certain\\nsocial forces operating to bring about crises.\\nWe have been giving prominence to the effect\\nof belief upon action. It is not intended to ignore\\nthe equally important effect of action upon feelings\\nand beHefs. But as actions are more ruled by\\nsocial considerations than are beliefs, the discussion\\nof the effect of action has been postponed to this\\npoint.\\nThe persistent exertion of will power to force\\none to a certain line of action possesses a remark-\\nable power to coerce the feelings into harmony\\nwith the action performed. In the competitive\\nsystem, the business man is soon taught that to\\ncourt success properly he must put on all the\\nappearance of success, and talk, act, and look as if\\nhe were successful. A merchant attracts trade by\\nprofessing that he already has it and by acting as\\nif he were in the height of a deserved prosperity.\\nMerchants drive trade with merchants by talking\\ncess. It is this fatal confidence which gives gambling its power\\nof fascinating the lucky as well as the unlucky. The winner con-\\ntinues to tempt fortune, believing all the while that he is exerting\\nsome special aptitude for games of chance, until the inevitable\\nchange of luck arrives; and thereafter he continues to play because\\nhe believes that his luck has only deserted him for a time, and\\nmust presently return. The unlucky gambler, on the contrary,\\nregards his losses as sacrifices to insure the ultimate success of his\\nsystem, and even when he has lost his all, continues firm in the\\nbelief that had he had more money to sacrifice, he could have\\nbound fortune to his side forever. Littell s Living Age, Gam-\\nbling Superstitions, Vol. CXIV, p. io6.\\n198", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0210.jp2"}, "211": {"fulltext": "THE PSYCHOLOGY OF CRISES\\ngeneral trade prosperity to one another. Adver-\\ntisements must always assume a confident, cheer-\\nful tone and give the impression of assured success.\\nPhysicians, to court the best clientage, must live\\nwell, dress well, drive stylish equipages, and assume\\nall the appearances of success. All these actions\\ndo very truly tend to coerce feelings and opinions\\ninto Unes harmonious with themselves and enforce\\nthe appropriate feelings of optimism which, as we\\nhave seen, are only too ready to spring up and\\ndominate the thought. At this point a suggestion\\nof Walter Bagehot may be recalled. He con-\\ntended that this generation was afflicted by too\\ngreat a desire for activity, and that this surplus\\nactivity accounted for some of the serious defects\\nof our economic practice. Optimism is the appro-\\npriate mental state to accompany activity. This\\nactivity and optimism produce the gullible public\\nand the promoter who sees fields for enterprise\\nwhere no enterprise should be undertaken.^i\\nNext to the optimistic activity which the com-\\npetitive trade system enforces upon its members,\\nthe economic consequences of belief in testimony\\nshould be considered. If the individual mind\\nworks imperfectly and is prone to certain chronic\\nerrors, the social mind is yet more unsatisfactory\\nin many ways. In the social mind, the tendency\\ntoward optimistic, extreme, and intense views\\nappears more marked. We receive only a small\\n21 Bagehot, Physics and Politics, Complete Works, Vol. IV,\\nP- 567-\\n199", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0211.jp2"}, "212": {"fulltext": "ECONOMIC CRISES\\nportion of our beliefs as a result of our own\\nobservation and independent thought. Most of\\nour guidance comes from the testimony of others.\\nThis ready-formed opinion our intellectual inertia\\nleads us to accept. The coercive power of a gen-\\nerally accepted view is very great, and only the\\nmost independent minds can hold out against it.^^\\nUnder the influence of the struggle for eminence,\\nsuccess comes to the front for display, while failure\\ntries to hide itself. In so far as economic forces\\nare controlled by the struggles of individuals for\\nsuccess, it is optimistic testimony which is most\\navailable in economic matters. The businesses\\n22 Alexander W. Kinglake, in his book Eothen, brings out the\\npower which the generally accepted opinion has over the stoutest\\ndoubter. He refers to the effect upon Europeans of the Eastern\\nbelief in magic, There is no controversy about the matter. The\\neffect of this, the unanimous belief of an ignorant people upon the\\nmind of a stranger, is extremely curious and well worth noticing.\\nA man coming freshly from Europe is at first proof against the\\nnonsense with which he is assailed; but often it happens that after\\na little while the social atmosphere of Asia will begin to infect him,\\nand, if he has been unaccustomed to the cunning of fence by\\nwhich reason prepares the means of guarding herself against fal-\\nlacy, he will yield himself at last to the faith of those around him;\\nand this he will do by sympathy, it would seem, rather than from\\nconviction. I have been much interested in observing that the\\nmere practical man, however skilful and shrewd in his own way,\\nhas not the kind of power that will enable him to resist the gradual\\nimpression made upon his mind by the common opinion of those\\nwhom he sees and hears from day to day. Ch. VIII.\\nBagehot, in Physics and Politics, referring to the above, says,\\nIn true metaphysics I believe that (contrary to common opinion)\\nunbelief far oftener needs a reason and requires an effort than\\nbelief. Complete V^orks, Vol. IV, pp. 494, 495.\\n200", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0212.jp2"}, "213": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nwhich are to be seen are those which have survived\\nthe shocks of trade. Those which have failed\\nhave disappeared. Success is contagious. A prom-\\ninent American paper recently published this state-\\nment It will be noticed that the list of Wall\\nstreet losers is never published. Another trade\\npaper contains the following Mark Twain, in\\none of his books, says he never saw in all the\\nsplendid battle scenes in the Louvre a picture of a\\nsingle French defeat, and the remarks contain a\\nlarge amount of sound philosophy. Hence it is\\nnot the rule, or the exception either, for the news-\\npapers to chronicle advertising failures, of which\\nthere are undoubtedly many. Not only is the\\ntrue success in evidence, but a false showing is\\nmade by the counterfeit of success which the\\nstruggle for social position leads many to attempt,\\nwhen reason would counsel a more humble course.\\nThis false social attitude toward economic affairs\\nmay be expected to continue so long as the eco-\\nnomic life is overemphasized. So long as business\\nsuccess is taken as the sovereign criterion for judg-\\ning of a man s character and ability, every motive\\nwhich can lead a man to desire good standing in\\nthe eyes of his fellow-men will lead him to struggle\\nfor economic success and counterfeit it when not\\nreally achieved. A subordination of the economic\\ntest to other tests would decrease the intensity of this\\nstruggle and diminish the fundamental influences\\nwhich now make for crises. It only remains to be\\nnoticed that the influences here discussed derive\\n20I", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0213.jp2"}, "214": {"fulltext": "ECONOMIC CRISES\\ntheir force and significance from their social char-\\nacter. The closer a business man is in touch with\\nhis competitors, the more will competition and emu-\\nlation stimulate him. Competitive business in trade\\ncentres becomes more or less like industrial war-\\nfare or a series of personal combats. The leaders\\nnaturally recognized are those who excel in the\\nachievement of that toward which all are working,\\nand their influence, as leaders, is to mould others\\nto a type with themselves. In the heat of this\\nstruggle unwise ventures are made, unwise expen-\\nditures are encouraged, and the moral code is\\nstretched to the breaking point The business\\nworld deceives itself and thwarts itself.\\nTo return to the passage of opinions from one\\nto another in a social group, it may be observed\\nthat growth of erroneous beliefs can be carried\\nmuch further by a crowd of persons associated\\nthan by the persons composing it when separated.\\nThis is brought about by the reaction of opinion\\nupon opinion. As McCulloch said: In specula-\\ntion, as in most other things, one individual derives\\nconfidence from another. Such a one purchases\\nor sells, not because he has any particular or accu-\\nrate information in regard to the state of the\\ndemand and supply, but because some one else\\nhas done so before him. If it be granted for\\npurpose of argument that each individual may be\\ncapable of only a limited error in estimating the\\n23 Bowen, Principles of Political Economy, p. 437.\\n202", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0214.jp2"}, "215": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nfuture condition of industry upon the basis of\\npresent indications, it will be seen that his opin-\\nion, as expressed or implied by his acts upon the\\nmarket, may serve as evidence from testimony for\\nothers. They, in turn, when considering the same\\nproblem, will allow a certain weight to this testi-\\nmony. If we suppose a like inclination on their\\npart to see business success as certain where it is\\ndesired, they may advance by means of their indi-\\nvidual increment of error one step further than the\\nprevious trader toward a speculative and unsound\\nestimate. The market dealings resulting from this\\nsecond or derivative judgment may in turn serve\\nas the basis of a still more erroneous estimate made\\nsimilarly by others. Thus one may serve to bol-\\nster another up. The opinion of the associated\\ntrading public is reflected back and forth, while\\nwith each successive transfer of influence an\\nincrement of error is added which Ufts the entire\\ngroup, step by step, through the mutual accumula-\\ntions of error in the direction of overconfidence\\nand recklessness to a point of absurdity further\\nthan any one of those involved would, with the\\nordinary use of his reason, have advanced himself\\nsingly.\\nAlthough these accumulations of error are most\\nimportant, the influence of belief in testimony can\\nhardly be made to account for all the vagaries of\\nbelief which accompany a crisis. States of mind,\\nhopes and beliefs, are communicated from one to\\nanother by means of what is best described as\\n203", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0215.jp2"}, "216": {"fulltext": "ECONOMIC CRISES\\nsympathy. The intense feeling which can be\\nproduced in reUgious, poHtical, or other assem-\\nblages, is something more than can be accounted\\nfor by the mere argument presented to the mind.\\nThe more intimate the association, the more will\\nthe common thinking processes be influenced by\\nthe sympathetic force. The most extreme phase of\\nthe operation of this force is seen in the unthinking\\nferocity of mob action.^* Inasmuch as the- pre-\\nvailing economic system enforces intimate associa-\\ntion in a sense in which no previous system ever\\ndid, this class of influences tending to vitiate the\\neconomic reasoning of those who are subject to\\nmarket influences may well demand serious atten-\\ntion. Businesses are being increasingly concen-\\ntrated in large cities, and especially are those who\\ncontrol them being closely compacted together in\\nthe business sections of great cities. It has been\\nasserted that these conditions originate the influ-\\nences which breed crises, and the case of Australia,\\nwhere the population is unusually concentrated in\\ncities, has been cited as evidence. A large city\\nis characterized by an intensity of internal imita-\\ntion in proportion to the density of population,\\nBoris Sidis, in an article entitled, A Study of the Mob, in\\nthe Atlantic Monthly (Vol.LXXV, P^ebruary, 1895, PP* 188-197),\\npoints out the very significant relation between mobs and igno-\\nrance, monotony of life, and social oppression. Cf. Cesare Lom-\\nbroso, A Study of Mobs, Chautauquan, June, 1892; Bureau\\nof Education Circular of Information, No. 4, 1893, Abnormal\\nMan, p. 109.\\n25 Mr. H.J. Fletcher, in the Forum, August, 1895.\\n204", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0216.jp2"}, "217": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nand the multiform multiplicity of the relations of\\nits inhabitants. Thus there is an epidemic and\\ncontagious character given not only to its diseases,\\nbut to its styles and views. ^6 The so-called\\nbooms of American towns illustrate in acute\\nform the occasional economic effect of these influ-\\nences. The power of mental contagion is increased\\nby such facilities for assemblage and communica-\\ntion as the railway, telegraph, and telephone. It\\nis obviously enhanced by the practice of transact-\\ning business in industrial assemblages such as\\nstock and produce exchanges. Attention may be\\ncalled to the fact that in periods of unusual busi-\\nness success or depression, this physical concen-\\ntration of traders in large markets is greatly\\nincreased.\\nThe force of sympathy and imagination in the\\npropagation of opinions is not an intelligent one\\nand in economic matters it makes for the support\\nof opinions dangerous to the stability of industry.^^\\n26 G. Tarde s book, Les Lois de I lmitation, is thus summar-\\nized in Circular No. 4, 1893, of the Bureau of Education, p. 166.\\n2 That the pubHc opinion of the masses is not in the rule the\\nresult of a careful proving and sifting of facts has been already\\nemphasized. The views vi^hich little by little, as occasion offers,\\nestablish themselves as the reigning opinion are produced rather\\nby the working together of a group of factors, partly active and\\npartly passive. Among the latter the most important is the instinct\\nfor imitation which plays an important role, not only in regulating\\nthe externals of society, the forms of social intercourse, clothing,\\netc., but opinions and beliefs as well. The majority of men be-\\nlonging to the middle and lower ranks of society readily absorb\\nthose opinions regarding public matters which they hear most\\n205", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0217.jp2"}, "218": {"fulltext": "ECONOMIC CRISES\\nAn undue concentration of interest resulting in\\nintense emotion is always prejudicial to sound rea-\\nsoning. The general tendency of emotion is to\\nparalyze thought, and particularly to withhold the\\nmind from those considerations which are out of\\nharmony with itself.^^ The social effects of the\\nundue haste to be rich are quite as serious for the\\nsocial structure of industry as we have already\\nseen the exclusive attachment of interest to a sin-\\ngle aim is to the individual intellect. It is a strong\\narraignment of the ruling passion which is given\\nus by the German writer Neuwirth in the follow-\\ning conclusions based upon the study of the cri-\\nsis of 1873 The extravagant love of gambling\\nand the restless, passionate chase after wealth form\\nthe root of all crises. These things produce\\ntheir effects more frequently and destructively as\\nfrequently and emphatically expressed by others. See Franz\\nHoltzendorff, Oeffentliche Meinung, p. 93.\\nMost young men espouse the political parties of their fathers.\\nThe church of one s choice is usually the one attended by one s\\nparents.\\nThe sympathetic influence we are considering is doubtless allied\\nto hypnotic influence. Cf. Edward Fry, Imitation in Human\\nProgress, Contemporary Review, Vol. LV, 1889, p. 662; Albert\\nMoll, Hypnotism, pp. 221, 222.\\n28 Alexander Bain enunciated the law When we are under a\\nstrong emotion, all things discordant with it keep out of sight. A\\nstrong volitional urgency will subdue an opposing consideration\\nactually before the mind; but intense feeling so lords it over the\\nintellectual trains that the opposing considerations are not even\\nallowed to be present. The Emotions and the Will, p. 523.\\nSee Chalmers celebrated sermon On the Expulsive Power of a\\nNew Affection James Sully, Illusions, pp. 308-316.\\n206", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0218.jp2"}, "219": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nour age thinks, trades, and lives more quickly.\\nScience may ever so skilfully indicate the ultimate\\ncauses of industrial storms and their periodic\\nrecurrence, it may ever so clearly point out the\\nimmediate seat of the difficulty and the remedies\\nto be applied, but the particular primary cause lies\\nalways in that fatal peculiarity of the gold-hunting,\\ngold-worshipping human family against which\\ncommon sense and science are equally puny and\\npowerless. 2^ If the passion of the haste to be\\nrich operates, as has been here set forth, to upset\\nthe individual judgment, destroy experience, sup-\\npress proper consideration of risk and dishonesty,\\nand force economic activity along unwise lines, it\\ngoes very far to account for the occurrence of eco-\\nnomic crises. The crisis simply ruptures untena-\\nble conditions and reduces valuations to their\\nproper level.^^ Hence, in a certain sense, the crisis\\nmay be said to be not only inevitable but servicea-\\nble, inasmuch as it performs a necessary work in\\nreadjusting economic forecasts to reality\\nIn the crisis may be found a new set of psychi-\\ncal phenomena which it is of interest to indicate\\nbriefly before passing to the question of remedies.\\nIn contrast to the activity and optimism of the pre-\\n2^ Neuwirth, Speculationskrisis von 1873, Kap, V, pp. 312, 313.\\nThis is tersely expressed by Horace White The want of\\nconfidence which upsets commercial calculations and brings on a\\ncrisis is the disturbance or rupture of a commonly received opinion\\nthat fifty cents worth of goods are equal to a dollar in gold.\\nLalor, Article Commercial Crises, Vol. I, p. 529.\\n31 See note No. 16.\\n207", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0219.jp2"}, "220": {"fulltext": "ECONOMIC CRISES\\ncrisis period there may be found in, and subsequent\\nto the crisis a very deep f eeHng of depression and\\na very general lassitude. The change from one\\ncondition to another may be made with great rapid-\\nity because the mechanism of trade, and especially\\nof currency, suddenly turns the full force of the\\ncompetitive impulse in a reverse direction, and in-\\ntensifies it, inasmuch as the struggle to save prop-\\nerty in danger of loss may be more severe than the\\nprimary struggle to secure it. The indiscretion\\nof the period of business expansion, the luxurious\\nand extravagant life based upon fictitious profits,\\nand the wild chase of speculation are transformed\\nin the crises into an oppressive anxiety, a sharp\\nreduction of expenditures, even in cases where not\\nnecessary, and a critical, suspicious attitude toward\\nthe advancing of capital, even against the best of\\nsecurity. The entire nation suffers the aches and\\npains of sobering up after its intoxication and the\\nsubjective forces fail to facilitate the process of\\nrecuperation.\\nPsychologists tell us that a state of emotion is\\nonly gradually created or subdued. It is reason-\\nable to think that a state of social excitement is\\nmore gradual in its origin and subsidence than are\\nstates of individual emotion. The excitement\\nwhich accompanies the rapid growth of trade is\\nin the crisis transformed in character and intensi-\\nfied to the highest pitch. While an emotion is\\n82 Oechelhauser, Die Wirthschaftliche Krisis, pp. 84, 85.\\n208", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0220.jp2"}, "221": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nonly gradually subdued, it may be easily trans-\\nferred from one feeling to another. The feeling\\nof an enraged people cannot at once, in the\\nabsence of a victim, be soothed or appeased it\\nmay be diverted into a safe or harmless channel\\nor some altogether new emotion may be called\\ninto being, by means of an adequate occasion, as,\\nfor example, something to awaken the sentiment\\nof pride. The transfer of emotion from one\\nfeeling to another is particularly easy when the\\nsecond is entirely opposite to the first in character.\\nThe passage from smiles to tears is proverbially\\neasy. Such a jump from the top of the scale\\nof feelings to the bottom as is witnessed during\\nthe crisis corresponds to the general law of\\nchange in feeling and is a manifestation of the\\nsocial law called by Schaffle the law of con-\\ntrast. ^4\\nOther transfers of feeling besides that to a\\ndiametrically opposed feeling are possible. It is\\ninteresting to note that the emotions which have\\nbeen generated by speculative excitement and\\nintensified by panic depressions have been fre-\\nquently transferred to religious subjects and have,\\nin the United States at certain times, given rise\\n23 Alexander Bain, The Emotions and the Will, p. 43.\\n3* If we soar above the normal business level at one time, we\\nshall certainly fall below it at another; and the higher the flight,\\nthe more rapid and great will be the descent. The greatest panics\\nare always preceded by the most intense activity and speculation.\\nHenry Wood, Natural Law in the Business World, pp. 175,\\n176.\\n209", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0221.jp2"}, "222": {"fulltext": "ECONOMIC CRISES\\nto remarkable revivals of religion following close\\nupon the heels of panics.^^\\n35 Evidence of the recognition of this connection is abundant in\\ncontemporary religious literature. (See E. P. Whipple, Outlooks\\non Society, Literature, and Politics, pp. 12 and others.) It is\\nonly reasonable that the destruction of temporal prospects should\\nturn the mind to ambitions of another character.\\nThe history of the extraordinary revival movement of 1857 con-\\nnects it immediately with the crisis of that year. A few extracts\\nfrom a contemporary account will serve to explain this. It was\\nin October of this year (1857) that Mr. Lamphier, a missionary of\\nthe Dutch Reformed Church, thought, in his own heart, that an\\nhour of daily prayer would bring consolation to afflicted business\\nmen. In a few weeks those holding the meetings were astonished\\nto find the crowds growing too large for the buildings. The Metho-\\ndist Church on John Street and the Dutch Reformed Church on\\nFulton Street were opened daily. Next, Burton s theatre was hired,\\nand throughout the winter noonday prayer-meetings were held at\\nnumerous places in the city. Even the firemen and policemen held\\ntheir prayer-meetings, so that we may feel perfectly assured of the\\ntruth of what the writer says when he adds, It is doubtful whether\\nunder heaven was seen such a sight as went on in the city of New\\nYork in the winter and spring of the year 1857-58. From\\nNew York as a centre, the mysterious influence spread abroad till it\\npenetrated all New England in the East, southward as far as Vir-\\nginia, and even beyond, westward to Buffalo, Cincinnati, Chicago,\\nSt. Louis. The Galaxy, Great Awakenings, Vol. VI, pp.\\n388, 389. A very significant peculiarity of this movement, and one\\nwhich caused much mystification, was its spontaneity {pp. cit.,\\np. 390). If we recall the ease with which emotions may be trans-\\nferred this difficulty solves itself.\\nDr. Storrs, the president of the American Board, said, in an\\naddress delivered at Madison, Wis., before the Board, on October\\n12, 1894, You say how is it in our time as contrasted with 1857?\\nGod for two years has been grinding our communities under the\\npressure of commercial disease and distress, and He has been un-\\nable reverently be it said to grind them down into a position\\nof carelessness of the world and of penitent prayerfulness, or. rich\\n210", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0222.jp2"}, "223": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nWe may conclude that the depression of the\\nperiod subsequent to a crisis is due, first of all, to\\nthe excitement created by business prospects prior\\nto the crisis, and that this excitement is not im-\\nmediately extinguished in the crisis, but is altered\\nin form. Its strength is increased by the refresh-\\nment of feeling which comes from a change in the\\nnature of the interest presented to the mind. As\\nJames Sully says, Pain and pleasure alike are\\nheightened or intensified, or have their disagree-\\nable or agreeable side emphasized, by a transition\\nfrom and contrast to the opposite phase of feel-\\ning. Finally, this depression is chiefly due to\\nthe feeling naturally generated by the realization\\nof loss. In the measure that one s interests have\\nbeen concentrated upon business will the destruc-\\ntion of business prospects leave the mind confused,\\nbereft of any serious or sufficient purpose, liter-\\nally aimless, and hence despondent. As the\\ndepression of the post-crisis period wears away\\nand a normal condition of business is estabHshed,\\nrevivals vpould have followed as they did in 57. Wisconsin\\nState Journal, October 13, 1894. The explanation of this is that\\nbefore the appearance of the crisis of 1893 ^^e sails of business\\nwere closely trimmed, and no such intense excitement accompanied\\nthe crisis as was experienced in 1857, when the crash came as the\\nresult of the reckless speculation of the fifties. Cf. Albert C.\\nStevens, Phenomenal Aspects of the Financial Crisis, Forum,\\nVol. XVI, September, 1893.\\nWhat feeling there was generated in 1893 and during the sub-\\nsequent hard times found vent in the McKinley-Bryan presidential\\ncampaign.\\n36 James Sully, The Human Mind, Vol. II, p. 29.\\n211", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0223.jp2"}, "224": {"fulltext": "ECONOMIC CRISES\\nthe end of the crisis cycle is reached and the way\\nis cleared for the first stirrings of enterprise and\\nthe first promptings of hope which herald the\\nbeginning of a new cycle.\\nThe discussion of remedies for the conditions\\nwhich have been occupying our attention is pecul-\\niarly difficult, since the subjective forces in ques-\\ntion are difficult to change or to bring under\\npermanent subjection. The first thing which sug-\\ngests itself is education. A certain kind of educa-\\ntion has been making rapid strides of recent years,\\nbut it is open to question whether we are not still\\ngreatly in need of an education adapted to give\\nclear ideas concerning the duties and responsibil-\\nities incident to living in a social state like that\\nprevailing at present.\\nFor the education of business men a technical\\ntraining is not sufficient. The president of a suc-\\ncessful college of mines says that disastrous mis-\\ntakes probably occur in the practice of a mining\\nengineer oftener through ignorance of the petro-\\ngraphical and geological relations of the ore de-\\nposits in question than from lack of engineering\\nor metallurgical skill. In the same spirit, we may\\nsay that the graver afflictions of industry come\\noftener from ignorance of economic science than\\nfrom incapacity to solve the technical problems\\nof industry. The technical education attempts to\\nshow one how to pass his competitors, but it does\\nnot open an intellectual horizon wide enough to\\n212", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0224.jp2"}, "225": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nenable one to see how in the struggle of individuals\\nall may be defeated because of the imperfection\\nof the general industrial system. There is, among\\nbusiness men, often a lack of a comprehensive\\nmental life, of a broad, sane vision of the whole\\nof society, or even of the whole of industry. It is\\nimportant that business men should be acquainted\\nwith the larger aspects of business as set forth in\\npolitical economy.^ The trouble often is, as Mr.\\nWhipple observed concerning the crisis of 1857,\\nthat merchants become political economists, not\\nwhen their obligations are incurred, but when they\\nhave matured.^^ Judgment, resting as it does upon\\nexperience, cannot be accurate until the mind has\\nlong been storing up the materials for it in unbiassed\\nobservation and thinking.^^ Education is to be\\nrecommended for its effect in stimulating individ-\\nual self-confidence^^ and independent thinking, and\\n^7 Cf. Holtzendorff, Oeffentliche Meinung, pp. 132-144.\\n*8 Outlooks on Society, Literature, and Politics, Essay on\\nPanics and Investments. It would be difficult to state better than\\nMr. Whipple has done in this essay the moral aspects of crises.\\nSee especially pp. 23, 24.\\n39 It has been a frequent remark in the course of our exposi-\\ntion of the mind that for prudential forethought, and for sympathy\\nalike, there is needed an effective recollection of pleasures and\\npains. Bain, op. cit., p. 113.\\nio A merchant must not only have confidence in those around\\nhim, but also in hi?)iself. Confidence in his own powers of judgment\\nwill render him prudent in husbanding his resources, calm in the\\nmidst of speculation and excitement, and firm of purpose under\\ndifficulty. In this important particular many are wanting: they\\nhave not sufficient confidence in themselves to think or act inde-\\npendently, but are led by the example and guided by the opinion\\n213", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0225.jp2"}, "226": {"fulltext": "ECONOMIC CRISES\\nhence for its tendency to check dangerous vagaries\\nof popular feehng.*! To effect these purposes, the\\nprogress of culture must be very general. A con-\\nservative, clear-seeing individual here and there\\nwill not suffice. It is necessary to cultivate such\\na general spirit of solidity as shall express itself\\neffectively through public opinion and general\\npractice and be capable of repressing bad indus-\\ntrial symptoms before they have gained headway.\\nA quotation from Mr. John Mills, whose work was\\nmentioned at the opening of this chapter, is here\\nin place. Educate indeed as we may, credit will\\nalways fulfil its own law of growth and, as you\\ncannot endow all men with caution and conscience,\\nthe growth will still tend, at intervals, to degenerate\\nof their neighbors; and while so doing they commit actions as\\nrash as jumping from a railway carriage or rushing from a crowded\\nbuilding on the first cry of danger. Unaccustomed to exercise\\ntheir judgment, they give way to the first alarm without examining\\nits cause; an unaccountable tremor seizes them and renders them\\ndeaf to reason; a natural anxiety gives way to overwhelming fear,\\nand they insure the result they are most anxious to avoid a com-\\nmercial panic! Callander, The Commercial Crises of 1857,\\np. 10.\\n41 Adam Smith, speaking of what he calls inferior ranks of\\npeople, says, The more they are instructed, the less liable they\\nare to the delusions of enthusiasm and superstition, which, among\\nignorant nations, frequently occasion the most dreadful disorders.\\nWealth of Nations, Bk. V, Part III, Art. II, Sec. 60. See also\\nBk. V, Part III, Art. Ill, Sec. 14, where he says, Science is the\\ngreat antidote to the poison of enthusiasm and superstition.\\nTaine, in his Ancient Regime, writes somewhat pessimistically\\nof the state of reason, which he says is at best but an unstable\\nequilibrium. Bk. Ill, Ch. IV (translated by Duran, 1876), pp.\\n238, 239.\\n214", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0226.jp2"}, "227": {"fulltext": "THE PSYCHOLOGY OF CRISES\\ninto a critical rankness but it is very sure that, to\\nthe extent in which you increase the average intel-\\nligence and elevate the average moral tone, you\\ncooperate with the conservative action of economic\\nlaw on the equilibrium of Credit and Capital. It\\nis the liability to an ignorant speculative excite-\\nment, and a willingness to take immoral risks,\\nwhich ultimately put the growth of Credit beyond\\nthe control of the price of loan capital. Diminish\\nthose, and the cycle may then expand beyond its\\ncustomary decade. If crises rest ultimately, as\\nmany think, upon a self-interest so unduly devel-\\noped as to shut out a proper regard for the social\\nside of economic life, and if this is contributed to\\nby a weakness which permits the abuse of the\\ntrust imposed by credit, then true reform must\\ncome through the slow processes of character\\nbuilding.\\nSince it has been shown that an undue concen-\\ntration of interest upon economic matters begets\\ndistorted individual judgments and feverish and\\nfatuous social struggles for wealth, it is desirable,\\nby means of education or otherwise, to widen the\\nrange of social interests. If the proof that an\\nage given over to the production of wealth loses\\nmany of the higher pleasures of social and indi-\\nvidual life, and, even in economic affairs, deceives\\nitself because of the wasteful and unsatisfactory\\ncharacter of wealth consumption, when the arts\\nof consumption are neglected, does not constitute\\n*2 Credit Cycles, p. 39.\\n215", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0227.jp2"}, "228": {"fulltext": "ECONOMIC CRISES\\na convincing argument, then it may be proven that\\nsuch an age falls short of being even a perfect\\nproducer of wealth. To avoid the ill effects of an\\nundue concentration of mind, we must broaden\\nour interests. To tone down the feverish char-\\nacter of industry, we must have more than a single\\naim and more than a single goal to work for.\\nIt has been asserted that economic interests are\\npeculiarly dominant in the United States, and this\\nis undoubtedly true but there are many reasons\\nwhy this may be considered a passing phase of\\nour national evolution. The tempting opportu-\\nnities of a new country stimulate to effort. In the\\nfounding of a settlement, material interests must\\nof necessity be first considered. A relatively\\nunorganized society, in which wealth lies at hand\\nas the most convenient criterion of social worth,\\nstimulates the socially ambitious to secure wealth for\\nan ulterior purpose. Professor Hugo Miinsterberg\\nsays The American business man hunts success\\nvery energetically, but he does not care for money\\nitself. He wants a fortune because, in a country\\nwithout titles and orders, wealth is the only meas-\\nure of worth. As our country becomes older,\\n*3 This is a discriminating statement, conveying quite a different\\nidea from the assertion of De Tocqueville, who said, A native\\nof the United States clings to this world s goods as if he were\\ncertain never to die; and he is so hasty in grasping at all within\\nhis reach that one would suppose he was constantly afraid of not\\nliving long enough to enjoy them. Democracy in America\\n(Boston, 1873), Vol. II, Bk. II, Ch. XIII, p. 163. Cf. E. P. Whip-\\nple, Outlooks on Society, Literature, and Politics, p. 8.\\n216", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0228.jp2"}, "229": {"fulltext": "THE PSYCHOLOGY OF CRISES\\nand the most attractive opportunities are taken,\\nas leisure for something besides wealth getting\\nis afforded, and as, in consequence of this, another\\ncriterion besides wealth is used in determining\\nsocial standing, we may look for a radical change\\nin the characteristics of American civiHzation.\\nAs custom grows up to restrain enterprise, and\\nthe class which guards wealth supplements that\\nearning it, the practices fading to crises will find\\nless and less place. These economic changes may-\\nbe confidently expected in the United States, but\\nsince crises have not been limited to the United\\nStates, a word may be added referring to older\\ncountries. The industrial revolution which has\\nso transformed the nature of industry during the\\nlast century, has permitted the older nations to\\nenter upon a nev/ and unparalleled course of wealth\\nproduction, which has for a time made them resem-\\nble new nations so far as the prominence of eco-\\nnomic interests is concerned. As we look for the\\nnext stage of industry in the United States to\\nexhibit greater conservatism and solidity, for the\\nsame reasons we may look for the other crises-\\nsuffering countries of the world to assume again\\nthe normal characteristics of countries old in the\\neconomic sense.\\nRESUME\\nI. The psychology of crises, review of some theories.\\n(a) The crisis cycle presents a succession of mental\\nstates.\\n217", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0229.jp2"}, "230": {"fulltext": "ECONOMIC CRISES\\n(b) Recurring crises indicate an error of psychic forces.\\n(c) A powerful impulse will distort mental states.\\nCrises result from undue dominance of the im-\\npulse to secure wealth.\\nII. Individual effects of a powerful impulse.\\n1. Distorts recollection.\\n{a) Modifies force of the original impression.\\n(b) Mental states and external causes.\\n(c) Selection of details in recalling.\\n(d) Undesirable recollections repressed.\\n2. Distorts anticipation.\\n(a) Anticipation free from correctives.\\n{b) Optimism by contrast.\\n{c) Imagination ruled by desires.\\n3. Economic practice.\\nThe optimistic become leaders.\\n(b) Undue concentration of interest producing\\nstrong emotion promotes errors of prac-\\ntice.\\nA broadening of interest demanded.\\n{d) Character of business to-day.\\nIII. Social Psychology.\\n1 Effect of actions upon feeling.\\nCompetition requires the simulation of success.\\n2. Belief in testimony.\\n{a) Effects of the money test of worth.\\n(J?) Growth of increments of error in an asso-\\nciated body of traders.\\n3. Sympathy the compactness of trading commu-\\nnities.\\nIV. The reaction of the panic.\\nI The intensity of feeling.\\nCompetition to save property.\\nV. Remedies.\\nLiberal education.\\nWidened range of social interests lessening the im-\\nportance of economic motives.\\n218", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0230.jp2"}, "231": {"fulltext": "CHAPTER X\\nCONCLUSION\\nThe more important of the theories of crises take\\nup and magnify some one aspect of the subject.\\nThey, however, each develop a point of view\\nwhich it is necessary to accommodate in order to\\ngain a comprehensive knowledge. A crisis is cer-\\ntainly a disturbance of the equilibrium between\\ndemand and supply. A helpful, if not a very pen-\\netrating, view of the causes of crises, may be ob-\\ntained by arranging them according as they arise\\nfrom the side of demand or supply. The organi-\\nzation of industry very justly demands attention\\nin connection with crises, so that the proper rela-\\ntion of the size and structure of the individual busi-\\nness unit to the social industrial organism may be\\nunderstood. The dominant change in modern pro-\\nduction is due to the increased use of capital. It\\nis necessary to learn what effect this has upon cri-\\nses. A still more searching study of economic ten-\\ndencies comes in the consideration of the effect of\\nthe growth of capital power upon demand through\\nits relation to the welfare of the wage-earning\\nclasses. Since contests over the economic theories\\ninvolved in these studies bring in the question of\\n219", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0231.jp2"}, "232": {"fulltext": "ECONOMIC CRISES\\nthe relation of the state to the economic life, the\\nconsideration of the relation of legislation to crises\\nis a pertinent appendix to the above. A quite sepa-\\nrate, but equally important, phase of the subject is\\nthe relation of the mental and moral tendencies of\\nbusiness men to crises. This study includes the\\nexamination of the nature of credit and speculation,\\nbut the psychology of crises is a much larger sub-\\nject than this and demands more attention than it\\nhas received.\\nThere can be found in the literature devoted to\\ncrises a sufficient amount of data to present fairly\\nthe more fundamental characteristics of crises.\\nThe chief types of rational interpretation which\\nthese data will permit may also be found repre-\\nsented. Under these conditions it is not a particu-\\nlarly useful proceeding to advance a competing\\ntheory to add to the already long list. It is much\\nmore useful to attempt to knit together various\\ncontributions into an orderly whole, making what-\\never additions seem necessary, with a view to sup-\\nplementing and completing what has already been\\ndone.\\nWhile the industrial convulsion which character-\\nizes the crisis is obviously a lamentable occurrence,\\nthere are certain observations regarding the loss\\ndue to a crisis which it is desirable to set down.\\nMuch that is commonly reported as loss is not loss\\nin the sense of destruction of utility. The railway\\nsystem of the United States has remained practi-\\ncally the same during the few years preceding the\\n220", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0232.jp2"}, "233": {"fulltext": "CONCLUSION\\nlast crisis and the few years since. In that period,\\nhowever, there was an immense variation in the\\nselHng value of the securities which controlled prop-\\nerty rights in that railway system. A decHne of\\nmarket values is not to be understood as a loss of\\nwealth in the ordinary sense, when the finances\\nof an entire trading community are concerned.\\nDuring a crisis, while goods decline in value, money\\nenhances; but since values are reckoned in terms\\nof money, the enhancement of the value of money\\ndoes not offset the decline of the value of goods\\nin any attempt to estimate values in terms of\\ndollars and cents. Strictly speaking, what oc-\\ncurs is a transfer of values from certain com-\\nmodities to others. This transfer favors such\\npersons as possess wealth in money or in obli-\\ngations which stipulate the payment of certain\\nsums of money.^\\nThe direct and indirect social effects of crises\\nare numerous, but too numerous and important to\\nbe taken up in the present work. There are also\\nimportant relations between crises and various\\neconomic problems which are appropriate subjects\\nfor the attention of students of economic problems.\\nThere is no question but that crises promote rather\\n1 Hence one hears the expression debts have grown heavier.\\nSenator Chandler of New Hampshire said in the Senate, February\\ni6, 1897: Shrinkage in prices has been most serious since 1890.\\nThe value of property in the United States was ^65,000,000,000 in\\n1890; now it is estimated at ^49,000,000,000, a shrinkage of twenty-\\nfive per cent, since 1890. Our debts have not shrunk, but have\\nremained an inexorable charge.\\n221", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0233.jp2"}, "234": {"fulltext": "ECONOMIC CRISES\\nthan diminish inequahties ii; the distribution of\\nwealth, for in the extremity of the man of ordinary-\\nmeans hes the opportunity of men of very large\\nwealth. Crises intensify the real meaning of\\nvariations in wealth by reducing large numbers of\\npeople to a condition of want which gives a new\\nmeaning to the difference between large and\\nsmall wealth.\\nAnything which increases the uncertainty of\\nbusiness tends to break down habits of thrift. The\\ndistress of persons who in ordinary seasons are\\nself-supporting, and who are in search of work, is\\nwell calculated to draw out the benevolence of\\nthe charitable. The crisis teaches to many per-\\nsons the fatal secret that they can live without\\nwork.\\nA further effect of uncertain business conditions\\nis the growth of the captain of industry or the\\none-man-power system. Slow-moving, delibera-\\ntive forms of business management, the expansion\\nof which is much to be desired for the sake of\\nenlarging the number of persons in responsible\\npositions, are at a disadvantage.\\nThe coming of a crisis may not greatly injure\\na sound economic organism, but if that organism\\nbe diseased, a crisis will intensify its evils. A\\nmarked increase in certain kinds of crime occurs\\nduring a crisis.^ The decline of wages renders\\nnecessary woman and child labor, a decline of\\n2 Ellis, The Criminal, New York, 1890, p. 299; Max Haus-\\nhofer, Lehr und Handbuch der Statistik, 2 Aufl., p. 470.\\n222", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0234.jp2"}, "235": {"fulltext": "CONCLUSION\\nprofits increases the evasions of factory acts.\\nUnemployment is a conspicuous result of crises,\\nand the whole economy of production, which is\\nbuilt up in periods of tranquillity through the\\ndivision of labor, is marred by the downward dis-\\nplacement of wage-earners to the performance of\\ntasks beneath their ability. The incompetent are,\\nof course, first eliminated, but many misfits in the\\nrelation of workman to task result from the fever-\\nish search for work which is kept up during a\\ncrisis. Strikes, lockouts, and industrial disputes\\nreadily grow out of such conditions, while all types\\nof industrial experiments, such as cooperation and\\nprofit-sharing, aiming to inaugurate reforms, suffer\\ndistress. Then it is that the financial machinery\\nof government receives criticism, and that eco-\\nnomic questions are dragged out for ill-advised\\npolitical discussion and hasty legislation.\\nThese things emphasize the reality of social\\nsolidarity. And this suggests that therais a soli-\\ndarity in the progress of scientific thought, as well\\nas in economic conditions. Progress toward a\\nmore systematic knowledge of crises will come\\nchiefly as the result of general advances in eco-\\nnomic science. The extinguishment of crises will\\ncome through the progress of general economic\\nevolution, rather than as the result of the applica-\\ntion of specific remedies.\\n223", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0235.jp2"}, "236": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0236.jp2"}, "237": {"fulltext": "BIBLIOGRAPHY\\nI. GENERAL WORKS\\nHadley, A. T., article Commercial Crises in Johnson s\\nUniversal Cyclopaedia (Ed. of 1895).\\nVol. II, p. 423 ff. Brief historical and theoretical discussion.\\nHerkner, H., article Krisen in Conrad s Handworterbuch\\nder Staatswissenschaften. Bd. IV, p. 891 ff. Jena,\\n1892.\\nBest single article upon the subject of crises.\\nHyndman, Henry Mayers, Commercial Crises of the Nine-\\nteenth Century. London, 1892.\\nSocial Science Series, Vol. L.\\nJuglar, Clement, Crises Commerciales et de leur retour\\npdriodique en France, Angleterre, et aux Etats-Unis.\\n2d Ed., Paris, 1889.\\nSpecial use is made of the accounts of the Bank of France.\\nCrises Commerciales, in Leon Say s Nouveau Dic-\\ntionnaire d Economie Politique. Tome L Paris, 1891.\\narticles Des Crises Commerciales et Monetaires de\\n1800 k 1857, in Journal des Economistes, Tome XIV,\\n1856.\\nPages 14 fF. and p. 253 ff. Presents in outline the points\\ntreated more at length in Juglar s book. It traces for France\\nthe connection between crises and population, price, savings,\\nspeculation, the general condition of the market, and social and\\npolitical relations.\\nLaveleye, Emile Louis Victor de, La Marche Mondtaire et\\nses crises depuis cinquante ans. Paris, 1865. Also see\\nRevue des Deux Mondes, January and February, 1865.\\nMacleod, Henry Dunning, article Commercial Crises, in\\nMacleod s Dictionary of Political Economy. London,\\n1863.\\nQ 225", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0237.jp2"}, "238": {"fulltext": "BIBLIOGRAPHY\\nMarshall, Alfred, Economics of Industry. 1st Ed. London,\\n1891. Especially Bk. Ill, Ch. I.\\nThe description of crises there contained is quoted in F. A.\\nWalker s Political Economy (advanced course) pp. 175-177,\\n3d Ed. New York, 1888.\\nJ Pownall, G. H., article Crises, Commercial and Financial,\\nin Palgrave s Dictionary of Political Economy. Vol. I.\\nLondon, 1892.\\nSchaffle, Albert E. Friedrich, Bau und Leben des sozialen\\nKorpers. 4 Vols. Tiibingen, 1881.\\nBd. I, p. 344; II, 431 ff. and 445 ff.\\nGesammelte Aufsatze, Bd. II, pp. 23-137, Tubingen,\\n1886, a part of which appeared as article Zur Lehre\\nvon den Handelskrisen, in Zeitschrift fiir die gesammte\\nStaatswissenschaft, Bd. XIV, Tiibingen, 1858, and as\\narticle Der grosse Borsenkrach des Jahres 1873, i^i\\nBd. XXX, Tubingen, 1874.\\nAn important contribution to the subject. Among other things,\\nthe fluctuation in the price of the precious metals is treated with\\nreference to crises.\\narticle Handelspolitik, in Bluntschli s Deutsches\\nStaatsworterbuch, Bd. IV. 11 Vols. Stuttgart, 1857-70.\\nDas Gesellschaftliche System der Menschlichen Wirth-\\nschaft. 3 Aufl. 2 Vols. Tiibingen, 1873.\\nWagner, Adolph, article Krisen, in Rentzsch s Hand-\\nworterbuch der Volkswirthschaftslehre. 2 Aufl. Leip-\\nzig, 1870.\\nAn especially valuable article. The influence of credit is\\nemphasized.\\nWhite, Horace, article Commercial Crises, in Lalor s\\nCyclopaedia of Political Science, Economy and Political\\nHistory of the United States. 3 Vols. Chicago, 1884.\\nWirth, Maximilian Wilhelm Gottlob, Geschichte der Han-\\ndelskrisen. 4 Aufl. Frankfurt a/M., 1890.\\nThe standard historical work.\\n226", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0238.jp2"}, "239": {"fulltext": "BIBLIOGRAPHY\\nII. THE ECONOMIC EQUILIBRIUM\\nGamier, M. Joseph, Traitd d Economie Politique Sociale ou\\nIndustrielle. Paris, 1880.\\nEspecially Sees. 363, 579, et seq. Follows the presentation of\\nMax Wirth.\\nNasse, E., article Ueber die Verhlitung der Produktions-\\nkrisen durch staatliche Flirsorge, in Jahrbuch fiir\\nGesetzgebung, Verwaltung und Volkswirthschaft im\\ndeutschen Reich. N. F., Bd. III. Leipzig, 1879.\\nRoscher, Wilhelm, Zur Lehre von den Absatzkrisen (first\\npublished in 1849), in Ansichten der Volkswirthschaft.\\n3 Aufl. Leipzig u. Heidelberg, 1878.\\nChief authority of the equilibrium theory.\\nNationalokonomik des Handels und Gewerbfleisses.\\n2 Aufl. Stuttgart, 1881. Being Bd. Ill of System der\\nVolkswirthschaft.\\nEspecially Abtheilung II, Kap. XI.\\nIII. THE ORGANIZATION OF INDUSTRY\\nReference may be made to much of the literature of modern social-\\nism. Upon the size of business units see also section (c) of the\\nbibliography of Crises and Legislation.\\nBebel, Die Frau und der Socialismus. 10 Aufl. Stuttgart,\\n1890.\\nEspecially p. 235 ff.\\nEngels, Friedrich, Herrn E. Dlihring s Umwalzung der\\nWissenschaft. 2 Aufl. Zurich, 1886.\\nSocialism, Utopian and Scientific (Ed. by Edw.\\nAveling). London, 1892. Social Science Series No. 56.\\nContains a fine description of the phases through which business\\npasses in a crisis period.\\nEngels-Marx, Das Kommunistische Manifest. 4 Aufl.\\nLondon (German Cooperative Publishing Co.), 1890.\\nKautsky, K., Marx s okonomische Lehren. Stuttgart, 1887.\\nPages 238 ff.\\nKleinwachter, F., Die Kartelle. Innsbruck, 1883.", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0239.jp2"}, "240": {"fulltext": "BIBLIOGRAPHY\\nLexis, article Handel, in Schonberg s Handbuch. 2 Aufl.\\nTubingen, 1886.\\nEspecially Bd. I, pp. 697-734, and Bd. II, pp. 734-737.\\nSchultze-Gavernitz, Grossbetrieb ein wirthschaftlicher und\\nsocialer Fortschritt. Leipzig, 1892.\\nSmart, William, article The Dislocations of Industry, in\\nContemporary Review, Vol. LIII, May, 1888.\\nWatchel, Friedrich, Die Versicherung der Actienrente, Ein\\nPraservativ gegen Borsen- und Handels-Krisen. Leip-\\nzig, 1874.\\nIV. CRISES AND THE PROBLEM OF CAPITAL\\nAldis, W. Steadman, article Over-production in the Con-\\ntemporary Review, Vol. XXXV. London, April, 1879.\\nBeaumont, Henri de, article Des Fetes comme Remede k la\\nCrise Commerciale, in Journal des Economistes, Feb-\\nruary, 1886. Sdrie 4, Tome XXXIII.\\nEmphasizes expenditure as necessary to maintain trade.\\nBernhardi, Th., Versuch einer Kritik der Griinde, die fiir\\ngross und klein Grundeigentum angefUhrt werden. St.\\nPetersburg, 1849.\\nSec. 15. Reviews the classical doctrines of profits and surplus.\\nBowen, Francis, American Political Economy. 3d Ed.\\nNew York, 1863.\\nParticularly Chs. XVII and XXIII.\\nChalmers, Thomas, On Political Economy in Connection\\nwith the Moral State and Moral Prospects of Society.\\n2d Ed. Glasgow, 1832.\\nChs. Ill and V. Argues for the possibility of a general glut.\\nCourcelle-Seneuil, Jean Gustave, Traite Theorique et Pratique\\nd Economie Politique. Paris, 1858.\\nTome I, Partie Theorique ou Ploutologie.\\nCrocker, Uriel H., Excessive Saving a Cause oi Commercial\\nDistress being a Series of Assaults upon Accepted Prin-\\nciples of Political Economy. Boston, 1884.\\nThe Causes of Hard Times. Boston, 1895.\\n228", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0240.jp2"}, "241": {"fulltext": "BIBLIOGRAPHY\\nD Avis, article Die wirthschaftliche Ueberproduktion und\\ndie Mittle zu ihre Abhiilfe, in Conrad s Jahrbiicher,\\n1888, Bd. XVII, N. F., pp. 465-490.\\nEly, Richard T., Outlines of Economics (College Edition).\\nNew York, 1893.\\nGuyot, Yves, Principles of Social Economy (Trans, by\\nC. H. Lippington). 2d Ed. London and New York, 1892.\\nHawley, Fr. B., article The Rationale of Panics, in National\\nQuarterly Review, October, 1879.\\narticle The Ratio of Capital to Consumption, in Na-\\ntional Quarterly Review, Vol. XXXIX, July, 1879.\\nCapital and Population. New York, 1882.\\nChs. 11, III, IV, and V.\\nHobson, John A., The Evolution of Modern Capitalism; a\\nStudy of Machine Production. London, 1894.\\nCli. VII. Presents the modern doctrine of saving.\\nMcCuUoch, John Ramsay, The Principles of Political Econ-\\nomy. London, 1870.\\nHeld Say s doctrine of the impossibility of a general glut.\\nMalthus, T. R., Principles of Political Economy considered\\nwith a View to their Practical Application. 2d Ed.\\nLondon, 1836.\\nBk. I, Ch. V, and Bk. II, Ch. I. Chief opponent of Say.\\nHeld the possibility of a general glut.\\nMoffat, R. S., The Economy of Consumption; an Omitted\\nChapter in Political Economy. London, 1878.\\nMummery, A. F., and J. A. Hobson, The Physiology of In-\\ndustry an Exposure of Certain Fallacies in Existing\\nTheories of Economics. London, 1889.\\nRae, John, Statement of Some New Principles on the Subject\\nof Political Economy, exposing the Fallacies of the\\nSystem of Free Trade and of Some Other Doctrines\\nmaintained in the Wealth of Nations.^ Boston, 1834.\\nBk. II, first six chapters.\\nRau, Karl Heinrich, Malthus und Say liber die Ursachen der\\njetzigen Handelsstockung. Hamburg, 1821.\\nComprises selections from the principal parts of Malthus\\nPrin. of Pol. Econ., London, 1820, and Say s Open Letters to\\n229", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0241.jp2"}, "242": {"fulltext": "BIBLIOGRAPHY\\nMalthus, Paris, 1820, together with a comment upon the arguments\\npresented. Rau leans toward Malthus position.\\nRobertson, John M., The Fallacy of Saving. London, 1892.\\nSocial Science Series No. 52.\\nAgrees in the main with Hobson.\\nSay, Jean-Baptiste, Cours Complet d Economie Politique\\nPratique. 2d Ed. Paris, 1840.\\nPart III, Ch. XXXI. Developed the theory of the market.\\nLettres k Malthus sur differents sujets d economie poli-\\ntique, notamment sur ies causes de la stagnation generale\\ndu commerce. Paris, 1820.\\nSimonde de Sismondi, Jean Charles Leonard, Nouveaux\\nPrincipes d Economie Politique ou de la Richesse dans\\nses Rapports avec la Population. 2d Ed. Paris, 1827.\\nLiv. II,Chs. IV, V, andVI.\\nWells, David Ames, article The Great Depression of Trade,\\nin the Contemporary Review, Vol LIT, August and\\nSeptember, 1887.\\nV. THE WAGES SYSTEM\\nPart of the literature given in the previous section may be consulted.\\nAdler, Georg, Rodbertus, eine socialokonomische Studie.\\nLeipzig, 1884.\\nA very valuable essay.\\nBahr, Hermann, Rodbertus Theorie der Absatzkrise.\\nWieh, 1884.\\nReprint of an address.\\nBrentano, Ludwig Joseph (called Lujo), article Die Arbeiter\\nund die Produktionskrisen, in Jahrbuch fiir Gesetzge-\\nbung, Verwaltung und Volkswirthschaft im deutschen\\nReich. Bd. II, N. F., 1878.\\nContains his plan for the insurance of the wage-earning classes\\nagainst crises. This plan is in part repeated in several of his\\nother works.\\nDer Arbeiter-Versicherungszwang. Berlin, 1881.\\nUeber die Ursachen der heutigen socialen Noth. Ein\\nBeitrag zur Morphologic der Volkswirthschaft. 2d Aufl.\\nLeipzig, 1889.\\n230", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0242.jp2"}, "243": {"fulltext": "BIBLIOGRAPHY\\nDie Arbeiterversicherung gemaiss der heutigen Wirth-\\nschaftsordnung geschichtliche und okonomische Stu-\\ndien. Leipzig, 1879.\\nArbeitsverhaltniss gemass dem heutigen Rechte.\\nLeipzig, 1876. Translated by Sherman, The Re-\\nlation of Labor to the Law of To-day. New York, 1891\\nGeorge, Henry, Progress and Poverty. Bk. V, Ch, L\\n4th Ed. New York, 1880.\\nHertzka, Theodor, Die Gesetze der sozialen Entwickelung.\\nLeipzig, 1886.\\nBk. I, Kap. VIII. Die Ueberproduktion.\\nEine Reise nach Freiland. Leipzig, 1893.\\nKap. X. Unmoglichkeit von Krisen in Freiland. A social\\nUtopia.\\nHobson, John A., article The Economic Cause of Unemploy-\\nment. Contemporary Review, Vol. LXVII, p. 744 fF.\\nMario, Karl (Karl Georg Winkelblech), Untersuchungen\\niiber die Organisation der Arbeit oder System der Welt-\\nokonomie. 2 Aufl. 4 Bde. Tubingen, 1885.\\nEspecially Bd. I.\\nNicholson, J. Shield, The Effects of Machinery on Wages.\\nSocial Science Series No. 54. 2d Ed. London, 1892.\\nOsgood, H. L., article Scientific Socialism (Rodbertus) in\\nPolitical Science Quarterly, Vol. I, 1886.\\nOwen, Robert, Observations on the Effects of the Manufac-\\nturing System. London, 1817.\\nReport. Part I of the Twenty-Fourth Annual, entitled\\nUnemployment. Bureau of Statistics of Labor of\\nMassachusetts. Boston, March, 1894.\\nRodbertus- Jagetzow, Johann Karl, Capital, being Vierter\\nsozialer Brief an von Kirchmann (Ed. by A. Wagner\\nand Th. Kozak). Berlin, 1885.\\nThe crisis theory of Rodbertus is frequently repeated in his\\nvarious works.\\nZur Erkenntniss unserer staatswirthschaftlichen Zu-\\nstande. Neubrandenburg and Friedland, 1842.\\nZur Beleuchtung der sozialen Frage, being Erster und\\ndritter sozialer Brief an von Kirchmann. Berlin, 1885.\\n231", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0243.jp2"}, "244": {"fulltext": "BIBLIOGRAPHY\\nZweiter sozialer Brief an von Kirchmann. Berlin, 1 890.\\nZur Erklarung und Abhlilfe der heutigen Creditnoth\\ndes Grundbesitzes. 2 Aufl. 2 Bde. Jena, 1876.\\nKleine Schriften, especially Die Handelskrisen der\\nGrundbesitzer. Berlin, 1890.\\nSargent, William L., Robert Owen and his Social Phi-\\nlosophy. London, i860.\\nVilleneuve-Bargemont, Alban de, Economic Politique Chr6-\\ntienne, ou recherches sur la nature et les causes du Pau-\\nperisme en France et en Europe. Paris, 1834.\\nTome I, Ch. XII. Des Machines.\\nZuns, Einiges uber Rodbertus. Berlin, 1883.\\nVI. CRISES AND LEGISLATION\\n{a) Bank Legislation\\nBonnet, Victor, article La Crise Mondtaire de 1863-64 et ses\\nOrigines, in Revue des Deux Mondes, November 15,\\n1865.\\nFavors a single bank of note issue.\\nQuestion Financiere a propos des crises. Paris, 1859.\\nBuchanan, President, Message, December 8, 1857. Sen.\\nEx. Doc. No. II, 35th Cong., ist Session. Washington,\\n1858.\\nCarey, Henry Charles, The Credit System in France, Great\\nBritain, and the United States. Philadelphia, 1838.\\nRecommends freedom in banking. Highly praised by Coquelin.\\nClement, Ambroise, article Des Crises Commerciales, in\\nJournal des Economistes, Tome XVII, January, 1858.\\nFavors freedom of banking.\\nLa Crise Economique. Paris (Guillaumin)\\nCoquelin, Charles, article Les Crises Commerciales et la\\nLiberte des Banques, in Revue des Deux Mondes\\n(Nouvelle Serie), Tome XXIV, November i, 1848.\\nOne of the chief exponents of the theory of freedom in bank issue.\\nCourcelle-Seneuil, Jean Gustave, article De la Liberte des\\nBanques, in Journal des Economistes, 2me S6rie,\\nTome XLII, May 15, 1864, and Tome XLIII, July 15.\\n232", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0244.jp2"}, "245": {"fulltext": "BIBLIOGRAPHY\\nFavors competing banks of issue, admitting, however, that, as\\nbanks aid progress in wealth, they assist in bringing about more\\nfrequent crises.\\nGuthrie, George, Bank Monopoly, the Cause of Commercial\\nCrises. Edinburgh, 1864.\\nMannequin, Th., article De la Libert^ des Banques, in\\nJournal des Economistes, 2me Sdrie, Tome XLI, 1864.\\nChampion of freedom in banking.\\nRoscher, Wilhelm, Nationalokonomik des Handels und\\nGewerbfleisses (especially Sees. 69-70). 2 Aufl. Stutt-\\ngart, 1887.\\nWagner, Adolph, Finanzwissenschaft. 3 Aufl. Leipzig, 1883. ^s^-^\\nEspecially Buch III, Sees. 259-262 in Bd. I. Best resum6 of\\nthe arguments for and against freedom of bank issue. Con-\\ntains extensive references to the literature of the subject.\\nSystem der Zettelbankpolitik. 2 Aufl. Freiburg, 1873.\\nWirth, Maximilian Wilhelm Gottlob, Handbuch des Bank-\\nwesens. 3 Aufl. Kbln, 1883. Being Bd. Ill of Grund-\\nziige der National Oekonomie.\\nWolowski, L., article Des Nouveaux Dtfbats sur les\\nBanques, in Revue des Deux Mondes, Tome LV,\\nFeb. I, 1865.\\nPrincipal champion of monopoly of bank issue by a single insti-\\ntution under state control.\\nLa Question des Banques. Paris, 1864, the substance\\nof which was published as Question des Banques in\\nJournal des Economistes, 2me Serie, Tome XLI, Feb.\\n15, and March 15, 1864, and Tome XLII, April 15.\\nContains an extensive collection of documents bearing upon\\nthe subject.\\n{b) The Peel Bank Act of 1844\\nGeneral reference is made to much of the literature given under the\\npreceding heading.\\nBaring, Alexander (Baron Ashburton), The Financial and\\nCommercial Crises Considered. 3d Ed. London, 1847.\\nLocates the cause oi crises in disturbances of the currency.\\nOpposed to the Peel Bank Act.\\n233", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0245.jp2"}, "246": {"fulltext": "BIBLIOGRAPHY\\nBaxter, Robert, Panic of 1866, with its Lessons on the Cur-\\nrency Act. London, 1866.\\nBullion Report of 18 10. Report of English Parliamentary\\nCommission. Text to be found in Appendix to Sumner s\\nHistory of American Currency. New York, 1874.\\nCairnes, John Elliott, An Examination into the Principles of\\nCurrency involved in the Bank Charter Act of 1844.\\nDublin, 1856.\\nArgues against the Peel Bank Act. Is highly praised by Tooke.\\nFullarton, John, On the Regulation of Currencies, being an\\nExamination of the Principles on which it is proposed to\\nrestrict, within a Certain Fixed Limit, the Future Issues\\non Credit of the Bank of England and of Other Banking\\nEstablishments throughout the Country. London, 1844.\\nPronounced one of the clearest opponents of the theory of the\\nPeel Bank Act.\\nMills, John, paper, The Bank Charter Act and the Late\\nPanic, read before National Social Science Associa-\\ntion at Manchester, Oct. 5, 1866. Published separately,\\nLondon, 1866.\\nDefends the Bank Act and claims that some broader and\\ndeeper cause must be found to account for the occurrences\\nof crises.\\nMill, John Stuart, Principles of Political Economy.\\nAmerican, from 5th London Ed. New York, 1882.\\nEspecially Bk. Ill, Ch. XXIV.\\narticle, The Currency Question, in Westminster\\nReview, June, 1844.\\nOverstone, (Lord) Sam. Jones Loyd, Tracts and Other Pub-\\nlications on Metallic and Paper Currency (Ed. by\\nJ. R. McCulloch). London, 1858.\\nChief authority of the Currency School.\\nPalmer, J. Horsley, The Causes and Consequences of the\\nPressure upon the Money Market with a Statement of\\nthe Action of the Bank of England from ist October,\\n1833, to 27th December, 1836. London, 1837.\\nTooke, Thomas, and William Newmarch, A History of\\nPrice\u00e2\u0080\u009e 6 Vols. London, 1857.\\n234", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0246.jp2"}, "247": {"fulltext": "The Citizen^s Library of Economics\\nPolitics, and Sociology\\nUNDER THE GENERAL EDITORSHIP OF\\nRICHARD T. ELY, Ph.D., LL.D.\\nDirector of the School of Economics, and Political Science and History\\nProfessor of Political Econotny at the University of Wisconsin\\ni2mo. Half Leather. $1.25 NET each\\nMONOPOLIES AND TRUSTS\\nBy Richard T. Ely, Ph.D., LL.D.\\nIt is admirable. It is the soundest contribution on the subject that\\nhas appeared. Professor John R. Commons.\\nBy all odds the best written of Professor Ely s works.\\nProfessor Simon N. Patten, University of Pennsylvania.\\nTHE ECONOMICS OF DISTRIBUTION\\nBy John A. Hobson, author of The Evolution of Modern\\nCapitalism, etc.\\nWORLD POLITICS\\nBy Paul S. Reinsch, Ph.D., LL.B., Assistant Professor of\\nPolitical Science, University of Wisconsin.\\nECONOMIC CRISES\\nBy Edv^ard D. Jones, Ph.D., Instructor in Economics and\\nStatistics, University of Wisconsin.\\nIN PRE PARA TION FOR EARL Y ISSUE ARE\\nESSAYS IN THE MONETARY HISTORY OF THE\\nUNITED STATES\\nBy Charles J. Bullock, Ph.D., Assistant Professor of\\nPolitical Economy, Williams College.\\nGOVERNMENT IN SWITZERLAND\\nBy John Martin Vincent, Ph.D., Associate Professor of\\nHistory, Johns Hopkins University.\\nHISTORY OF POLITICAL PARTIES IN THE UNITED\\nSTATES\\nBy Jesse Macy, LL.D., Professor of Political Science in Iowa\\nCollege.\\nTHE MACMILLAN COMPANY\\n66 FIFTH AVENUE, HEW YORK", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0247.jp2"}, "248": {"fulltext": "DEMOCRACY AND EMPIRE\\nWith Studies of their Psychological, Economic, and Moral Founda-\\ntions, by Franklin H. Giddings. Cloth. 8vo. $2.50\\nThe work as a whole is the most profound and closely reasoned defence of\\nterritorial expansion that has yet appeared. The volume is one of rare\\nthoughtfulness and insight. It is a calm, penetrating study ,of the trend of\\ncivilization and of our part in it, as seen in the light of history and of evolution-\\nary philosophy. The Chicago Tribttne.\\nThe question which most interests both Professor Giddings and his readers\\nis the application of his facts, his sociology, and his prophecy, to the future of\\nthe American Empire. The reader will rise from it with a broader charity\\nand with a more intelligent hope for the welfare of his country.\\nThe Independent.\\nTHE PRINCIPLES OF SOCIOLOGY\\nAn Analysis of Phenomena of Association and of Social Organiza-\\ntion, by Franklin Henry Giddings, M.A. (Columbia\\nUniversity Press.) 8vo. Cloth. $3.00, net\\nIt is a treatise which will confirm the highest expectations of those who\\nhave expected much from this alert observer and virile thinker. Beyond a\\nreasonable doubt, the volume is the ablest and most thoroughly satisfactory\\ntreatise on the subject in the English language. Literary World.\\nThe distinctive merit of the work is that it is neither economics nor\\nhistory. He has found a new field and devoted his energies to its exploita-\\ntion. The chapters on Social Population and on Social Constitution are\\namong the best in the book. It is here that the method of Professor Giddings\\nshows itself to the best advantage. The problems of anthropology and ethnology\\nare also fully and ably handled. Of the other parts I like best of all the dis-\\ncussion of tradition and as social choices; on these topics he shows the greatest\\noriginality. I have not the space to take up these or other doctrines in detail,\\nnor would such work be of much value. A useful book must be read to be\\nunderstood. Professor Simon N. Patten, in Science.\\nTHE ELEMENTS OF SOCIOLOGY\\nA Text-Book for Colleges and Schools, by Franklin Henry\\nGiddings, M.A., Professor of Sociology in Columbia Univer-\\nsity. 8vo. Cloth. $1.10 net\\nIt is thoroughly intelligent, independent, and suggestive, and manifests an\\nunaffected enthusiasm for social progress, and on the whole a just and sober\\napprehension of the conditions and essential features of such progress.\\nProfessor H. Sidgvvick in The Economic Jotirnal.\\nOf its extreme interest, its suggestiveness, its helpfulness to a reader to\\nwhom social questions are important, but who has not time or inclination for\\nspecial study, we can bear sincere and grateful testimony. New York Times.\\nProfessor Giddings impresses the reader equally by his independence of\\njudgment and by his thorough mastery of every subject that comes into his\\nview. The Churchman.\\nTHE MACMILLAN COMPANY\\n66 FIFTH AVENUE, NEW YORK", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0248.jp2"}, "249": {"fulltext": "BIBLIOGRAPHY\\nThe authority of first importance upon the subject of the Peel\\nBank Act.\\nTorrens, Colonel Robert, The Principles and Practical Opera-\\ntion of Sir Robert PeePs Act of 1844 explained and\\ndefended. 3d Ed. London, 1858.\\nA Letter to the Right Honourable Lord Viscount Mel-\\nbourne, on the Causes of the Recent Derangement in the\\nMoney Market and on Bank Reform. 2d Ed. Lon-\\ndon, 1837.\\nThe Budget, a Series of Letters on Financial, Com-\\nmercial, and Colonial Policy. London, 1844.\\nDiscusses the crisis of 1841-42.\\nWagner, Adolph, Die Geld- und Credittheorie der PeeP-\\nschen Bankacte. Wien, 1862.\\nThe most scholarly and systematic presentation of the subject.\\n(c) Miscellaneous Legislative Provisions\\nGeneral reference is made to the works given under the heading\\nCredit and Speculation.\\nAnonymous, The Profit of Panics showing how Financial\\nStorms arise, who make Money by them, and Other\\nRevelations by a City Man. London, 1866.\\nBy the author of Bubbles of Finance, also anonymously\\npubhshed. See under Credit and Speculation.\\nBenton, T. H., Thirty Years View. New York, 1854.\\nVol. II, Chs. XIII and XIV, pp. 43-56. Discussion of Bank-\\nruptcy Laws in the United States.\\nCampbell, R. V., Principles of Mercantile Law. 2d Ed.\\nEdinburgh, 1890.\\nCrump, Arthur, A New Departure in the Domain of Politi-\\ncal Economy. 2d Ed. London, 1881.\\nParticularly Part I, Ch. IX, The Influence of Joint Stock\\nLimited Liability Companies upon Production.\\nDunscomb, S. W., Bankruptcy; a Study in Comparative\\nLegislation. Columbia College Studies in History,\\nEconomics, and Public Law. Vol. II, No. 2. New York,\\n1893.\\n235", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0249.jp2"}, "250": {"fulltext": "BIBLIOGRAPHY\\nEvans, D. M., Facts, Failures^ and Frauds; Revelations,\\nFinancial, Mercantile, Criminal. London, 1859.\\nGrif n, R., Stock Exchange Securities; an Essay on the\\nGeneral Causes of Fluctuations in their Prices. London,\\n1879.\\nKleinwachter, Fr., in Schonberg s Handbuch, Bd. I, 3\\nAufl. 3 Bde. Tubingen, 1890-91.\\nEspecially Part I, Ch. V, Sub-division III, Sees. 27-34. Dis-\\ncusses the advantages and defects of various forms of business\\nundertaking.\\nOechelhauser, W., Die Nachteile des Aktienwesens und der\\nReform der Gesetzgebung. 1876 and 1878.\\nOliphant, Laurence, article The Autobiography of a Joint\\nStock Company (Limited). Blackwood s Magazine,\\nJuly, 1876, Vol. cXX.\\nSchafQe, Altert Eberhard Friedrich, article Die Anwend-\\nbarkeit der verschiedenen Unternehmungsformen, in\\nZeitschrift fUr die Gesammte Staatswissenschaft, Jahr-\\ngang 1869.\\nBest treatment of the subject of forms of business organization.\\nVerhandlungen, Die, des elften Kongresses deutscher Volks-\\nwirthe, held in Mainz, September i, 2, 3, and 4, 1869.\\nReport of proceedings in Faucher s Vierteljahrsschrift\\nfiir Volkswirthschaft und Kulturgeschichte, Jahrgang\\n1869. Bd. in.\\nUpon the subject of joint stock companies.\\nVerhandlungen, des Vereins fur Socialpolitik am 12 u. 13\\nOctober, 1873, Bd. IV of Schriften des Vereins.\\nLeipzig, 1874.\\nConcerning joint stock companies. Contains Wagner s thirty-\\ntvi^o theses.\\nVTI. PERIODICITY OF CRISES\\nA few astronomical works are cited which deal especially with the\\nphenomena involved in this theory.\\nBanner, Samuel, Benner s Prophecies of Future Ups and\\nDowns in Prices. 3d Ed. Cincinnati, 1884.\\n236", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0250.jp2"}, "251": {"fulltext": "BIBLIOGRAPHY\\nBoccardo, Gerolamo, Economia Political 6th Ed. Turin,\\n1879.\\nVol. II, pp. 127-157.\\narticle La Legge de Periodicita della Crisi-Perturbazioni\\nEconomiche e Macchie Solari, in Archivio di Stitis-\\ntica, Anno IIL Roma, 1879.\\nCarr, Nathan T., The Sun Its Constitution Its Phenomena\\nIts Condition. New York, 1883.\\nEspecially Sec. 25, Periodicity of Sun-spots.\\nCarrington, R. C, Observations of the Spots on the Sun\\nfrom November 9, 1853, to March 24, 1861. London,\\n1863.\\nThe author compares the frequency of sun-spots with the price\\nof wheat.\\nHazen, H. A., article Sun-spots and Predictions, in Sci-\\nence, Vol. XVI, pp. 29-33, July 18, 1890.\\nHerschel, Sir William, Observations tending to investigate\\nthe Nature of the Sun, etc. Philosophical Transactions\\nof the Royal Society, Vol. XCI. London, 1801.\\nPage 265 ff. Contains perhaps the earliest suggestion of the\\nconnection between sun-spots and the variations of harvests.\\nHunter, W. W., and J. Norman Lockyer, article Sim-spots\\nand Famines, in Nineteenth Century, November, 1877.\\nVol. 11^ pp. 583-602. Concerning periodicity of famines in India.\\nJevons, W. Stanley, Investigations in Currency and Finance.\\nLondon, 1884.\\nChs. I, V, VI, VII, and VIII. Mr. Jevons is mainly respon-\\nsible for bringing this discussion into economic literature.\\nKedzie, J. H., Speculations, Solar Heat, Gravitation, and\\nSun-spots. Chicago, 1886.\\nPart III.\\nYoung, C. A., The Sun and the Phenomena of its Atmos-\\nphere, in Half Hours with Modern Scientists. Sec-\\nond Series. New Haven, Conn., 1873.\\n237", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0251.jp2"}, "252": {"fulltext": "BIBLIOGRAPHY\\nVIII. CREDIT AND SPECULATION\\nReference may be made to the literature in the next section of the\\nbibliography.\\nAnonymous, The Bubbles of Finance: Joint Stock Compa-\\nnies, promoting of Companies, Modern Commerce, Money\\nLending, and Life Insuring, by a city man. London,\\n1865.\\nBy the author of Profits and Panics, also anonymously pub-\\nlished (see VI (c) of this bibliography)\\nAnonymous, Rationale of Market Fluctuations. London,\\n1875.\\nAnonymous, Market Fluctuations, by a city editor. London,\\n1876.\\nCohn, Gustav, article Zeitgescbafte und Diiferenzgeschafte,\\nin Hildebrand s Jahrbucher, Bd. VII, and Bd. IX,\\n1866.\\nConsular Reports, Symposium on Debts of Honor how\\nthey are considered in various countries. Vol. XLII.\\nAugust, 1893.\\nCrump, Arthur, The Key of the London Money Market.\\n6th Ed. London, 1877.\\nContains a concise review of the history of the money market\\nduring the last century, with tables of the accounts of the Bank of\\nEngland.\\nTheory of Stock Exchange Speculation. London,\\n1874; New York, 1887.\\nAmerican Edition edited by H. W. Rosenbaum. An accurate\\nand suggestive description of speculative methods.\\nEvans, D. M., Speculative Notes and Notes on Speculation,\\nIdeal and Real. London, 1859.\\nGarnier, J., article De la Nature des Operations de Bourse\\net de I Agiotage, in Journal des Economistes, Tome\\nXLII, p. 378. Paris, 1864.\\nGibson, G. Rutledge, Stock Exchanges of London, Paris,\\nand New York; a Comparison. New York, 1889.\\nGlagau, Der Borsen- und Grlindungsschwindel in Berhn.\\nLeipzig, 1873.\\n238", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0252.jp2"}, "253": {"fulltext": "BIBLIOGRAPHY\\nDer Borsen- und GrUndungsschwindel in Deutschland.\\nLeipzig, 1877.\\nHoltzendorff, Franz von, Wesen und Werth der Oeffentlichen\\nMeinung. MUnchen, 1879.\\nHume, John F., article The Heart of Speculation, in the\\nForum, Vol. II, pp. 130-141, October, 1886.\\nA description of stock exchange methods.\\nKnies, Karl, Credit. Being the second part of Geld und\\nCredit. 2 Aufl. Berlin, 1873-79.\\nMangoldt, Hans Karl Emil von, article Kredit, in Bluntschli s\\nDeutsches Staatsworterbuch, Bd. VI.\\nMichaelis, Otto, article Die wirthschaftliche Rolle des Spec-\\nulationshandels, in Faucher s Vierteljahrsschrift fiir\\nVolkswirthschaft, Bd. IV, pp. 130-172, 1864, and Bd. I,\\npp. 196-210, and Bd. II, pp. 77-110, 1865. Forming\\nalso Bd. II of Volkswirthschaftliche Schriften. Berlin,\\n1873.\\nA very able treatise upon speculation.\\nRogers, J. E. T., Industrial and Commercial History of\\nEngland. London, 1892.\\nCh. IV, The Development of Credit Agencies.\\nSchaffle, Albert E. F., article Die Handelskrisis mit beson-\\nderer Riicksicht auf das Bankwesen, in Deutsche\\nVierteljahrsschrift, Heft I, 1858.\\nMisuse of credit the cause of crises economic morality the cure.\\nBau und Leben des sozialen Korpers. Tubingen, 1875.\\nBd. I, p. 452 ff.\\nStein, Lorenz von, Lehrbuch der Volkswirthschaft, pp.\\n225-230. Wien, 1858 or pp. 424-448, Ed. Wien, 1878.\\nStevens, Albert Clark, article The Utility of Speculation, in\\nPolitical Science Quarterly, Vol. VII, September, 1892.\\nRadically defends speculation.\\nIX. THE PSYCHOLOGY OF CRISES\\nConsult the preceding section.\\nAnonymous, article Great Awakenings, in the Galaxy,\\nVol. VI, pp. 388-398. New York, 1868.\\n239", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0253.jp2"}, "254": {"fulltext": "BIBLIOGRAPHY\\nDiscusses the revivals of religion in New York City and else-\\nwhere in 1857, following upon the crisis of that year.\\nAdams, Charles Francis, Massachusetts, its Historians and its\\nHistory an Object Lesson. Boston and New York, 1893.\\nBain, Alexander, The Emotions and the Will. 3d Ed.\\nLondon, 1875.\\nReprint, New York, 1876.\\nBourne, H. R. F., Romance of Trade. London, 1868.\\nEspecially Ch. XI for account of early panics and manias.\\nCatteneo, Delia Psicologea della menti Associate, in Atti\\ndel Regio Instituto Lombardo, Vol. Ill, 1862.\\nUpon the psychology of public opinion.\\nDrake, Samuel G., The Witchcraft Delusion in New Eng-\\nland. Roxbury, Mass., 1866.\\nWoodward s Historical Series, Nos. 5, 6, and 7.\\nFry, Edward, article Imitation in Human Progress, in the\\nContemporary Review, Vol. LV, pp. 658-677, May,\\n1889.\\nHecker, J. F. C, The Epidemics of the Middle Ages. 3d Ed.\\nLondon, 1859.\\nTranslated by B. G. Babington, M.D., F.R.S.\\nLangton, William, Observations on a Table showing the\\nBalance of Account between the Mercantile Public and\\nthe Bank of England, in Transactions of Manchester\\nStatistical Society, 1857-58 also republished as appendix\\nto Transactions, 1875-76.\\nSuggests moral causes as explaining crises.\\nLorimer, J. G., D.D., The Great American Revivals.\\nGlasgow, 1859.\\nMackay, Charles, LL.D., Memoirs of Extraordinary Popular\\nDelusions and the Madness of Crowds. 2d Ed. 2 Vols.\\nLondon, 1852.\\nMills, John, Credit Cycles and the Origin of Commercial\\nPanics, in Transactions of the Manchester Statistical\\nSociety, 1867-68.\\nTraces the psychology of credit in relation to crises.\\nMoll, Albert, Hypnotism. London, 1890.\\nContemporary Science Series.\\n240", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0254.jp2"}, "255": {"fulltext": "BIBLIOGRAPHY\\nOechelhauser, Wilhelm, Die wirthschaftliche Krisis. Berlin,\\n1876.\\nSouthey, Robert, The Life of Wesley and the Rise and\\nProgress of Methodism. London, 1871.\\nBohn s Standard Library.\\nSully, James, Illusions a Psychological Study. Especially\\nCh. XI, Illusions of Belief. New York, 1881.\\nInternational Scientific Series.\\nTarde, G., Les Lois de I lmitation. Paris, 1890.\\nTaylor, Isaac, Natural History of Enthusiasm. 8th Ed.\\nLondon, 1842.\\nUpham, Rev. Charles W., Salem Witchcraft. Boston, 1867.\\nLectures on Witchcraft, comprising a History of the\\nDelusions in Salem in 1692. 2d Ed. Boston, 1832.\\nWendell, Barrett, Cotton Mather, the Puritan Priest. New\\nYork, i8qi.\\nX. MISCELLANEOUS WORKS UPON CRISES\\nAllard, La Crise, La Baisse des Prix, La Monnaie. Brux-\\nelles, 1885.\\nBagehot, Walter, Lombard Street a Description of the\\nMoney Market. Being Vol. V, pp. 1-2 16, of Complete\\nWorks issued in 5 Vols, by The Traveler s Ins. Co.,\\nHartford, Conn., 1891.\\nV Berliner, Adolf, Die wirthschaftliche Krisis, ihre Ursachen\\nund ihre Entwickelung. Hannover, 1878.\\nBilgram, Hugo, Involuntary Idleness. An Exposition of\\nthe Causes of the Discrepancy existing between the\\nSupply of and the Demand for Labor and its Products.\\nPhiladelphia, 1889. See also brief report of a paper\\nread before the American Economic Association, Dec. 29,\\n1888, in the proceedings of that Association.\\nAdvocates an expansion of the currency, which, in reducing\\ninterest shall reduce the profit necessary for marginal producers\\nwho must borrow, and hence will raise wages.\\nBlock, Maurice, article, La Crise Economique, in Revue\\nR 241", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0255.jp2"}, "256": {"fulltext": "BIBLIOGRAPHY\\ndes Deux Mondes, March 15, 1879, Tome II, pp.\\n433-459-\\nTroisifeme Periode, Tome XXXII.\\nBiisch, Johann Georg, Geschichtliche Beurtheilung der am\\nEnde des achtzehnten Jahrhunderts entstandenen grossen\\nHandelsverwirrung/ contained in Bd. VII of Sammt-\\nliche Schriften, 16 Bde. Wien, 18 13-18.\\nBusch, Ernst, Ursprung und Wesen der Wirthschaftlichen -i\\nKrisen und Angabe der Mittel zu ihrer Beseitigung.\\nLeipzig, 1892.\\nCannan, Edwin, A History of the Theories of Production\\nand Distribution in Enghsh Political Economy from 1776\\nto 1848. London, 1894.\\nThis book, with that ot Held, is indispensable for an un-\\nderstanding of the significance of the theories of English\\nEconomy.\\nCallender, W. R., Jr., The Commercial Crisis of 1857, its\\nCauses and Results being the Substance of a Paper read\\nbefore the Manchester Statistical Society, with an Appen-\\ndix containing a List of upwards of 260 English Failures\\nin 1857-58. 44 pp. London, 1858.\\nCarey, Henry Charles, Financial Crises, their Causes and \\\\j\\nEffects. Philadelphia, 1864.\\nSees in fi-ee trade the cause of financial crises.\\nChitti, Des Crises Financieres et de la R(^forme du Systeme\\nMonetaire. Bruxelles, 1839.\\nCommissioner of Labor, First Annual Report of, entitled In-\\ndustrial Depressions. Washington, 1886.\\nCraik, Dinah Maria, John Halifax, Gentleman. New York,\\n1870.\\nContaining a lively description of the crisis of 1825.\\nBort, L. Muret de, Crise Monetaire. De la Situation Re- v\\nspective des Grands Etats Commer9ants, de la Crise, et\\nde ses Causes, du Role important de la Monnaie.\\nParis, 1856.\\nDiihring, Eugen Karl, Kritische Grundlegung der Volks-\\nwirtschaftslehre. BerHn, 1866.\\nEspecially pp. 242-268.\\n242", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0256.jp2"}, "257": {"fulltext": "BIBLIOGRAPHY\\nKursus der National- und Sozialbkonomie. Abschnitt\\nIV, Kap. I. Berlin, 1873.\\nEvans, D. Morier, The History of the Commercial Crisis,\\n1857-58, and the Stock Exchange Panic of 1859. Lon-\\ndon, 1859.\\nCommercial Crises 1847-48. London, 1848.\\nFaucher, L., Etudes sur rAngleterre. Paris, 1856.\\nEspecially Tome I, pp. 360-383.\\nFrewen, Moreton, B.A., The Economic Crisis. London,\\n1888.\\nMr. Frewen sees in the demonetization of silver and the appre-\\ny ciation of gold the cause of crises.\\nGeyer, Ph., Banken und Krisen eine Studie. Leipzig,\\n1865.\\nGibbons, J. S., The Banks of New York, their Dealers, the\\nClearing House, and the Panic of 1857. New York,\\n1858.\\nGiffen, Robert, Essays in Finance. ist Series, 5th Ed.\\nLondon, 1890; 2d Series, 5th Ed. New York, 1886.\\nvGoadly, Edward, and W. Watt, Present Depression in\\nTrade its Causes and Remedies, with preface by Leon\\nLevi. Being the Pears Prize Essays, read before the\\nBritish Association for the Advancement of Science,\\nSeptember, 1885. London, 1885.\\nHeld, Adolf, Zwei Biicher zur sozialen Geschichte Englands.\\nLeipzig, 1 88 1.\\nImportant in explaining the connection between English eco-\\nnomics and politics.\\narticle Handelskrisen, in Loning s edition of Blunt-\\nschli s Staatsworterbuch. Bd. II, pp. 173-180. Leip-\\nzig and Stuttgart, 1876.\\nHerkner, Heinrich, Die Oberelsassische Baumwollindustrie\\nund ihre Arbeiter auf grund der Thatsachen dargestellt.\\nStrassburg, 1887.\\nParticularly Kap. XIV.\\nDie sozial Reform als Gebot der wirtschaftlichen\\nFortschrittes. Leipzig, 1891.\\nPages 33-96.\\n243", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0257.jp2"}, "258": {"fulltext": "BIBLIOGRAPHY\\nHermann, F. B. W. von, Staatswirtschaftliche Unter-\\nsuchung. 2 Aufl. Miinchen, 1870.\\nPage 631 ff.\\nHooper, Wynnard, essay The Influence of State Borrowing\\non Commercial Crises. Being Ch. V in A Policy of Free\\nExchange, edited by Thomas Mackay. London, 1894.\\nIssaiev, A. A., article Les Principales Causes des Crises \\\\j\\nEconomiques, pp. 654-692 and 985-101 1 in Revue\\nd Economie Politique, Tome VII, 1893.\\nLeroy-Beaulieu, Pierre Paul, Das sinken der Preise und die\\nWelthandels Krisis. BerHn, 1886.\\nUebersetzt durch E. V. Kalckstein.\\nMcCulloch, J. C, article Crisis in the American Trade, in v\\nEdinburgh Review, Vol. LXV, July, 1837.\\nMacpherson, Annals of Commerce. 4 Vols. London, 1805.\\nConsult especially for account of early crises and manias.\\nMeyer, R., Politische Griinder und die Korruption in\\nDeutschland. Leipzig, 1877.\\nMichaelis, 0., article Die Krisis von 1857, in Pickford s\\nMonatsschrift, Bde. 1-3. Erlangen, 1858-59.\\nMorisseaux, Charles, La Crise Economique. Paris, 1884.\\nNeumann-Spallart, Franz Xavier von, Uebersichten der\\nWeltwirtschaft. Stuttgart, 1879.\\nEspecially Jahrgang 1879, upon the crisis of 1873.\\nNeuwirth, Joseph, Die Speculationskrisis von 1873, being\\nBd. II of Die Bank und Valuta in Oesterreich-Ungarn,\\n1862-72. 2 Bde. Leipzig, 1874.\\nPatterson, R. H., article Bad Trade and its Cause, in Con- y\\ntemporary Review, Vol. XXXV, April, 1879.\\nPlayfair, Sir Lyon, article The Progress of Applied Science V\\nin its effect upon Trade, in Contemporary Review,\\nVol. LIII, March, 1888.\\nDiscusses over-production and machinery.\\nSalomons, David, A Defence of the Joint Stock Banks an\\nExamination of the Causes of the Present Monetary\\nDifficulties, and Hints for the Future Management of the\\nCirculation. 2d Ed. London, 1837.\\n244", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0258.jp2"}, "259": {"fulltext": "BIBLIOGRAPHY\\nScudder, M. L., Jr., Congested Prices. Chicago, 1883.\\nSmith, R. H., The Science of Business. London and New\\nYork, 1888.\\nI Smith, Walter E., The Recent Depression of Trade its\\nNature, its Causes, and the Remedies which have been\\nSuggested for it. London, 1880.\\nCobden Club prize essay for 1879.\\nStevens, Albert C, article Phenomenal Aspects of the Fi-\\nnancial Crisis, in Forum, Vol. XVI, September, 1893.\\nEmphasizes the conservative nature of business in the United\\nStates immediately preceding the crisis of 1893.\\nStopel, F., Die Handelskrisis in Deutschland, being Heft I\\nof his Volkswirthschaftliche Zeitfragen. Frankfurt\\na/M., 1875.\\nStruck, E., article Zur Geschichte der Pariser Borsenkrisis\\nvom Jahre 1882, in Jahrbuch fiir Gesetzgebung, Ver-\\nwaltung und Volkswirthschaft im deutschen Reich.\\nN. F., Bd. VIL Leipzig, 1883.\\nTestelin, E. A., Economic Politique ^tude sur la crise in-\\ndustrielle, commerciale, et agricole. Bruxelles, 1885.\\nToynbee, Arnold, Lectures on the Industrial Revolution of\\nthe Eighteenth Century in England. With Memoir by\\nB. Jewett. New York, 1890.\\nWallace, A. R., Bad Times. London and New York, 1885.\\nSee as the causes of industrial depression for England foreign\\nloans, war expenses, rural depopulation, millionnaires, speculation,\\ndishonesty, private property in land, etc.\\nh| Wasserrab, Karl, Preise und Krisen. Stuttgart, 1889.\\nComprising Die Wirthschaftskrisen und die Entwicke-\\nlung der Krisis von 1873, published also separately.\\nStuttgart, 1889.\\n\\\\j Willson, H. B., Industrial Crises: Their Causes and\\nRemedy. Washington, 1879.\\n245", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0259.jp2"}, "260": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0260.jp2"}, "261": {"fulltext": "NDEX\\nAdams, C. F,, effect of concentra-\\ntion of interest in religious mat-\\nters, 193, 194.\\nAdams, H. C, uncertain indus-\\ntries and taxes, 25.\\nAgriculture, stability of, 24.\\nBacon, optimistic expectations, 190.\\nBagehot, excessive activity of this\\ngeneration, 199; economization\\nof cash, 142; sun-spot and har-\\nvest theory, 135.\\nBalance of trade, 29.\\nBank, public financiering through a\\nstate bank, 105 reduction of re-\\nserves begins a crisis, 105 func-\\ntions of, 107 relative importance\\nof banks for crises, 108 charters,\\n108 examination, 109 state-\\nments, 108; duties of directors,\\n109, no; of France, in, 114;\\nnote issue, 111-116; of England,\\n114; overemphasized, 116; and\\nthe standard of punctuality, 161\\ncredit and crises, 162 stingy,\\n170 and stock exchange, 170.\\nBankruptcy, two conceptions con-\\ntrolhng legislation, 126, 127 dis-\\nhonest, 127, 128 voluntary and\\ninvoluntary, 128 hindrance to\\ndischarge, 128, 129,\\nBelief effected by action, 198,\\nBellamy, 49, 50.\\nBoccardo, sun-spot theory of perio-\\ndicity, 135.\\nBrentano, voluntary insurance, 98-\\nlOI.\\nBuUion Committee, 116.\\nCapital, r61e of, since the Indus-\\ntrial Revolution, 58; use of\\ncapital in broad sense, 65, 66;\\nmakes the productive process\\nroundabout, 69 proper distribu-\\ntion of, in investment difficult,\\n70, 71 can be used to solve its\\nown problem, 79.\\nCaptains of industry, and uncer-\\ntain economic conditions, 49;\\nand crises, 222.\\nCarey, theory of bank-note issue,\\n115.\\nCauses of crises, 13, 14 list of, by\\nMax Wirth, 23 settlement of\\nbalance of trade, 29 accidental,\\nCh. II Roscher on, 35 Von\\nStein and credit, 157.\\nChalmers, on saving, 78.\\nChance, in relation to speculation\\nand gambling, 166.\\nChevalier, government interfer-\\nence with a state bank, 114.\\nClearing-house, certificates, 106;\\ncontrol of banks, no.\\nCombination, to regulate supply\\nand demand, 52.\\nCommerce, new routes of, 26.\\nCompetition, over-production, 49;\\nintensified by an element of pug-\\nnacity, 72; of banks in note\\nissue, III, 112; of banks of\\nissue a mutual check, 115.\\nConceit, fatal in speculation, 170,\\n171.\\n247", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0261.jp2"}, "262": {"fulltext": "INDEX\\nConcentration, of wealth and un-\\nstable demand, 32; of industry,\\n42 and effect of crises on em-\\nployers, 42; effect on business\\njudgments, 204, 205.\\nCondorcet, plan of insurance, loi.\\nConsolidation, following crises, 51.\\nConsumption, the study of, neg-\\nlected, 74; Engel s laws, 38, 39.\\nControl, lack of organs of eco-\\nnomic, 41 application of capi-\\ntal to the problem of, 47 private\\nproperty, 48 through stock ex-\\nchanges, 53; through commer-\\ncial agencies, 54.\\nCorporations, charters, 121; safe-\\nguards in founding, 121 control\\nby stockholders, 122; demo-\\ncratic principle, 122; voting\\npower of shares, 122, 123; issue\\nof stock without full payment of\\ncapital, 123 limit of borrowing\\npower, 123, 124; pubhc record\\nof share ownership, 124.\\nCredit, emphasized by Wagner, 6\\nand crises, 24; growth of, and\\ncrises, 153 separates demand\\nand supply, 154; Lorenz von\\nStein, 155 uses of, 155, 156\\nAdam Smith on, 156; dangers\\nof, 157 Rodbertus ignores, 157\\nand unwise consumption, 158;\\nfor short periods only, 160;\\nethics of use of money of others,\\n161, 162; and trustworthiness,\\n165, 178.\\nCrisis, definition, 3 descriptions\\nof, 2, 3 classification, 5 Wirth s\\nclassification, 6 importance of\\nstudy, 7; nineteenth century\\nphenomenon, 8, 23; territorial\\ndistribution, 9 Teutonic nations,\\n9 democracies, 9 table of, 10\\nwhether increasing, 1 1 place of\\nsubject in Political Economy,\\n11-13; of 1893 and monetary\\nlegislation, 30; coincident with\\nmodern wage-earners problem,\\n81 list of, 137; Jevons list, 144;\\nand revivals of religion, 209, 210\\nloss, 220, 221 and captains of\\nindustry, 222.\\nCurrency School, 116, 117.\\nDemand, instabihty of, 31, 32; di-\\nvergence of law of production\\nand consumption, 31 uncer-\\ntainty of, 44.\\nDepression, contrasted with crisis,\\n4.5.\\nDe Tocqueville, crises and democ-\\nracies, 9.\\nDiminishing returns, law of, 59.\\nDirectors of banks, duties of, 109,\\nno.\\nDistribution of wealth, unequal,\\nfurthers over-investment, 73\\ncrises and inequalities in, 222.\\nDivision of labor and coordination\\nof demand and supply, 43.\\nEducation, 212-215.\\nEly, R. T., treatment of crises, 12.\\nEmotions, transfer of, 208, 209 in-\\nfluence of, on judgment, 185 If.\\ninfluence on recollection, 186-\\n188 influence on expectation,\\n188 the haste to be rich, 206,\\n207.\\nEmployment given by state during\\na crisis, 36.\\nEpidemics, religious, 193, 194.\\nEquilibrium of demand and sup-\\nply, 21 static conception, 21\\ndynamic conception, 21 equi-\\nlibrium theory, 35.\\nExpectations, Shakespeare, 190\\nBacon, 190; Ward, 190; Young,\\n190.\\nFashion, 31 and machinery-made\\ngoods, 43.\\nForeign trade, unstable, 24, 27\\nand crises in England in 1857.\\n248", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0262.jp2"}, "263": {"fulltext": "INDEX\\n31 and crisis cycles, 45 Schmol-\\nler considers, a cause of crises,\\n46 temporary relief from over-\\nproduction, 76.\\nFuture, underestimation of, 159,\\n160.\\nFutures, dealings in, 171.\\nGambling, 165, 166; psychology of,\\n196, 197.\\nGuyot, psychology of crises, 181.\\nHadley, on sun-spot theory, 151.\\nHerschel, sun-spots and climate,\\n148.\\nHertzka, theory, 89.\\nHobson, effect of machinery, 42.\\nHonesty and credit, 161.\\nIndividual business units, 50.\\nIndividualistic production, 49.\\nIndustrial revolution, changes\\ncaused by, 42.\\nInsurance, extension of, 55;\\nWachtel s proposal, 55; to raise\\nthe standard of life, 98-101;\\nCondorcet, loi.\\nInsolvency, see Bankruptcy.\\nInterest, decline of rate of, 58 ex-\\nplanation of, by Adam Smith, 58;\\nRicardo on, 59-60 J. S. Mill on,\\n61 decline of, and speculation,\\n62; and crises, testimony of his-\\ntory, 64; meaning of average rate\\nof, 161.\\nInventions of Watt, Crompton,\\nand Arkwright, and crises, 83;\\ngeneral discussion, 25; increas-\\ning disturbance caused by, 26.\\nJevons, list of causes of crises, 14;\\ntheory of periodicity, 139-151.\\nJoint stock companies, see Cor-\\nporations.\\nJuglar, definition of crisis, 4; re-\\nduction of bank reserves, 105.\\nJuristic person, 120.\\nKing, Gregory, tables, 141.\\nLabor organizations and the stand-\\nard of life, 97.\\nLaveleye, settlement of balance of\\ntrade causes crises, 29.\\nLaw of markets, 17.\\nLegal tender notes, retirement of,\\n107.\\nLegislation, urged after every crisis,\\n103; crises with diverse, 104;\\nmonetary, 104-107 difficulty of\\nenacting proper, 129 enactment\\nof new, 163.\\nLiterature, of little value, 15;\\nFrench, 17; English, 17; Ger-\\nman, 18; fairly inclusive, 220.\\nLuxurious expenditure, and over-\\nproduction, 75; Chalmers, Sis-\\nmondi, and Owen approved, 90.\\nMachine-made goods sold to wage\\nearners, 85, 86.\\nMachinery, demands uniformity,\\n31, 51; effect of, 42; and over-\\nproduction, 76.\\nManagerial ability, 50 and rate of\\ninterest, 65; and use of capital,\\n66 lack of, shown by gluts, 69\\nmodern need of, 70, 77 remu-\\nneration of, 78 Smart, 78 and\\nsalaries, 79.\\nMarket, expansion of, 43, 44.\\nMemory, the selective, 187, 188.\\nMercantile agencies, 165.\\nMiddlemen, elimination of, 53.\\nMill, J. S., crises, where treated in\\nhis work, 13; theory of tendency\\nof profits to a minimum, 61\\nemphasizes credit, 156.\\nMills, education as a remedy, 214;\\npsychology of crises, 180, 181.\\nMississippi Scheme, 196.\\nMoney, study of, in connection\\nwith financial history, 105;\\nAmerican system produces strin-\\ngency during a crisis, 106 ideal\\n249", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0263.jp2"}, "264": {"fulltext": "INDEX\\nsystem, io6 Currency School\\ntheory of depreciated paper, 117.\\nMonopolies, 29, 51 cornering the\\nmarket, 29; growth and modi-\\nfication of, 52; close establish-\\nments, 72.\\nNeuwirth, desire for wealth, 206.\\nOechelhauser, the panic, 208.\\nOrganization, ability for, see\\nManagerial Ability.\\nOver-capitalization, 46.\\nOver-investment, theory of Rod-\\nbertus, 85-89.\\nOver-production, 67, 68.\\nOverstone, power of the Bank of\\nEngland, 113.\\nPaper currency, unstable equilib-\\nrium of trade, 24; temporary\\nissue of, to ease a stringency, 36.\\nPeel, theory of note issue, 117, 118\\nBank Act of 1844, 17; act must\\nbe suspended during a crisis,\\n106; effect of act, 118, 119; when\\nact was violated, 119.\\nPeriodicity, school of writers de-\\nnying, 22; of decline of profits,\\n64 Diihring, 35 climatic periods,\\n147; of harvests not shown for\\nrecent years, 149; of maximum\\nsun-spots, 143; effect of sun-\\nspots on harvests, 143 growth of\\ncredit, 138 succession of genera-\\ntions, 139; general law of, 132;\\nof economic affairs due to sea-\\nsons, 133 of reforms, 133; move-\\nment of settlement, 133.\\nPetty, first mention of periodicity,\\n135.\\nPlunkett, T. F., description of\\ncrises, 3.\\nPrecious metals, course of, 29 pro-\\nduction of gold in California, 30.\\nPrivate property, Rodbertus would\\nretain, 91; an evolution to ex-\\ntinguish ownership in capital, 91\\nand the control of industry, 48\\nrelation of ownership to control,\\n52.\\nProduction, law of, divergent from\\nthat of consumption, 31.\\nProfit, falling, and production on a\\nlarge scale, 88.\\nPublic opinion, concentrated on a\\nsingle bank of issue, iii; and\\nhonor debts, 176.\\nPunctuality, 160.\\nPsychology, of crises, 180 of crisis\\ntheories, 182, 183; individual\\npsychology, 185-197; social\\npsychology, 198-207 psychology\\nof the crisis proper, 207-211;\\nOechelhauser, 208.\\nQuarter-day, influence on trade,\\n140, 141.\\nReform, periodicity of, 133.\\nRemedies, paper currency, 36;\\nfailure of paper currency in the\\nUnited States in 1873, 36; edu-\\ncation, 212, 215 widening range\\nof social interests, 215, 216,\\nRevivals of religion and crises, 209,\\n210.\\nRodbertus, his theory of distribu-\\ntion, 82, 84; ideal plan for state\\ncontrol of industry, 92 criticism,\\n95, 96; Cohn s criticism, 94;\\nignores speculation, 157.\\nRoscher, definition of crisis, 4;\\nstable equihbrium, 22; his con-\\ntribution, 34 causes, 35 denies\\nperiodicity, 136.\\nSalaries, and organizing ability, 79.\\nSaving, 73, 74; private maxim\\nand economic principle, jt, 78\\nChalmers on, 78.\\nSchaffle, growth of credit, 157, 158.\\nScudder, Jr., denies periodicity,\\n136.\\n250", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0264.jp2"}, "265": {"fulltext": "INDEX\\nSelf-interest, principle of, hinders\\n\u00e2\u0080\u00a2organization, 49.\\nSmart, managerial ability, 78.\\nSmith, Adam, explanation of de-\\ncline of profits, 58 money econ-\\nomized by using credit, 156;\\nspeculative returns in wages, 165.\\nSocialism, and German literature\\nof crisis, 18 mistake of (Smart)\\n78.\\nSolidarity, of industry, 7; evinced\\nby world crisis, 10 increased by\\ncredit, 24, 153 and credit, 34\\nof economic problems, 223.\\nSpeculation, 165-178 and decline\\nof profits, 62; Rodbertus con-\\nsiders unimportant, 87 Adam\\nSmith, 165 function of, 167,\\n169 lessens chance, 168 fu-\\ntures, 171 margins, 171 in\\ngovernment securities, 174; tax-\\nation of, 174, 175.\\nStandard of life, and socialism, 96;\\nreforms through its elevation, 97\\nand labor organizations, 97 and\\ninsurance, 98-101.\\nStatistics, 37 Engel s laws of con-\\nsumption, 38-39; educate the\\npublic to, 54.\\nStein, Lorenz von, effect of credit,\\n155.\\nStock exchange, exercising control,\\n53; control of speculation, 172,\\n173-\\nStrikes, against unsanitary condi-\\ntions, 159.\\nSully, transfer of feeling, 211.\\nSumner, overemphasis of banks in\\nconnection with crises, 116.\\nSun-spots, see Periodicity, and Jev-\\nons years of maximum of, 150.\\nSympathy, 203-205.\\nTariffs, 28.\\nTaussig, periodic movement of set-\\ntlement, 133.\\nTestimony, belief in, 199-203.\\nTheories, of crises, two classes of,\\n22.\\nTropics, development of, 27.\\nUnited States, dominance of eco-\\nnomic interests in, 215.\\nUniversal glut, 67.\\nValue, Rodbertus labor theory of,\\n82.\\nVon Thiinen, wage formula, 94.\\nWages, a decreasing factor in dis-\\ntribution a cause of crises, 83-89\\niron law of, 84; Rodbertus\\nlabor-time checks, 92; the Von\\nThiinen formula, 94.\\nWagner, definition of crises, 4;\\noveremphasis of a single cause,\\n16; restriction of specie pay-\\nments, 114; emphasizes credit,\\n156.\\nWalker, F. A., treatment of crises,\\n13 functions of a bank, 107.\\nWants, development of new, 79.\\nWar, influence on industry, 32, 33\\nand crisis of 1815 in England,\\n33-\\nWard, optimism of expectation,\\n190, 191.\\nWasserrab, place of crises in po-\\nlitical economy, 12.\\nWaste, misinvestment of capital\\nrelieves plethora of the capital\\nmarket, 89 of capital in attempts\\nto avoid decline of profits, 62.\\nWhite, definition of crises, 4 Teu-\\ntonic nations subject to crises, 9\\npsychology of crises, 181,\\nWidney, ideal monetary system,\\n106.\\nWirth, symptoms of a crisis, 2 list\\nof causes of crises, 23.\\nWitchcraft craze in Salem, 193, 194.\\nWorld crisis, 10.\\nYoung, optimistic expectation, 190.\\n51", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0265.jp2"}, "266": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0266.jp2"}, "267": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0267.jp2"}, "268": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0268.jp2"}, "269": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0269.jp2"}, "270": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0270.jp2"}, "271": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0271.jp2"}, "272": {"fulltext": "", "height": "3281", "width": "2033", "jp2-path": "economiccrises01jone_0272.jp2"}}