Class jM^a:!!! Book A J 8 Copyright N*:" COFBRIGHT DEPOSm THE CITIZEN'S LIBRARY OF ECONOMICS, POLITICS, AND SOCIOLOGY EDITED BY RICHARD T. ELY, Ph.D., LL.D. DIRECTOR OF THE SCHOOL OF ECONOMICS, POLITICAL SCIENCE, AND HISTORY, UNIVERSITY OF WISCONSIN ECONOMIC CRISES -y^y^ THE CITIZEN'S LIBRARY ECONOMIC CRISES BY EDWARD D. JONES, Ph.D. ASSISTANT PROFESSOR OF ECONOMICS AND COMMERCIAL GEOGRAPHY, UNIVERSITY OF WISCONSIN Neixj gorit THE MACMILLAN COMPANY LONDON : MACMILLAN AND CO., LTD. 1900 All rights reserved 12856 L-Jbrai'V ■: JUN^SO I9iu i SECOND COPY. Delivered to ORDER DlVSSiON, JUL 12 1900 Copyright, igoo, bf the macmillan company. Norb3fDott i^resB J. S. Gushing & Co. — Berwick & Smith Norwood Mass. U.S.A. CONTENTS CHAPTER I. Introduction PAGE I II. The Industrial Equilibrium 21 III. The Organization of Industry . 41 IV. Crises and the Problem of Capital 58 V. Crises and the Wage System 81 VI. Crises and Legislation 103 VII. The Periodicity of Crises . 131 VIII. Credit and Speculation 153 IX. The Psychology of Crises . 180 X. Conclusion .' 219 Bibliography 225 Index 247 ECONOMIC CRISES CHAPTER I INTRODUCTION The growth and differentiation of industrial institutions which have taken place within the present century have brought many new and per- plexing problems to the man of affairs and the student of economics. None of these problems takes a firmer hold upon the fundamentals of economic society than does that of crises, and few of them receive more attention or create more controversy. The crisis is practically of nineteenth-century origin, and it is an acute malady to which business appears to be increasingly subject. These crises are periodically recurring convulsions which para- lyze the course of trade, give rise to violent fluctu- ations of values, and leave behind them crippled industries, bankrupt or suspicious capitaHsts, and impoverished laborers as the result of their visits. It is often desirable to begin a treatise with a definition. Descriptions and definitions, however, ECONOMIC CRISES shade off almost imperceptibly into one another, and what may be called a descriptive definition is sometimes best suited to the purpose. Two such descriptions of an industrial cycle containing a crisis are here offered. The first, taken from the Tracts of Lord Overstone, is as follows : ** State of quiescence, improvement, growing confidence, prosperity, excitement, overtrading, convulsions, pressure, stagnation, distress, ending again in qui- escence." ^ A somewhat more extended descrip- tion from the pen of Frederick Engels is as follows : " The whole industrial and commercial world, pro- duction and exchange, among all civilized peoples and their more or less barbaric hangers-on, are thrown out of joint about once every ten years. 1 The symptoms of a crisis are thus catalogued by Max Wirth : " I. Abnormal activity in floating enterprises, and boldness in spec- ulation. 2. Unusual activity in stock-jobbing: viz. the desire to found stock corporations in order to use all possible means to force the stocks rapidly to a high figure, and then sell out at a profit, leav- ing the corporation to those in vi^hose hands the stock, like an un- lucky card, is found at last. A rule in such cases is that a good business is operated by one's self or a few companions, but a bad one is formed into a stock company. 3. Unusual excitement and gullibility of the public caused by the report of large profits. 4. Rapid increase of luxury. 5. Sharp rise of the price of necessa- ries, articles of luxury, raw^ materials, and provisions. 6. Rise in the price of real estate. 7. Strong demand for labor, and rise in wages. 8. Unusual expansion of credit and credit instrumentalities in consequence of which a rapid and unusual increase in discount. 9. Large demand for cash, and, in consequence of this demand, a decline in stocks." — " Handbuch des Bankwesens," 3 Aufl., p. 62. The same is also contained in the " Geschichte der Handelskrisen," by Max Wirth. 2 INTRODUCTION Commerce is at a standstill, the markets are glutted, products accumulate, as multitudinous as they are unsalable, hard cash disappears, credit vanishes, factories are closed, the mass of the workmen are in want of the means of subsistence, because they have produced too much of the means of subsist- ence, bankruptcy follows upon bankruptcy, execu- tion upon execution. The stagnation lasts for years ; productive forces and products are wasted and destroyed wholesale, until the accumulated mass of commodities finally filters off, more or less depreciated in value, until production and exchange gradually begin to move again. Little by little the pace quickens. It becomes a trot. The industrial trot breaks into a canter, the canter in turn grows into the headlong gallop of a perfect steeple-chase of industry, commercial credit, and speculation, which finally, after breakneck leaps, ends where it began — in the ditch of a crisis. And so over and over again." 2 If we confine our thought to the culminating period of a crisis, we may define it more concisely than is done above, in the following terms : A crisis is the sudden application of a critical conservatism 2 " Socialism : Utopian and Scientific " (trans, by Edward Ave- ling), London, 1892, pp. 64, 65. The steps are given by another author thus : " A round of variations expressed as follows, is pretty sure to run its course at least once in the life of each generation : •torpor, prudence, health, plethora, blood-letting'; or thus: 'stag- nation, economy, productive industry, accumulation, enterprise, ex- pansion, collapse.' " — T. F. Plunkett, " Money Panics and Specie Payments," Pittstield, Mass., 1873, p. 9. 3 ECONOMIC CRISES to business transactions, leading to such a demand for liquidation as to cause a widespread inability among business men to meet their obligations.^ Herkner follows Roscher in defining crises as consisting of a disturbance in the equilibrium between production and effective demand.* In the work of definition the most important point is to establish the proper distinction be- tween crises and industrial depressions. Either of these two classes of phenomena may appear 8 Wagner says : " Crises imply . . . the overwhelming and simultaneous occurrence of inability on the part of independent entrepreneurs to pay their debts." — " Krisen," in Rentzsch, " Hand- worterbuch," p. 26. Clement Juglar thus defines crisis : " The com- mercial crisis, as in disease, is a critical period. The all-important question asked by those caught in embarrassment is whether they will hold out or succumb. The crisis is the touchstone which reveals the soHdity of commercial houses." — Say's " Dictionnaire," Sec. I. Mr. Horace White gives the following : " Commercial crises are disturbances of the course of trade at given times, arising from the necessity of readjusting its conditions to the common standard and measure of value." — Article "Commercial Crises," Lalor's " Cyclopaedia," Vol. I, p. 523. * To this Schaffle also agrees. Herkner, in Conrad's " Hand- worterbuch," Bd. IV, Sec. i, p. 891. Schaffle, " Handelspolitik," in Bluntschli's "Deutsches Staatsworterbuch," Bd. IV, p. 638. Schaffle criticises the definitions offered by Mill, Juglar, and Max Wirth, and also the definition of Coquehn, in the "Dictionnaire de I'Economie Politique," that crises are the sudden disappear- ances of credit. This calls to mind a remark made by John Mills in "The Bank Charter Act and the Late Panic," p. 6, where, in speaking of the crisis of 1866, he says: "A volumi- nous magazine writer on this subject considers the main evil to have been a want of currency, which is about as explicit as the jocular diagnosis that a man died of * want of breath.' " 4 INTRODUCTION independently of the other ; in fact, the presence of one is more or less a guarantee of immunity from the other. By some writers the crisis proper is called an ''active crisis," while an industrial de- pression is called a ''passive crisis."^ The patho- logic terminology which is frequently employed in the discussion of crises ^ enables us to express very well the distinction between crises and depressions. The first are acute, the second chronic maladies of industry. The causes of the first lead rapidly to a climax of unnatural and unstable conditions which in the panic find their rupture and give place to extreme stagnation. The causes of depression appear to be more enduring. They weigh down business by handicapping disabilities which exert a steady pressure, producing dejection and prostra- tion. A crisis results when business is carried to a high point from which it is precipitated. A de- pression marks the struggle of industry under a weight of adverse conditions. According as crises have more or less conspicu- ously involved disturbances of the medium of ex- change, of financial institutions, or of productive or commercial industry, they have been denomi- nated monetary, financial, commercial, or industrial crises. These varying designations are useful to indicate the causes or characteristics of individual crises. A more general term and one which 5 De Viti de Marco, cited by Lexis in Schonberg's " Handbuch," 2 Aufl., Vol. II, Ch. XXI, Sec. 51. 6 Neuwirth, Roscher, and Schaffle, for example, use this. 5 ECONOMIC CRISES involves commitment to no view or school is economic crisisJ While the crash or panic is the particular feature which characterizes the modern crisis, no consid- eration of the subject, which is limited to this culminating period of the disturbance, can be com- plete. The circumstances leading up to the climax can only be distinguished by the study of the evo- lution of a crisis.^ ''' Wagner uses the phrase " credit crises " because he especially emphasizes the abuse of credit as a cause of crises. "Overstock- ing of the market is usually an accompaniment of crises. The name overproduction crisis usually suffices therefore, but it does not express so exactly the nature of the evil as the name credit crisis. The expression money crisis is indefinite, since the word money has many meanings; capital crisis is not accurate enough; commercial crisis is one-sided, for crises are not affairs concerning commercial circles alone." — Rentzsch, " Handworterbuch," p. 526. The following division of crises is given by Max Wirth : " In the first place, there are two sorts of crises to distinguish : -— I. Crises of the circulating medium, and II. Crises of capital. The first are divided into such as follow distressing experiences or defective arrangements of the credit and money machinery of industry: («) a congestion of the circulating medium; {b) those which follow an immoderate issue of irredeemable paper currency, which causes a sudden rise of prices and unstable fluctuations. Those capital crises which fall under II may be subdivided into : (a) acute diseases of production, of stock market specu- lation especially accompanied by the founding of new enterprises, and of real estate values; (3) commercial crises proper and over- stocking of the product market." ^ It is the business of the student to examine these years of business history, and construct in theory a complex of forces which will account for the phenomena. Oechelhauser says : " In our opinion, high and low prices do not stand opposed as good 6 INTRODUCTION The concentration of distress upon one portion of the industrial cycle which the term " crisis " implies is the result of modern economic practices. The division of function which was first planned between man and man has been extended to apply- between regions and countries. The organic rela- tions which have resulted have produced a de- pendency of part on part. The life history of any industry is of import to all. Particularly, however, have the institutions connected with finance and credit worked an economy of effort based upon the existence of normal conditions. The crisis reaches each industry through the interdependence of in- dustries, but chiefly through the relation of all industries to monetary and credit institutions. The importance of crises as a subject of study is commensurate with the loss which they inflict. The industrial life of the nineteenth century can- not be completely presented without considering them. As Diihring has well pointed out health and disease are but two complementary phases under which the processes of life manifest them- selves. To understand the social organism com- pletely we must study it in disease as well as in health.9 and bad, or prosperous times and calamitous times, but they together form two phases of the same critical evolution. The last crisis took its start in the unusual advance of prices over values, not with the revolution of prices." — « Die Wirthschaft- liche Krises," p. 24. ^ E. Diihring, " Cursus der National- und Socialokonomie," Part V, Ch. I, p. 225. Cf. Cossa, "An Introduction to the Study 7 ECONOMIC CRISES The striking and unusual character of the phe- nomena composing a crisis calls attention to them, but sets them in a light which is, on the whole, not favorable to their proper scientific observation. It is hard to recognize in the crisis the result of a combination of familiar forces. The interest which invests crises attracts many to their study who come inadequately equipped by previous training in the observation and interpretation of economic phenomena. Again, in the study of so pronounced a subject, arraying interests so sharply against one another, it is natural that opinions should prevail which are pronounced rather than judicious. A voluminous partisan literature exists on the subject of crises which impedes scientific research. The study of crises is difficult, since the crisis is a period of rapid transition. Conditions are not permanent enough to permit of elaborate examination and classification. The forces which are in control are an entirely different compound of human motives than that which usually prevails. The gradual appearance of crises within a com- paratively recent period and as an accompaniment of the present industrial system, gives to them at once a definite significance. They have come to us in company with industrial freedom and indi- vidualism, with the factory system, the extension of foreign commerce, the use of credit, and the other features which mark the economic life of of Political Economy," London, 1893, Theoretics, Ch, IV, Sec. 2, pp. 47, 48. 8 INTRODUCTION this century. The order in which the leading industrial nations began to experience crises is a significant fact, as is to-day the varying degrees of intensity with which these storms expend them- selves in different countries. It helps to direct inquiry to know that crises are more severe and frequent in the United States than in any other country. They are felt in progressively diminish- ing force in England, Germany, France, Holland, and Switzerland. The comparative study of the history of crises suggests the wisdom, of observing the extent to which various nations have developed foreign trade and adopted credit and banks. The study of race psychology is not foreign to the sub- ject, nor the observation of national honesty, edu- cation, natural conservatism, and the speed and energy of life.^^ The comparative method alone renders it possible duly to subordinate the politi- cal situation, the peculiar system of currency pre- vailing, the banking system adopted by a nation, or the bankruptcy legislation in force. Especially significant for comparative study is 1^ After stating that crises fall where the credit system is well developed, Mr. Horace White says : " It is an observed fact that nations of Teutonic origin (including the English, American, German, Dutch, and Scandinavian) are most frequently and se- verely affected with commercial crises." — Lalor's "Cyclopaedia," Vol. I, p. 524. De Tocqueville considered that the temperament of democratic nations was particularly favorable to crises, since in them economic ambitions are supreme. — " Democracy in America," Boston, 1873, Vol. II, Bk. II, Ch. XIX, prf»92. 9 ECONOMIC CRISES the international or world crisis. The widespread disturbance which occurred between the years 1836 and 1839 in most nations, and the crises of the years 1857, 1873, and 1882, deserve to be desig- nated world-crises.^^ The crisis of 1825, which affected England and America together with some other countries, and which arose through the dis- turbance of the cotton trade, may perhaps be ranked as the first international crisis. In 1847 the condition of England very seriously affected the money markets of Paris, New York, and Amsterdam. The most widespread and endur- ing international crisis was probably that of 1873. This susceptibility of the whole crisis area of the world to be drawn from time to time into one con- 11 The following table is presented by Juglar in Say's " Diction- naire," to show the solidity of France, England, and the United States in the matter of crises. Crises of more or less severity have occurred at the dates indicated : — France England United States 1804 .... 1803 .... 1810 . 1810 . 1813-I4 1815 . 1814 1818 . 1818 . 1818 1825 1825 . 1826 1830 . 1830 . 1836-39 1836-39 1837-39 1847 . 1847 . 1848 1857 . 1857 . 1857 1864 . . 1864-66 1873 . War 1873 1882 . 1882 . 1882 Compare this list with the one given in Ch. VII. 10 INTRODUCTION vulsion, shows a high degree of economic inter- dependence. The question whether crises are increasing in severity has been a much mooted one. The mat- ter presents a different appearance according to whether a long or short industrial period is con- sidered. Taking the entire history of crises into account, an increase in the severity of crises seems certain. During the last half century, however, crises appear to be losing something of their in- tensity, but to be approaching the character of industrial depressions as the period of recovery after a crisis is lengthened.^^ The place which the subject of crises should occupy, in a systematic treatise upon political economy, is not definitely fixed. For German economists, who divide their works into theoreti- cal and practical economics, the matter presents little difficulty, although the discussion of crises is by no means always placed in the latter divi- sion.^^ For those who hold rigidly to the English ^2 In the " First Annual Report of the Commissioner of Labor," upon " Industrial Depressions," occurs the following : " As already stated, the features of regularity and contemporaneousness of crises and depressions have been apparent since the commencement of this century. Crises and panics, with more or less of industrial depression accompanying them, have occurred in various coun- tries, but there were not such strong connecting influences and facts and associated conditions as have been observed during the past fifty years." — Ch. I, p. 15. 13 « A review of the literature of crises discovers the fact that the position which this theory has occupied in economic science has been an extremely varied one. Without considering that the sub- II ECONOMIC CRISES division of the science into Production, Exchange, Distribution, and Consumption, the adjustment of the subject into the general scheme of arrange- ment is more difficult. The crisis involves so many economic functions that it cannot be ade- quately treated within the boundaries of any one of the departments of economic science. Impor- tant considerations arise when the subject is looked upon from each of the view-points, — Production, Exchange, Distribution, and Consumption. It lies athwart these lines of demarkation. From the standpoint of crises it is possible to judge every important economic tendency, and study every economic institution. If crises are disturb- ances of the equilibrium between production and consumption, they evidently concern both these functions as well as the methods of adjusting the two with which Exchange and Distribution have to do. In accordance with this view we find such writers as Professor R. T. Ely, presenting some special aspects of the subject of crises in each of the divisions of theoretical economics, while emphasiz- ing especially the connection between crises and the ject is taken up at times in the general, then in the special, part of economic science, and sometimes in both, we find its position in General Economics variable. Often it is treated under Pro- duction, as a disturbance of the same; again and most frequently it is taken up in Exchange; at times in Consumption, as is the practice with Roscher, who considers all crises to be disturbances of the balance between production and consumption. Rodbertus- Jagetzow considers crises under the caption Distribution." — Was- SERRAB, •* Preise und Krisen," p. 39. 12 INTRODUCTION process of consumption. Francis A. Walker, in his " Political Economy," set apart for the consid- eration of crises a portion of the last chapter under the subject of Exchange, entitling it ''The Reac- tion of Exchange upon Production." i* J. S. Mill lays some of the fundamental propositions neces- sary to his development of the subject in Book I, on Production, others in Book II, on Distribution, and he finally brings out his theory in Book IV, entitled, " Influence of the Progress of Society on Production and Distribution." Turning to the theories which have been con- structed to account for crises, we have first to notice some of the limitations of economic theory which concern us. As is to be expected in the case of so striking and intricate a subject, a truly enormous number of theories have been expounded to explain crises. The " First Annual Report of the Commissioner of Labor," which was devoted to the subject of industrial crises and depressions, enumerates the following assigned causes of crises : Railway speculation, under-, over-, misdirected, and unsteady consumption, contracted, inflated, depre- ciated, or fluctuating currency, machinery, various kinds of laws, debt, intemperance, monopoly, spec- ulation, tariff, and taxation. These are but a few of the particular arraignments, while bad sanitary conditions, free passes, education too exclusively intellectual, coolie, convict, female, child, and im- 1* " Political Economy" (advanced course), Part III, Ch. VII. 13 ECONOMIC CRISES ported labor come in for a share of the blame. The enumeration rounds well up to the border of the ridiculous with the mention of such causes as absence of caste, and instinctive and wide- spread indolence. Concerning the collapse of 1878, Mr. Walter Stanley Jevons wrote, in his essays on Currency and Finance : " It is curious to notice the variety of the explanations offered by commercial writers concerning the course of the present state of trade. Foreign competition, beer drinking, over-production, trades-unionism, war, peace, want of gold, superabundance of sil- ver. Lord Beaconsfield, Sir Stafford Northcote, their extravagant expenditure, the Government policy, the Glasgow bank directors, Mr. Edison and the electric light, are a few of the happy and consistent suggestions continually made to explain the present disastrous collapse of industry and credit." To this list a malicious reader might add " sun-spots." 1^ The literature devoted to crises is full of discus- sions of the purely local and incidental features of individual crises. The external and apparent has 1^ Many opinions concerning the origin of crises have been expressed by economic writers which have not been taken up to any extent by students of the subject, Laveleye emphasizes the derangement of the balance of trade leading to the exporta- tion of precious metals as the cause of contractions of credit liable to bring on crises. Bonamy Price attributes crises to a diminution of the means of buying. Nasse dwells upon the effect of changes due to progress. Leroy-Beaulieu brings forward the importance of commercial treaties and of commercial legislation in general. 14 INTRODUCTION always been seized upon. Without comparative study it is impossible to establish a perspective within the subject which permits the subordina- tion of local and incidental causes to those more fundamental. The literature which appears dur- ing and immediately after a crisis, and which con- tains only an analysis of that crisis, cannot be expected to contribute much to a well-balanced discussion of the subject. Writers who only ven- ture into the field when stirred by local happen- ings, are likely to be permeated by local prejudices and inflamed by prevailing social and economic controversies.^^ When it has been determined that any crisis is unusual in character and in its causes departs from the type, then we must look with distrust upon all literature known to have been particularly inspired by it. The crises of the latter part of the seventeenth century and the first part of this century seem, as a rule, to have been the result of peculiar and unusual combina- tions of events. The conditions under which they occurred are so different from those prevaiHng since, that it may be safely said that little of value can be found in discussions published prior to 1837. 1^ " As is often the case, in the study of crises and in distin- guishing their successive periods, theory has gone ahead of practice. It need not excite surprise that that theory was for iwenty-five years considered one of the most obscure in eco- nomics. Each author, maintaining his own point of view, has indicated such causes of crises as best agree with the system of thought he has accepted or built up." — Clement Juglar in Say's " Dictionnaire." 15 ECONOMIC CRISES In the literature of crises the tendency has until recently been strong to consider the last link in a chain of causes as the only one of importance. The crash of a panic has been observed to the neglect of the pre-crisis period in which the secret of causes lies.^*^ Financial and credit institutions have received undue attention because through them unstable conditions are first brought to rupture. Not only are the varying phases of the history of commercial convulsions reflected in theories of crises, but so also are the prevailing social and economic ideas. As Friederich A. Lange has said, "We examine a science, and we find in its doctrines only the mirror of social conditions." ^^ It is human nature that good results or qualities should be referred most easily to causes or objects which already have a favorable character in our estimation. Bad actions are laid at the door of those whom we believe to be bad. Crises have been time out of number laid at the door of the opposite political party, the disliked financial sys- 1'^ " In all economic questions, one can note the tendency of observers to trace great consequences back to some single cause which, by accident, is known or understood by them. This ten- dency has especially manifested itself in the judgments which have been formed regarding the causes of periods of speculation and commercial crises, and in general regarding phenomena connected with money and credit." — A. Wagner, "Die Geld- und Credit- theorie der Peel'schen Bankacte," p. 257. 18 "History of Materialism" (2d ed.), Boston, 1879-81, Vol. Ill, p. 233. 16 INTRODUCTION tern, and the economic class with whose interest one's own is not coincident. This kind of work is on an intellectual level with the practices of those villagers of past centuries who evolved the idea of a witch, attributing the sickness and deaths of the community to the influence of old women who were primarily disliked for their ugly appearance and temper. The history of crises has often been made an arsenal from which were to be drafted arguments for political and economic polemics. The theory of crises has been a handle in many arguments, and has been subordinated to the purpose of first one popular discussion and then another. As between the French, German, and English literatures of the subject some comparisons may be made. In France, the literature of crises was for a long and important period a mere side-light in the discussion of the freedom of bank-note issue. French scientific economic literature, in common with the English, brings the subject of crises into connection with the dispute over the law of markets or over-production. English writers for some time only mentioned crises to connect them in one way or another with the expositions of the "Currency School" or to use them in the defence or attack of the Peel Bank Act of 1844. That the theory of crises should have been until the last three decades involved in abstract discus- sions of over-production, currency, and interna- tional trade is not, broadly speaking, accidental. c 17 ECONOMIC CRISES Before the period mentioned the ideals and methods of the exact sciences prevailed and in- fluenced economics. Such subjects were naturally chosen as best fitted these methods, and economics was built with the idea of an exact science in mind. More recently the biological sciences have been built up. They now exert an influence as ideals, while the inductive method appropriate to them has extended its influence. Germany brings a double contribution, namely, that of the socialists and that of scientific econo- mists. These two are relatively distinct. The contribution of the socialists to the subject is very considerable. German scientific literature is not greatly influenced so far as the theory of crises is concerned by socialistic thought, and is free from prolonged entanglement with any other discussions such as arose in England or France. It is in Ger- many, therefore, that we find the most systematic and unprejudiced discussions of crises. Before proceeding to consider the various theo- ries of crises it may be well to say a word con- cerning diversities of view. The differences of position taken by writers is very frequently more apparent than real. Of a number of investigators who perceive that crises result from a divergence between supply and demand, some will speak of over-production and others of under-consumption. Of a number who examine the fluctuation of demand and single out as the cause of crises the failure of the effective demand of wage-earning i8 INTRODUCTION classes, some will maintain that the institution of private property permits capitalists to defraud wage-earners and will, with Rodbertus, hold a socialistic theory. Others, like Robert Owen, will see most clearly the influence of machinery in these results, and will frame a mechanical and technical problem. Others still may, with Bren- tano, look upon the condition of the wage-earner as due primarily to his intelligence and providence or improvidence, and will thus constitute out of the matter a moral problem. Let us proceed to the statement, in as favorable a light as may be, of the chief theories explaining crises. The presentation in the following chapters will be dominated by the idea of making each new point of view a position from which certain impor- tant aspects of the subject may be best elucidated. The chapters which follow form, therefore, at once a systematic discussion of crises and a presentation of the chief theories of crises. RESUME I. Definition : (a) of a crisis cycle ; of a crisis ; (3) distinc- tion between crises and depressions ; (c) types of crises — the monetary, financial, commercial, and in- dustrial crises ; the economic crisis. II. The culmination of a crisis cycle in a crisis accounted for by the solidarity of economic interests and modern credit. III. Importance of the study commensurate with the losses inflicted by crises. Social ills reveal important aspects of social forces. 19 ECONOMIC CRISES IV. Difficulty of study caused by (a) the complex, striking, unusual, and temporary character of the phenom- ena ; (d) untrained observation ; (c) partisan opin- ions. V. Guiding general facts : (a) crises appeared with the present industrial system, with industrial freedom, the factory system, foreign commerce, and credit ; (d) geographical distribution of crises — the world crisis. VI. Place of subject in economic treatises. It does not adjust itself to the four-part division of economics into Production, Exchange, Distribution, and Con- sumption. VII. Limitations of economic theory : — (a) Large number of theories advanced. {d) Discussions devoted to local and incidental fea- tures. (^) Literature growing out of abnormal economic crises likely to be worthless. (d) Little work of value prior to 1837. (e) Undue prominence of the " crash " and of credit institutions in studies of crises. (/") Theory of crises used as a handle in various economic and political discussions. (g) French theory and the question of freedom of bank-note issue. (k) English theory and the Peel Bank Act of 1844. (t) German socialistic and scientific contributions. Both of value. The latter the most unpreju- diced body of discussion extant. VIII. Caution regarding apparent and real divergences of opinion. 20 CHAPTER II INDUSTRIAL EQUILIBRIUM A PROMINENT place is given in the science of economics to the idea of an equilibrium. The forces of supply and demand bring about condi- tions of equilibrium which are marked by price quotations, and which serve as a guide and crite- rion for the movement of economic interests. The simplest conception of an economic equilibrium is that which makes it resemble a pair of scales, in which are balanced, on one side, utilities, on the other, the costs of production involved. An ex- tension of this conception, necessitated by the entrance of the evolutionary doctrine into science and the introduction of the historical method in economics, has regard to changes in the costs of production and in men's wants, which are accom- modated by an equilibrium ever changing, but ever being renewed. The dynamic conception of an equilibrium is the only one which can be em- ployed in an extended examination of economic phenomena. The first impression which the crisis gives to the student of political economy is that the normal adjustment of economic forces has been violently 21 ECONOMIC CRISES disturbed. The ratios of exchange, indicated by prices, are abnormal. They imply the severest hardships to the industries of a country. Granted that in a crisis the normal relations of supply and demand have been destroyed, we may ask what are the causes of the disturbance. An examination of the literature dealing with economic crises shows that the theories which have been advanced to answer this question may be divided into two classes. First are those which assign some specific, immediate, and actuating cause, of such a character that no law can be formulated as to its recurrence. Second, we may group together all those explanations of crises pointing out an inherent tendency of industry which, when not counteracted, leads to recurring periods of distress. It may be well, before taking up the study of those economic tendencies which lead to crises, to group together in this chapter for convenient treatment the heterogeneous "accidental" causes which have been pointed out by various writers, at different times, as the cause of this or that crisis. A group of writers, among the most prominent of whom is Wilhelm Roscher, have presented the idea that the present industrial system tends to pre- serve a stable equilibrium, and that there are no persistent or recurrent tendencies operating to break down the adjustment which normally pre- vails between demand and supply. Such writers, among whom we may include Nasse, Lugo Bren- INDUSTRIAL EQUILIBRIUM tano, Garnier, and perhaps Max Wirth,^ scout the idea of a definite periodicity of crises, holding that they result from unforeseen occurrences, or acciden- tal junctures in the life history of trade.^ These writers and their followers all recognize, however, that the nineteenth-century economy is not the same as that which preceded it. Changes have taken place which have resulted in making industry sensitive to destructive influences once unknown. Such changes are the division of labor and the application of capital to industry, which 1 The list of crises-producing causes enumerated by Max Wirth is as follows: (i) Harvest failures; (2) Discovery of new deposits of coal, metals — particularly of the precious metals; (3) Inven- tions; (4) Opening or closing of commercial routes and of mar- kets; (5) War and revolutions; and, (6) Leading to depression of trade, the depreciation of the currency. " Grundziige der National Oekonomie," Bd. Ill, p. 57. 2 " The germs of crises lie in unusual economic phenomena which stimulate production and industry generally to forsake its beaten path, and which call forth unwonted activity in various parts of the economic organism." — Max Wirth, " Grundziige der National Oekonomie," 3 Aufl., Bd. Ill, p. 57. "The feverish activity of the market and the abnormal inflation of prices are always the result of peculiar causes, for the operation of which the previous depression of industry has, indeed, prepared the way, but which exert throughout an independent, actuating influ- ence. Periods of depression give way to a gradual revival of commerce when such peculiar causes are not present, or when the evolution is not suddenly interrupted by such disturbing events as war or the declaration of peace. Such a trade revival continues uninterrupted, unless checked by some new disturbing influences." — Nasse, " Ueber die Verhiitung der Productionskrisen," Jahrbuch fur Gesetzgebung, Bd. Ill, N. F. 1879, p. 150. Cf. Roscher, "System der Volkswirthschaft," Bd. Ill, p. 783. 23 ECONOMIC CRISES increase the interdependence of industrial units. These also, by lengthening the chain of connected productive processes, lengthen the time during which disturbing changes may occur. Both the solidarity and the sensitiveness of business condi- tions are increased by the use of credit. It was with the economy and moral beauty of credit in mind, but yet remembering the crisis, that Roscher spoke of crises as "the shadow side of progress itself." 3 Under some circumstances the industrial system may be said to be in unstable equilibrium, as when a country possesses a system of unsound banks or an unregulated paper currency. The course of foreign commerce is usually recognized as less sta- ble and reliable than that of home trade. Hence, the growth of international commerce opens the trade of a country to many new disturbing influ- ences. Agriculture and the other extractive in- dustries are less susceptible to injury than are manufacture and commerce, because the goods which they produce are in the least possible de- gree specialized, and therefore sealed for specific commercial uses. These industries are adaptive, since, if one outlet is closed, the goods may be fitted for another use. Each branch of manu- facture must follow the course of some specific demand, and commerce must suffer by any read- justment of supply and demand areas. We may 3 Roscher, " Ansichten der Volkswirthschaft," Bd. II, Sec. 4, p. 385- 24 INDUSTRIAL EQUILIBRIUM say furthermore that capital invested in agriculture is not so rapidly impaired while lying idle as is capital invested in manufacturing and commercial enterprises.* The bonds of credit linking these various parts of a country's industries together by credit and debtor relations put the whole economic organism in a position to suffer from the reverses which come to the least stable elements compos- ing it. Whatever in any way extends the market, therefore, or complicates business, if it is accom- panied by a corresponding increase in economic solidarity, makes larger the area within which crisis-producing causes may appear. Having noticed how liable the machinery of in- dustry is to become deranged, it remains to con- sider that group of the actuating causes of crises which has been selected for treatment in this chap- ter, namely, the unpredictable ones. Beginning with those considerations which belong to the department of Production, in economic science, we may first mention invention, which has for its immediate effect a revolution in the technique of some industry. Invention changes the proportions in which the factors of production are related to one another in industry, readjusts industries to one another in the scale of importance, and changes * The varying degrees of sensitiveness to derangement which economic enterprises display is an important consideration in con- nection with the laying of taxes, for it determines in a measure the reliability of the various sorts of public revenue. Cf. H. G Adams, "Taxation in the United States 1 789-1 8l6 " (Johns Hop- kins Studies), Vol. II, pp. 69, 70. 25 ECONOMIC CRISES the territorial relations of producing areas. The gradual accumulation of improvements, which is often allowed to grow unheeded by capitalists whose money is invested in equipped plants, forms,- from time to time, a crushing advantage for new enterprises starting with all the latest devices known to the trade. During the early part of the century the advent of a new invention was not accompanied with great loss of fixed capital, because at that time capital was for the first time let into the productive process on a large scale by these inventions, and the change meant the use of expensive equipment for the first time. At pres- ent great inventions are coming more and more to mean the destruction of large amounts of fixed capital, which have been invested to utilize pre- vious inventive achievements. The opening of a new means of communication has an effect in some respects similar to that of an invention. The European markets were convulsed by the opening of the Suez Canal. The opening of a new market has frequently, in the past, led to ill-advised productive activity, resulting in great loss. The requirements of a new market are at first imperfectly understood, especially if it is in an undeveloped country. Optimism and the love of stimulating news serve generally to exaggerate the importance of an unknown demand. One has only to recall the "Mississippi Scheme" of 1718 and 1719 and the "South Sea Bubble" of 1720 in confirmation of this. Overestimation of the 26 INDUSTRIAL EQUILIBRIUM markets of Brazil and of Spanish America con- tributed principally to the distress in England in 1 8 10. In 1824 and 1825 the markets of Peru and Mexico were overestimated, and in 1843 those of China were likewise. European manufacturers have been prone to ship what they wanted to sell, as regards assortments, quality, and style, rather than what the market demanded. A realization of the importance of early establishing trade con- nections, in order to " hold the field " against com- petitors, leads to activities which anticipate in too great a degree the development of a new field. This leads to such conditions as prevailed in Cali- fornia in September, 1850. When a collapse does not follow the first receipt of accurate information regarding the condition and capacity of a new market, a second stage of the process is entered, in which European capital and methods are rashly applied to stimulate the local industries. When the crash, which is almost certain to come, lays low the colonial industry, European houses con- nected therewith are often brought down in the general ruin. This is illustrated by the case of the Baring failure in England in the summer of 1890. Unfounded trade expansion in the home countries, such as that which was connected with the opening of California, is not likely to occur in the future, because of the improvement of means of communication ; but the hasty and inconsider- ate application of European methods in a tropical climate, with strange flora, fauna, and with non- 27 ECONOMIC CRISES European people, to bring about a forced growth of industry through the use of European capital, is likely yet to lead to trouble. The laying of import duties, a practice common among new countries after reaching a certain stage of development, offers a prolific cause of uncer- tainty in trade with new markets. A tariff brings about an artificial distribution of industry which then must hang upon the course of legislation and indirectly upon the fortune of political parties. A tariff in a growing country must be revised from time to time. Furthermore, a tariff tends to build up interests which exert a pressure to secure revisions advantageous to themselves. The system must therefore be pronounced an unstable one. The history of tariffs shows that the system is " a thing of shreds and patches." In connec- tion with crises the unstability and artificiality of tariffs is the chief subject of remark.^ fi The opinion of the business men of this country who are not intrenched in monopolies may be judged from the well-indorsed sentiment of the National Board of Trade, as expressed in Wash- ington in January, 1895, ^y Mr. Helman of Cleveland: "The gravest dangers from present methods of tariff discussion and legislation are found in the constant menace to the business interests of our country. History tells us that the various changes from low to high and high to low tariff between 1S32 and 1880 led to periods of undue inflation, great demoralization, prosperity, and depression. Uncertainty has always acted as a damper on trade, and even the mere suggestion of a possible change in revenue rates has operated to unsteady business and hinder pro- duction. In the language of the resolution presented to this body, twice within the last two years have we, by overwhelming 28 INDUSTRIAL EQUILIBRIUM In this connection attempts to form monopoly may be mentioned. When these attempts are in the form of getting " a corner " on the market, great and possibly destructive price fluctuations may result. Attention must be called to the char- acter of the trust wars, at present becoming famil- iar to us, and in all probability to be made more familiar in the future. These struggles may al- most be called the wars of the giants. The invest- ments of capital and the numbers of wage-earners involved are so great as to make them a matter of public solicitude. A cause of crises, which may be considered to fall under the head of Exchange in economics, is the course of the precious metals. As these metals form the most important elements of the exchange medium of trade, and as every socio-economic activity is influenced by changes in the medium of exchange, the circumstances which affect the value of gold and silver are most important.^ The value of these metals is, in a greater degree than majorities, reversed the national system of raising revenues, and twice placed in jeopardy the business interests of the country by making uncertain for months the outcome of legislation touch- ing the exchange value of every article in trade. Every observer knows that there need be no actual legislation to involve great risk. The mere suggestion of possible action is sufficient to stir the commercial world and to produce alarm and even serious disturbance in trade." — "Proceedings," 1895, PP- '3°» ^3^* ^ Emile de Laveleye considers that the fluctuations occasioned by the settlement of the balance of trade and the resulting move- ment of the precious metals are responsible for crises. " Revue des Deux Mondes," 1865, pp. 445 ff. 29 ECONOMIC CRISES is true of most other substances, dependent upon legislation. This suggests a source of economic insecurity. The crisis of 1893 in the United States was, in part, due to distrust of the integrity of our currency, caused by the operation of the Sherman Law, and by the existence of a strong free silver sentiment. The physical conditions governing the supply of gold and silver are also to be considered. The assertion has been made by Schaffle, Gustave du Puynode, and others that the increase in the production of gold, following upon the discovery of the California fields, lowered the rate of interest in Europe and stimulated speculation, resulting in a number of crises, prom- inently that of 1857.7 The Committee of the House of Commons appointed to inquire into the causes of the crisis of 1857 reported that specula- tion had been especially increased by three circum- ' For a discussion of this, see Schaffle's article in " Zeitschrift fur d. gesammte Staatswissenschaft," Bd. XIV, 1858, pp. 469, 470, also in "Deutsche Vierteljahrsschrift," 1858, Heft I, p. 327. Puynode, in "Journal des Economistes " for March, 1858, p. 458, argues the same cause for the crisis of 1857 in the United States. For a discussion of the influence of the scarcity of gold and demone- tization of silver upon trade since 1882, see Robert Giffen's "Essays in Finance," 2d Series (N. Y.), 1886, Essay I: "Trade Depression and Low Prices," Part IV; "The Question of Gold Scarcity," pp. 22-28. Cf. Dr. Wm. Scharling, "Die jetzige Ge- schaftsstille und das Gold," Conrad's " Jahrbuch," Bd. II, N. F., 1885, pp. 189-219, and pp. 289-312; also J. E. T. Rogers in "Prince- ton Review," Vol. Ill, N. S., 1879, Article "Causes of Commercial Depressions"; Stephen Williamson, "Contemporary Review," Vol. XXXV, 1879, Article "Bad Trade and its Cause," Part I, pp. 121- 131. 30 INDUSTRIAL EQUILIBRIUM stances : (i) The extension of foreign trade ; (2) A great importation of gold and silver; (3) The econ- omies in the use of money made possible by the practice of banking. The productive process may be considered relatively stable and dependable, in comparison with the capricious movements of demand. The unexpected in industry usually makes itself felt first from the side of demand. We do not suffi- ciently understand the process by which wants rise and propagate themselves among the individuals composing society ; hence there is to us always an element of the unexpected in the movements of demand. There occurs to the mind at once the influence of fashion. Undoubtedly the word " fash- ion " has been overworked in this connection and made to stand for a variety of forces governing the movement of wants. Undoubtedly also many producers who complain loudly of the uncertainty of fashion have themselves to thank for nourish- ing a change of demand to put movement into the commodity market. A review of modern changes in production and consumption strongly indicates that these two complementary parts of the eco- nomic process are growing more and more unUke and are with more and more difficulty adjusted to one another. Production, employing machinery, and a strictly classified labor personnel under a complete system of organization pours forth vast quantities of goods of which each unit exactly resembles the other. To secure the economies 31 ECONOMIC CRISES inherent in this system there is demanded above all things stable and uniform conditions over wide areas. Demand on the contrary, influenced by general education and the quickening of intellect- ual movements, and encouraged to nicety by the great variety of goods available to choose from, is becoming more uncertain and more subject to whims and fads than ever before. The increase in the income of the wage-earning classes increases their power and desire to individualize their con- sumption. The smaller an income the more pre- dictable is the expenditure resulting from it as it is mortgaged to the necessities of life. The larger the income the larger the disposable surplus set free to form an unpredictable demand. To this list of crisis-inducing influences may be added one or two which cannot be grouped accord- ing to the customary divisions of economics. It is a fact, known to every one, that war operates powerfully to restrain certain kinds of consump- tion and to increase other kinds. The " Chicago Tribune" of December 31, 1898, published a very interesting table, in the course of a review of the industry of Chicago, to show what industries were stimulated by the Spanish war, what were depressed, and what unaffected. In the first class are placed industries connected with drugs, groceries, farm produce, grain, flour, iron and steel, leather, paper, packing cases and clothing. To this might be added the newspaper and photographic industries, the trade of American resorts and the manufacture 32 INDUSTRIAL EQUILIBRIUM of powder, bunting and flags, brushes, etc. Among the industries depressed were those connected with boots and shoes, real estate, building material, lum- ber, and beer. The bicycle industry was depressed and trade on the Board of Trade was lessened. The industries not affected were connected with coal, furniture, hardware, jewellery, and millinery. Banking was also unaffected. Not alone does war disturb the course of industry of those nations engaged in it, but of many others as well. Neutral powers may have their markets destroyed, or their sources of raw material cut off, or may suffer from necessary changes in the routes of commerce. Again, neutral powers are tempted to expand their production in the hope of gaining a stolen march upon their competitors temporarily handicapped. The first great crisis of the nineteenth century, that of 1815 in England, was caused by the exag- gerated hopes of English merchants that they would be able to control the continental markets at the close of the Napoleonic wars.^ War is an abnormal condition, but when it is long continued industry adjusts itself in a measure to its influence. The passage back to peace may then be a readjust- ment accompanied by anxiety and distress, until the situation of trade is again definite. The delicately poised industry, which is in these 8 Sir Fr. Baring considered the unexpected declaration of war to be one of the chief causes of the crisis of 1 793. " Observations on the Bank of England," p. 19. Tooke, however, disputed this. "History of Prices," Vol. I, p. 177. D 33 ECONOMIC CRISES days built up through the instrumentality of credit, may suffer derangement through the failure of a staple crop, through the collapse of a mining excitement, or in the puncture of the bubble of over-capitalization of joint stock concerns. The whole industry of a country may suffer in a de- rangement having its origin and cause in some one trade. It has even been maintained that in certain critical seasons a general convulsion has followed as the result of the disastrous collapse of some one great individual concern. This extreme statement is frequently to be met with in the litera- ture devoted to the crisis of 1857 in .the United States. That crisis is attributed by some to the failure of the Ohio Life Insurance and Trust Com- pany, having a capital of $2,000,000 and a deficit of ;^20,ooo. This is, of course, no more an expla- nation of the crisis of 1857 than was the failure of the Cordage Company on May 5, 1893, the cause of the crisis of 1893. Such an enumeration of the causes of crisis as the preceding, while, perhaps, fair enough and free from partisan bias, and while elastic and compre- hensive, is unsatisfying. Roscher has been justly praised for early according a place to the discus- sion of crises. His writings have been called pre- eminently fair. This is because what he has given us is virtually a blanket theory — an explanation encyclopaedic rather than truly interpretative. An enumeration similar to the one given above can afford us no criterion to judge the future. Accord- 34 INDUSTRIAL EQUILIBRIUM ing to the " Equilibrium " theory, the cause of each crisis is some unusual conjecture which must be sought in the study of the events immediately pre- ceding the crisis. The recognition of the delicacy of the industrial adjustment is merely an indirect way of saying that the precipitating cause of a crisis may be in itself something inconsequential in comparison with the string of events which it sets in motion. This takes the matter out of the general into the particular, and hides the roots of the problem in accidental and personal details beyond the reach of scientific study.^ The con- clusions to be drawn from this are that the causes of crises are innumerable, that no important classi- fication can be made among them, and that all true causes are equally important.^^ The discus- sions contained in the following chapters may be considered in the light of an answer to this position. ^ " One can see that the ultimate cause of such crises must be an organic failure, and that the source from which the repetition of the phenomenon takes its rise must be sharply distinguished from the individual circumstances connected with each crisis. It is obviously a superficial procedure to fix attention on the incidental character of the crisis phenomenon, and therein to find the real, and in part predictable, law without coupling with this the search for the ultimate causes which account for the entire series of similar phenomena." — E. Duhring, "Cursus der National- und Socialokonomie," pp. 236, 237. 1^ " The causes of such an economic disease are most numerous. Every circumstance which suddenly and largely increases produc- tion or decreases consumption or which even disturbs the ordinary course of industry must bring with it a commercial crisis." — RosCHER, " Ansichten der Volkswirthschaft," Bd. II, Sec. 5, p. 391. 35 ECONOMIC CRISES Passing to the consideration of the remedies which are proposed or suggest themselves in con- nection with this Ust of causes, we have to observe that they must of necessity be as numerous and desultory as are the causes which they are to counteract. Alleviative rather than preventive measures are proposed by the adherents of the " Equilibrium " theory. First, as regards capital : During a financial panic persons who, in ordinary times would be perfectly solvent, are liable to have their property swept away, at a merely nomi- nal valuation, in order to purchase cash in a strin- gent money market with which to pay a small obligation. To meet this emergency the state may issue a paper currency which may either draw interest, or be taxed to secure its rapid retirement after it has served its purpose. This aid may be made effective by advancing money to private parties upon security of property including stocks of goods.^^ The trial of this scheme in the United States in 1873 condemned it as tending to revive speculation, to create an unhealthy dependence upon government, and as offering a relief from the due effects of unwise and dishonest financiering. To afford an equal relief to labor the local units of government may give employment to those who are out of work. If it is deemed unwise for the state to affirm the "right of work," this may be done under the plea of taking advantage of a 11 Roscher, " Ansichten," Bd. II, Sec. 16, B. 36 INDUSTRIAL EQUILIBRIUM favorable market. In behalf of such public expen- diture it may be urged that persons so employed would become a charge upon the public if not aided in some such manner. Little can be done to diminish the force of such reorganizing influences as invention, the opening of new means of communication, or the opening of new markets. Nothing short of a comprehen- sive reorganization of industry such as is proposed by the socialists would avail much. The same may be said of the wars of trusts and monopolies. It is to be observed that legislation to restrict trusts and monopolies has been ineffective thus far in the United States. In regard to the risks con- nected with changes in tariff or monetary legisla- tion the remedy suggests itself. To forecast, and in some degree diminish the uncertainties of demand, the sovereign remedy is statistical in- quiry. It is a remarkable fact that almost without exception every important writer upon crises has emphasized in the most unmistakable manner the necessity of enlarging the scope of govern- ment statistical investigations.^^ Statistical bureaus should not only undertake investigations on their own account, but should give the utmost pubUcity to valuable statistical information gathered by pri- 12 Roscher says : " Had each producer and tradesman an accu- rate and continuous knowledge both of the extent of demand and of the number and capacity of his competitors, a serious crisis would scarcely be possible." — ** System der Volkswirthschaft," Bd. Ill, Ch. II, Par. 175, A. 37 ECONOMIC CRISES vate persons and trade organizations and societies. If, as John Stuart Mill said, the laws of consump- tion are the laws of human enjoyment, then the process of consumption cannot be extensively regu- lated by legislation without serious loss of freedom and enjoyment.^^ The next best thing is to subject the phenomena of consumption to serious study in order that we may at least foresee, if we cannot control events. In this connection it may be per- missible to add a brief explanation of the plans for the statistical study of consumption proposed by the late Dr. Ernst Engel, of Berlin, formerly the Chief of the Prussian Statistical Bureau. This eminent statistician proposed, through the study of budgets of private expenditure, to discover the laws of consumption. If changes in demand can be foreseen, it will greatly facilitate the adjustment of supply to demand. Dr. Engel himself exam- ined the expenditures of thousands of Prussian families and formulated the following four propo- sitions : " First. That the greater the income, the smaller the relative percentage of outlay for subsistence. Second. That the percentage of out- lay for clothing is approximately the same, what- ever the income. Third. That the percentage of 13 " p^ systematic direction of production without freedom of demand and freedom in the choice of occupations would be, while not precisely unthinkable, accompanied by the destruction of civilization and all that which makes life worth living. To harmonize the systematic direction of all industry with freedom of demand and of the choice of occupation is a problem which can only be compared with the squaring of the circle." 38 INDUSTRIAL EQUILIBRIUM outlay for lodging, or rent, and for fuel and light, is invariably the same, whatever the income. Fourth. That as the income increases in amount, the percentage of outlay for sundries becomes greater." ^^ Few subjects of economic research appear to offer greater rewards to the student than does this one. RESUME L Economic equilibrium — static conception — dynamic conception. IL Grand divisions of crisis theories. 1. A stable equilibrium disturbed by unpredictable causes. 2. An unstable equilibrium eventually ruptured by steadily operating cumulative forces. in. School adhering to the first class of theories — Roscher. IV. Sensitiveness of modern industry to disturbances caused by {a) division of labor, (Jj) lengthening of economic forecasts, {c) use of credit (special case of unsound banks and unregulated paper currency), (^) foreign trade, {e) in- crease of elaborative as opposed to extrac- tive industries. V. Unpredictable causes of crises grouped according to the departments of economic science. I. Production. (Ueber die Verhiitung der Produktions-Krisen," in"Jahrbuch fur Gesetzgebung," Bd. Ill, N. F., pp. 162, 163. 178 CREDIT AND SPECULATION Facilitates transfers of capital. Makes investments easy. Saves money and expenses of doing business. ((/) Dangers of credit. Credit depends upon a state of mind, — con- fidence. May support extravagance and unwise invest- ments. Lessens the money reserve. Lengthens and complicates pecuniary obliga- tions. The underestimation of the future. (. " Gesammelte Aufsatze," Bd. II, pp. 23-137, Tubingen, ^ 1886, a part of which appeared as article "Zur Lehre von den Handelskrisen," in " Zeitschrift fiir die gesammte Staatswissenschaft," Bd. XIV, Tiibingen, 1858, and as article "Der grosse Borsenkrach des Jahres 1873," i^i Bd. XXX, Tubingen, 1874. An important contribution to the subject. Among other things, the fluctuation in the price of the precious metals is treated with reference to crises. = article " Handelspolitik," in Bluntschli's " Deutsches Staatsworterbuch," Bd. IV. 11 Vols. Stuttgart, 1857-70. " Das Gesellschaftliche System der Menschlichen Wirth- schaft." 3 Aufl. 2 Vols. Tiibingen, 1873. ^. Wagner, Adolph, article "Krisen," in Rentzsch's " Hand- *" worterbuch der Volkswirthschaftslehre." 2 Aufl. Leip- zig, 1870. An especially valuable article. The influence of credit is emphasized. White, Horace, article "Commercial Crises," in Lalor's " Cyclopaedia of Political Science, Economy and Political History of the United States." 3 Vols. Chicago, 1884. Wirth, Maximilian Wilhelm Gottlob, " Geschichte der Han- delskrisen." 4 Aufl. Frankfurt a/M., 1890. The standard historical work. 226 BIBLIOGRAPHY II. THE ECONOMIC EQUILIBRIUM Gamier, M. Joseph, " Traitd d'Economie Politique Sociale ou Industrielle." Paris, 1880. Especially Sees. 363, 579, et seq. Follows the presentation of Max Wirth. Nasse, E., article " Ueber die Verhlitung der Produktions- ^ krisen durch staatliche Flirsorge," in "Jahrbuch fiir Gesetzgebung, Verwaltung und Volkswirthschaft im deutschen Reich.'" N. F., Bd. III. Leipzig, 1879. Roscher, Wilhelm, ''■ Zur Lehre von den Absatzkrisen " (first published in 1849), in" Ansichten der Volkswirthschaft." 3 Aufl. Leipzig u. Heidelberg, 1878. Chief authority of the equilibrium theory. " Nationalokonomik des Handels und Gewerbfleisses." '- 2 Aufl. Stuttgart, 1881. Being Bd. Ill of " System der Volkswirthschaft." Especially Abtheilung II, Kap. XI. III. THE ORGANIZATION OF INDUSTRY Reference may be made to much of the literature of modern social- ism. Upon the size of business units see also section (c) of the bibliography of " Crises and Legislation." Bebel, " Die Frau und der Socialismus." 10 Aufl. Stuttgart, 1890. Especially p. 235 ff. Engels, Friedrich, "Herrn E. Dlihring's Umwalzung der Wissenschaft." 2 Aufl. Zurich, 1886. " Socialism, Utopian and Scientific " (Ed. by Edw. Aveling). London, 1892. Social Science Series No. 56. Contains a fine description of the phases through which business passes in a crisis period. Engels-Marx, " Das Kommunistische Manifest." 4 Aufl. London (German Cooperative Publishing Co.), 1890. Kautsky, K., " Marx's okonomische Lehren." Stuttgart, 1887. Pages 238 ff. Kleinwachter, F., "Die Kartelle." Innsbruck, 1883. BIBLIOGRAPHY Lexis, article " Handel," in Schonberg's " Handbuch." 2 Aufl. Tubingen, 1886. Especially Bd. I, pp. 697-734, and Bd. II, pp. 734-737. Schultze-Gavernitz, " Grossbetrieb ein wirthschaftlicher und socialer Fortschritt." Leipzig, 1892. Smart, William, article " The Dislocations of Industry," in ''Contemporary Review," Vol. LIII, May, 1888. Watchel, Friedrich, " Die Versicherung der Actienrente, Ein Praservativ gegen Borsen- und Handels-Krisen." Leip- zig, 1874. IV. CRISES AND THE PROBLEM OF CAPITAL Aldis, W. Steadman, article " Over-production " in the " Con- temporary Review," Vol. XXXV. London, April, 1879. Beaumont, Henri de, article " Des Fetes comme Remede k la Crise Commerciale," in "Journal des Economistes," Feb- ruary, 1886. Sdrie 4, Tome XXXIII. Emphasizes expenditure as necessary to maintain trade. Bernhardi, Th., " Versuch einer Kritik der Griinde, die fiir gross und klein Grundeigentum angefUhrt werden." St. Petersburg, 1849. Sec. 15. Reviews the classical doctrines of profits and surplus. Bowen, Francis, "American Political Economy." 3d Ed. New York, 1863. Particularly Chs. XVII and XXIII. Chalmers, Thomas, "On Political Economy in Connection with the Moral State and Moral Prospects of Society." 2d Ed. Glasgow, 1832. Chs. Ill and V. Argues for the possibility of a general glut. Courcelle-Seneuil, Jean Gustave, " Traite Theorique et Pratique d'Economie Politique." Paris, 1858. Tome I, " Partie Theorique ou Ploutologie." Crocker, Uriel H., " Excessive Saving a Cause oi Commercial Distress : being a Series of Assaults upon Accepted Prin- ciples of Political Economy." Boston, 1884. "The Causes of Hard Times." Boston, 1895. 228 BIBLIOGRAPHY D'Avis, article ^' Die wirthschaftliche Ueberproduktion und die Mittle zu ihre Abhiilfe," in "Conrad's Jahrbiicher," 1888, Bd. XVII, N. F., pp. 465-490. Ely, Richard T., "Outlines of Economics" (College Edition). New York, 1893. Guyot, Yves, "Principles of Social Economy" (Trans, by C. H. Lippington). 2d Ed. London and New York, 1892. Hawley, Fr. B., article " The Rationale of Panics," in " National Quarterly Review," October, 1879. article " The Ratio of Capital to Consumption," in " Na- tional Quarterly Review," Vol. XXXIX, July, 1879. "Capital and Population." New York, 1882. Chs. 11, III, IV, and V. Hobson, John A., "The Evolution of Modern Capitalism; a Study of Machine Production." London, 1894. Cli. VII. Presents the modern doctrine of saving. McCuUoch, John Ramsay, " The Principles of Political Econ- omy." London, 1870. Held Say's doctrine of the impossibility of a general glut. Malthus, T. R., " Principles of Political Economy considered with a View to their Practical Application." 2d Ed. London, 1836. Bk. I, Ch. V, and Bk. II, Ch. I. Chief opponent of Say. Held the possibility of a general glut. Moffat, R. S., "The Economy of Consumption; an Omitted Chapter in Political Economy." London, 1878. Mummery, A. F., and J. A. Hobson, " The Physiology of In- dustry ; an Exposure of Certain Fallacies in Existing Theories of Economics." London, 1889. Rae, John, " Statement of Some New Principles on the Subject of Political Economy, exposing the Fallacies of the System of Free Trade and of Some Other Doctrines maintained in the 'Wealth of Nations.^" Boston, 1834. Bk. II, first six chapters. Rau, Karl Heinrich, " Malthus und Say liber die Ursachen der jetzigen Handelsstockung." Hamburg, 1821. Comprises selections from the principal parts of Malthus' " Prin. of Pol. Econ.," London, 1820, and Say's " Open Letters to 229 BIBLIOGRAPHY Malthus," Paris, 1820, together with a comment upon the arguments presented. Rau leans toward Malthus' position. Robertson, John M., " The Fallacy of Saving." London, 1892. Social Science Series No. 52. Agrees in the main with Hobson. Say, Jean-Baptiste, " Cours Complet d'Economie Politique Pratique." 2d Ed. Paris, 1840. Part III, Ch. XXXI. Developed the theory of the market. " Lettres k Malthus sur differents sujets d'economie poli- tique, notamment sur ies causes de la stagnation generale du commerce." Paris, 1820. Simonde de Sismondi, Jean Charles Leonard, "Nouveaux Principes d'Economie Politique ou de la Richesse dans ses Rapports avec la Population." 2d Ed. Paris, 1827. Liv. II,Chs. IV, V, andVI. Wells, David Ames, article " The Great Depression of Trade," in the " Contemporary Review," Vol LIT, August and September, 1887. V. THE WAGES SYSTEM Part of the literature given in the previous section may be consulted. Adler, Georg, "Rodbertus, eine socialokonomische Studie." Leipzig, 1884. A very valuable essay. Bahr, Hermann, "Rodbertus' Theorie der Absatzkrise." Wieh, 1884. Reprint of an address. Brentano, Ludwig Joseph (called Lujo), article " Die Arbeiter und die Produktionskrisen," in " Jahrbuch fiir Gesetzge- bung, Verwaltung und Volkswirthschaft im deutschen Reich." Bd. II, N. F., 1878. Contains his plan for the insurance of the wage-earning classes against crises. This plan is in part repeated in several of his other works. " Der Arbeiter-Versicherungszwang." Berlin, 1881. " Ueber die Ursachen der heutigen socialen Noth. Ein Beitrag zur Morphologic der Volkswirthschaft." 2d Aufl. Leipzig, 1889. 230 BIBLIOGRAPHY " Die Arbeiterversicherung gemaiss der heutigen Wirth- schaftsordnung ; geschichtliche und okonomische Stu- dien.'" Leipzig, 1879. " Arbeitsverhaltniss gemass dem heutigen Rechte."" Leipzig, 1876. Translated by Sherman, — "The Re- lation of Labor to the Law of To-day." New York, 1891 . George, Henry, "Progress and Poverty." Bk. V, Ch, L 4th Ed. New York, 1880. Hertzka, Theodor, " Die Gesetze der sozialen Entwickelung." Leipzig, 1886. Bk. I, Kap. VIII. " Die Ueberproduktion." "Eine Reise nach Freiland." Leipzig, 1893. Kap. X. " Unmoglichkeit von Krisen in Freiland." A social Utopia. ^ Hobson, John A., article "The Economic Cause of Unemploy- ment." " Contemporary Review," Vol. LXVII, p. 744 fF. Mario, Karl (Karl Georg Winkelblech), " Untersuchungen iiber die Organisation der Arbeit oder System der Welt- okonomie." 2 Aufl. 4 Bde. Tubingen, 1885. Especially Bd. I. Nicholson, J. Shield, " The Effects of Machinery on Wages." Social Science Series No. 54. 2d Ed. London, 1892. Osgood, H. L., article "Scientific Socialism" (Rodbertus) in "Political Science Quarterly," Vol. I, 1886. Owen, Robert, " Observations on the Effects of the Manufac- turing System." London, 1817. Report. Part I of the Twenty-Fourth Annual, entitled "Unemployment." Bureau of Statistics of Labor of Massachusetts. Boston, March, 1894. Rodbertus- Jagetzow, Johann Karl, "Capital," being "Vierter sozialer Brief an von Kirchmann" (Ed. by A. Wagner and Th. Kozak). Berlin, 1885. The crisis theory of Rodbertus is frequently repeated in his various works. " Zur Erkenntniss unserer staatswirthschaftlichen Zu- stande." Neubrandenburg and Friedland, 1842. " Zur Beleuchtung der sozialen Frage," being "Erster und dritter sozialer Brief an von Kirchmann." Berlin, 1885. 231 BIBLIOGRAPHY " Zweiter sozialer Brief an von Kirchmann." Berlin, 1 890. "Zur Erklarung und Abhlilfe der heutigen Creditnoth des Grundbesitzes." 2 Aufl. 2 Bde. Jena, 1876. " Kleine Schriften," especially " Die Handelskrisen der Grundbesitzer." Berlin, 1890. Sargent, William L., "Robert Owen and his Social Phi- losophy." London, i860. Villeneuve-Bargemont, Alban de, '-^ Economic Politique Chr6- tienne, ou recherches sur la nature et les causes du Pau- perisme en France et en Europe." Paris, 1834. Tome I, Ch. XII. " Des Machines." Zuns, " Einiges uber Rodbertus." Berlin, 1883. VI. CRISES AND LEGISLATION {a) Bank Legislation Bonnet, Victor, article " La Crise Mondtaire de 1863-64 et ses Origines," in "Revue des Deux Mondes," November 15, 1865. Favors a single bank of note issue. " Question Financiere a propos des crises." Paris, 1859. Buchanan, President, "Message," December 8, 1857. Sen. Ex. Doc. No. II, 35th Cong., ist Session. Washington, 1858. Carey, Henry Charles, " The Credit System in France, Great Britain, and the United States." Philadelphia, 1838. Recommends freedom in banking. Highly praised by Coquelin. Clement, Ambroise, article "Des Crises Commerciales," in "Journal des Economistes," Tome XVII, January, 1858. Favors freedom of banking. "La Crise Economique." Paris (Guillaumin) . Coquelin, Charles, article "Les Crises Commerciales et la Liberte des Banques," in " Revue des Deux Mondes " (Nouvelle Serie), Tome XXIV, November i, 1848. One of the chief exponents of the theory of freedom in bank issue. Courcelle-Seneuil, Jean Gustave, article "De la Liberte des Banques," in "Journal des Economistes," 2me S6rie, Tome XLII, May 15, 1864, and Tome XLIII, July 15. 232 BIBLIOGRAPHY Favors competing banks of issue, admitting, however, that, as banks aid progress in wealth, they assist in bringing about more frequent crises. Guthrie, George, " Bank Monopoly, the Cause of Commercial Crises.'" Edinburgh, 1864. Mannequin, Th., article "De la Libert^ des Banques," in "Journal des Economistes," 2me Sdrie, Tome XLI, 1864. Champion of freedom in banking. Roscher, Wilhelm, " Nationalokonomik des Handels und Gewerbfleisses " (especially Sees. 69-70). 2 Aufl. Stutt- gart, 1887. Wagner, Adolph, " Finanzwissenschaft." 3 Aufl. Leipzig, 1883. ^s^-^ Especially Buch III, Sees. 259-262 in Bd. I. Best resum6 of the arguments for and against freedom of bank issue. Con- tains extensive references to the literature of the subject. " System der Zettelbankpolitik." 2 Aufl. Freiburg, 1873. Wirth, Maximilian Wilhelm Gottlob, " Handbuch des Bank- wesens." 3 Aufl. Kbln, 1883. Being Bd. Ill of " Grund- ziige der National Oekonomie." Wolowski, L., article "Des Nouveaux Dtfbats sur les Banques," in " Revue des Deux Mondes," Tome LV, Feb. I, 1865. Principal champion of monopoly of bank issue by a single insti- tution under state control. " La Question des Banques." Paris, 1864, the substance of which was published as " Question des Banques " in "Journal des Economistes," 2me Serie, Tome XLI, Feb. 15, and March 15, 1864, and Tome XLII, April 15. Contains an extensive collection of documents bearing upon the subject. {b) The Peel Bank Act of 1844 General reference is made to much of the literature given under the preceding heading. Baring, Alexander (Baron Ashburton), "The Financial and Commercial Crises Considered." 3d Ed. London, 1847. Locates the cause oi crises in disturbances of the currency. Opposed to the Peel Bank Act. 233 BIBLIOGRAPHY Baxter, Robert, "Panic of 1866, with its Lessons on the Cur- rency Act." London, 1866. Bullion Report of 18 10. " Report of English Parliamentary Commission." Text to be found in Appendix to Sumner's " History of American Currency." New York, 1874. Cairnes, John Elliott, " An Examination into the Principles of Currency involved in the Bank Charter Act of 1844." Dublin, 1856. Argues against the Peel Bank Act. Is highly praised by Tooke. Fullarton, John, " On the Regulation of Currencies, being an Examination of the Principles on which it is proposed to restrict, within a Certain Fixed Limit, the Future Issues on Credit of the Bank of England and of Other Banking Establishments throughout the Country." London, 1844. Pronounced one of the clearest opponents of the theory of the Peel Bank Act. Mills, John, paper, "The Bank Charter Act and the Late Panic," read before "National Social Science Associa- tion" at Manchester, Oct. 5, 1866. Published separately, London, 1866. Defends the Bank Act and claims that some broader and deeper cause must be found to account for the occurrences of crises. Mill, John Stuart, "Principles of Political Economy." American, from 5th London Ed. New York, 1882. Especially Bk. Ill, Ch. XXIV. article, " The Currency Question," in " Westminster Review," June, 1844. Overstone, (Lord) Sam. Jones Loyd, " Tracts and Other Pub- lications on Metallic and Paper Currency" (Ed. by J. R. McCulloch). London, 1858. Chief authority of the Currency School. Palmer, J. Horsley, " The Causes and Consequences of the Pressure upon the Money Market ; with a Statement of the Action of the Bank of England from ist October, 1833, to 27th December, 1836." London, 1837. Tooke, Thomas, and William Newmarch, "A History of Price„ " 6 Vols. London, 1857. 234 The Citizen^s Library of Economics Politics, and Sociology UNDER THE GENERAL EDITORSHIP OF RICHARD T. ELY, Ph.D., LL.D. Director of the School of Economics, and Political Science and History Professor of Political Econotny at the University of Wisconsin i2mo. Half Leather. $1.25 NET each MONOPOLIES AND TRUSTS By Richard T. Ely, Ph.D., LL.D. " It is admirable. It is the soundest contribution on the subject that has appeared." — Professor John R. Commons. " By all odds the best written of Professor Ely's works." — Professor Simon N. Patten, University of Pennsylvania. THE ECONOMICS OF DISTRIBUTION By John A. Hobson, author of " The Evolution of Modern Capitalism," etc. WORLD POLITICS By Paul S. Reinsch, Ph.D., LL.B., Assistant Professor of Political Science, University of Wisconsin. ECONOMIC CRISES By Edv^ard D. Jones, Ph.D., Instructor in Economics and Statistics, University of Wisconsin. IN PRE PARA TION FOR EARL Y ISSUE ARE ESSAYS IN THE MONETARY HISTORY OF THE UNITED STATES By Charles J. Bullock, Ph.D., Assistant Professor of Political Economy, Williams College. GOVERNMENT IN SWITZERLAND By John Martin Vincent, Ph.D., Associate Professor of History, Johns Hopkins University. HISTORY OF POLITICAL PARTIES IN THE UNITED STATES By Jesse Macy, LL.D., Professor of Political Science in Iowa College. THE MACMILLAN COMPANY 66 FIFTH AVENUE, HEW YORK DEMOCRACY AND EMPIRE With Studies of their Psychological, Economic, and Moral Founda- tions, by Franklin H. Giddings. Cloth. 8vo. $2.50 " The work as a whole is the most profound and closely reasoned defence of territorial expansion that has yet appeared. . . . The volume is one of rare thoughtfulness and insight. It is a calm, penetrating study ,of the trend of civilization and of our part in it, as seen in the light of history and of evolution- ary philosophy." — The Chicago Tribttne. " The question which most interests both Professor Giddings and his readers is the application of his facts, his sociology, and his prophecy, to the future of the American Empire. . . . The reader will rise from it with a broader charity and with a more intelligent hope for the welfare of his country." — The Independent. THE PRINCIPLES OF SOCIOLOGY An Analysis of Phenomena of Association and of Social Organiza- tion, by Franklin Henry Giddings, M.A. (Columbia University Press.) 8vo. Cloth. $3.00, net " It is a treatise which will confirm the highest expectations of those who have expected much from this alert observer and virile thinker. Beyond a reasonable doubt, the volume is the ablest and most thoroughly satisfactory treatise on the subject in the English language." — Literary World. " The distinctive merit of the work is that it is neither economics nor history. . . . He has found a new field and devoted his energies to its exploita- tion. . . . The chapters on Social Population and on Social Constitution are among the best in the book. It is here that the method of Professor Giddings shows itself to the best advantage. The problems of anthropology and ethnology are also fully and ably handled. Of the other parts I like best of all the dis- cussion of tradition and as social choices; on these topics he shows the greatest originality. I have not the space to take up these or other doctrines in detail, nor would such work be of much value. A useful book must be read to be understood." — Professor Simon N. Patten, in Science. THE ELEMENTS OF SOCIOLOGY A Text-Book for Colleges and Schools, by Franklin Henry Giddings, M.A., Professor of Sociology in Columbia Univer- sity. 8vo. Cloth. $1.10 net " It is thoroughly intelligent, independent, and suggestive, and manifests an unaffected enthusiasm for social progress, and on the whole a just and sober apprehension of the conditions and essential features of such progress." Professor H. Sidgvvick in The Economic Jotirnal. " Of its extreme interest, its suggestiveness, its helpfulness to a reader to whom social questions are important, but who has not time or inclination for special study, we can bear sincere and grateful testimony." — New York Times. " Professor Giddings impresses the reader equally by his independence of judgment and by his thorough mastery of every subject that comes into his view." — The Churchman. THE MACMILLAN COMPANY 66 FIFTH AVENUE, NEW YORK BIBLIOGRAPHY The authority of first importance upon the subject of the Peel Bank Act. Torrens, Colonel Robert, " The Principles and Practical Opera- tion of Sir Robert PeePs Act of 1844 explained and defended." 3d Ed. London, 1858. "A Letter to the Right Honourable Lord Viscount Mel- bourne, on the Causes of the Recent Derangement in the Money Market and on Bank Reform." 2d Ed. Lon- don, 1837. " ' The Budget,' a Series of Letters on Financial, Com- mercial, and Colonial Policy." London, 1844. Discusses the crisis of 1841-42. Wagner, Adolph, ''Die Geld- und Credittheorie der PeeP- schen Bankacte." Wien, 1862. The most scholarly and systematic presentation of the subject. (c) Miscellaneous Legislative Provisions General reference is made to the works given under the heading " Credit and Speculation." Anonymous, " The Profit of Panics ; showing how Financial Storms arise, who make Money by them, . . . and Other Revelations by a City Man." London, 1866. By the author of " Bubbles of Finance," also anonymously pubhshed. See under " Credit and Speculation." Benton, T. H., "Thirty Years' View." New York, 1854. Vol. II, Chs. XIII and XIV, pp. 43-56. Discussion of Bank- ruptcy Laws in the United States. Campbell, R. V., "Principles of Mercantile Law." 2d Ed. Edinburgh, 1890. Crump, Arthur, " A New Departure in the Domain of Politi- cal Economy." 2d Ed. London, 1881. Particularly Part I, Ch. IX, "The Influence of Joint Stock Limited Liability Companies upon Production." Dunscomb, S. W., "Bankruptcy; a Study in Comparative Legislation." Columbia College Studies in History, Economics, and Public Law. Vol. II, No. 2. New York, 1893. 235 BIBLIOGRAPHY Evans, D. M., "Facts, Failures^ and Frauds; Revelations, Financial, Mercantile, Criminal." London, 1859. Grif&n, R., "Stock Exchange Securities; an Essay on the General Causes of Fluctuations in their Prices." London, 1879. Kleinwachter, Fr., in Schonberg's "Handbuch," Bd. I, 3 Aufl. 3 Bde. Tubingen, 1890-91. Especially Part I, Ch. V, Sub-division III, Sees. 27-34. Dis- cusses the advantages and defects of various forms of business undertaking. Oechelhauser, W., '' Die Nachteile des Aktienwesens und der Reform der Gesetzgebung." 1876 and 1878. Oliphant, Laurence, article "The Autobiography of a Joint Stock Company (Limited)." * Blackwood's Magazine, July, 1876, Vol.'cXX. SchafQe, Altert Eberhard Friedrich, article "Die Anwend- barkeit der verschiedenen Unternehmungsformen," in " Zeitschrift fUr die Gesammte Staatswissenschaft," Jahr- gang 1869. Best treatment of the subject of forms of business organization. " Verhandlungen, Die, des elften Kongresses deutscher Volks- wirthe," held in Mainz, September i, 2, 3, and 4, 1869. Report of proceedings in Faucher's " Vierteljahrsschrift fiir Volkswirthschaft und Kulturgeschichte," Jahrgang 1869. Bd. in. Upon the subject of joint stock companies. "Verhandlungen, des Vereins fur Socialpolitik am 12 u. 13 October, 1873," Bd. IV of "Schriften" des Vereins. Leipzig, 1874. Concerning joint stock companies. Contains Wagner's thirty- tvi^o theses. . VTI. PERIODICITY OF CRISES A few astronomical works are cited which deal especially with the phenomena involved in this theory. Banner, Samuel, "Benner's Prophecies of Future Ups and Downs in Prices." 3d Ed. Cincinnati, 1884. 236 BIBLIOGRAPHY Boccardo, Gerolamo, " Economia Political' 6th Ed. Turin, 1879. Vol. II, pp. 127-157. article " La Legge de Periodicita della Crisi-Perturbazioni Economiche e Macchie Solari," in "Archivio di Stitis- tica," Anno IIL Roma, 1879. Carr, Nathan T., " The Sun : Its Constitution ; Its Phenomena ; Its Condition." New York, 1883. Especially Sec. 25, " Periodicity of Sun-spots." Carrington, R. C, "Observations of the Spots on the Sun from November 9, 1853, to March 24, 1861." London, 1863. The author compares the frequency of sun-spots with the price of wheat. Hazen, H. A., article "Sun-spots and Predictions," in "Sci- ence," Vol. XVI, pp. 29-33, July 18, 1890. Herschel, Sir William, " Observations tending to investigate the Nature of the Sun, etc." Philosophical Transactions of the Royal Society, Vol. XCI. London, 1801. Page 265 ff. Contains perhaps the earliest suggestion of the connection between sun-spots and the variations of harvests. Hunter, W. W., and J. Norman Lockyer, article " Sim-spots and Famines," in " Nineteenth Century," November, 1877. Vol. 11^ pp. 583-602. Concerning periodicity of famines in India. Jevons, W. Stanley, "Investigations in Currency and Finance." London, 1884. Chs. I, V, VI, VII, and VIII. Mr. Jevons is mainly respon- sible for bringing this discussion into economic literature. Kedzie, J. H., "Speculations, Solar Heat, Gravitation, and Sun-spots." Chicago, 1886. Part III. Young, C. A., "The Sun and the Phenomena of its Atmos- phere," in "Half Hours with Modern Scientists." Sec- ond Series. New Haven, Conn., 1873. 237 BIBLIOGRAPHY VIII. CREDIT AND SPECULATION Reference may be made to the literature in the next section of the bibliography. Anonymous, "The Bubbles of Finance: Joint Stock Compa- nies, promoting of Companies, Modern Commerce, Money Lending, and Life Insuring," by a city man. London, 1865. By the author of " Profits and Panics," also anonymously pub- lished (see VI (c) of this bibliography) . Anonymous, " Rationale of Market Fluctuations." London, 1875. Anonymous, " Market Fluctuations," by a city editor. London, 1876. Cohn, Gustav, article " Zeitgescbafte und Diiferenzgeschafte," in Hildebrand's " Jahrbucher," Bd. VII, and Bd. IX, 1866. Consular Reports, Symposium on "Debts of Honor"; how they are considered in various countries. Vol. XLII. August, 1893. Crump, Arthur, " The Key of the London Money Market." 6th Ed. London, 1877. Contains a concise review of the history of the money market during the last century, with tables of the accounts of the Bank of England. " Theory of Stock Exchange Speculation." London, 1874; New York, 1887. American Edition edited by H. W. Rosenbaum. An accurate and suggestive description of speculative methods. Evans, D. M., " Speculative Notes and Notes on Speculation, Ideal and Real." London, 1859. Garnier, J., article "De la Nature des Operations de Bourse et de I'Agiotage," in " Journal des Economistes," Tome XLII, p. 378. Paris, 1864. Gibson, G. Rutledge, "Stock Exchanges of London, Paris, and New York; a Comparison." New York, 1889. Glagau, "Der Borsen- und Grlindungsschwindel in Berhn." Leipzig, 1873. 238 BIBLIOGRAPHY " Der Borsen- und GrUndungsschwindel in Deutschland." Leipzig, 1877. Holtzendorff, Franz von, " Wesen und Werth der Oeffentlichen Meinung." MUnchen, 1879. Hume, John F., article " The Heart of Speculation," in the "Forum," Vol. II, pp. 130-141, October, 1886. A description of stock exchange methods. Knies, Karl, "Credit." Being the second part of "Geld und Credit." 2 Aufl. Berlin, 1873-79. Mangoldt, Hans Karl Emil von, article " Kredit," in Bluntschli's "Deutsches Staatsworterbuch," Bd. VI. Michaelis, Otto, article " Die wirthschaftliche Rolle des Spec- ulationshandels," in Faucher's " Vierteljahrsschrift fiir Volkswirthschaft," Bd. IV, pp. 130-172, 1864, and Bd. I, pp. 196-210, and Bd. II, pp. 77-110, 1865. Forming also Bd. II of " Volkswirthschaftliche Schriften." Berlin, 1873. A very able treatise upon speculation. Rogers, J. E. T., " Industrial and Commercial History of England." London, 1892. Ch. IV, " The Development of Credit Agencies." Schaffle, Albert E. F., article "Die Handelskrisis mit beson- derer Riicksicht auf das Bankwesen," in " Deutsche Vierteljahrsschrift," Heft I, 1858. Misuse of credit the cause of crises ; economic morality the cure. " Bau und Leben des sozialen Korpers." Tubingen, 1875. Bd. I, p. 452 ff. Stein, Lorenz von, " Lehrbuch der Volkswirthschaft," pp. 225-230. Wien, 1858 ; or pp. 424-448, Ed. Wien, 1878. Stevens, Albert Clark, article " The Utility of Speculation," in "Political Science Quarterly," Vol. VII, September, 1892. Radically defends speculation. IX. THE PSYCHOLOGY OF CRISES Consult the preceding section. Anonymous, article "Great Awakenings," in the "Galaxy," Vol. VI, pp. 388-398. New York, 1868. 239 BIBLIOGRAPHY Discusses the revivals of religion in New York City and else- where in 1857, following upon the crisis of that year. Adams, Charles Francis, "Massachusetts, its Historians and its History ; an Object Lesson." Boston and New York, 1893. Bain, Alexander, "The Emotions and the Will." 3d Ed. London, 1875. Reprint, New York, 1876. Bourne, H. R. F., "Romance of Trade." London, 1868. Especially Ch. XI for account of early panics and manias. Catteneo, " Delia Psicologea della menti Associate," in " Atti del Regio Instituto Lombardo," Vol. Ill, 1862. Upon the psychology of public opinion. Drake, Samuel G., "The Witchcraft Delusion in New Eng- land." Roxbury, Mass., 1866. Woodward's Historical Series, Nos. 5, 6, and 7. Fry, Edward, article " Imitation in Human Progress," in the "Contemporary Review," Vol. LV, pp. 658-677, May, 1889. Hecker, J. F. C, "The Epidemics of the Middle Ages." 3d Ed. London, 1859. Translated by B. G. Babington, M.D., F.R.S. Langton, William, " Observations on a Table showing the Balance of Account between the Mercantile Public and the Bank of England," in Transactions of Manchester Statistical Society, 1857-58 ; also republished as appendix to "Transactions," 1875-76. Suggests moral causes as explaining crises. Lorimer, J. G., D.D., "The Great American Revivals." Glasgow, 1859. Mackay, Charles, LL.D., " Memoirs of Extraordinary Popular Delusions and the Madness of Crowds." 2d Ed. 2 Vols. London, 1852. Mills, John, "Credit Cycles and the Origin of Commercial Panics," in Transactions of the Manchester Statistical Society, 1867-68. Traces the psychology of credit in relation to crises. Moll, Albert, "Hypnotism." London, 1890. Contemporary Science Series. 240 BIBLIOGRAPHY Oechelhauser, Wilhelm, " Die wirthschaftliche Krisis." Berlin, 1876. Southey, Robert, " The Life of Wesley ; and the Rise and Progress of Methodism." London, 1871. Bohn's Standard Library. Sully, James, "Illusions : a Psychological Study." Especially Ch. XI, "Illusions of Belief." New York, 1881. International Scientific Series. Tarde, G., "Les Lois de I'lmitation." Paris, 1890. Taylor, Isaac, "Natural History of Enthusiasm." 8th Ed. London, 1842. Upham, Rev. Charles W., " Salem Witchcraft." Boston, 1867. "Lectures on Witchcraft, comprising a History of the Delusions in Salem in 1692." 2d Ed. Boston, 1832. Wendell, Barrett, "Cotton Mather, the Puritan Priest." New York, i8qi. X. MISCELLANEOUS WORKS UPON CRISES