Rensselaer Republican, Volume 27, Number 31, Rensselaer, Jasper County, 28 March 1895 — WHAT CAUSED THE PANIC. [ARTICLE]

WHAT CAUSED THE PANIC.

THE FEAR OF DEMOCRATIC FREE TRADE THE PRINCIPAL CAUSE. a The •‘Demonetization of Silver” Had Nothing tol)o With Jt. It really seems like a waste of time to discuss financial questions with students of the Coin School. Shown to be wrong at one point they rush to another, and when fairly beaten mever seem willing to acknowledge it. —We would Tike to call attention as briefly as possible, to one or two points so much relied on by this school of financiers. They found their main argument in favor of the free coinage of silver upon the alleged fact that, the _value of money in the country controls the price of its commodities — the ‘qualitative” theory, as they call it. All financial panics they say, come from a scarcity of money. It is a little curious that among all the financial tables exhibited by Coin, I have been able to find none showing the amount of money per capita in the country at periods of financial prosperity and adversity. If Coin is right, how does it happen that a condition of financial stringency dike the present should exist at a time when the amount of money per capita in the country was as great, if not greater than ever before?

The periodically recurring financial panics do not always arise principally from the scarcity of money in the country but from a condition of things of which that may, oi- may not be a factor. When money is lying idle in the banks, and hid away in old stockings for lack of opportunity for 'safe investment, its effect upon the country is far different from what it would be if invested in manufacturing industries and active business. A thousand dollars in active circulation would pay a thousand debts, and buy so .d and clothing for a thousand families; which, if locked up in a bank, it would only be a source of anxiety to the owner for fear the bank would break. Yet there is just as much money in the country per capita in one case as in the other. The prosperity of the country depends entirely, so fS* as the volume of money is concerned upon the question whether it is lying idle or being kept in active employment —a fact which seems to be utterly ignored by the students of the Coin School. With the panics of 1837-8 and of 1858 9, the fancied demonetization of silver certainly had nothing to do. The first was caused by speculations pure and simpl; and the indebtedness for “town sites” and “comer lota” was largely wiped out by the bankrupt law of 1830, leaving the participants free to engage in new ventures. The panic of 1868-9 was Drought on as every one knows, who had reached years *of descretiom at the time, by the cellapse of the “state” bank system—a financial measure

which many of our young financiers are anxious to see again introduced. The dearly bought experience ms their fathers count for nothing with the young financial theorists of.the present day. While excessive speculation, with its attendant indebtedness and reckless extravagance was the .primary canseof the pAnic of 1873, the failure of Jay Cooke and the N. P. railroad precipitated the event, and added to the intensity of the financial distress. The “Crime" of 1873” which was not discovered till some years later, is not charged with this calamity even by those who most bitterly denounce it as “the sum of all viilanies.” ' u~r— :^ Of the causes which resulted in the financial collapse of 1893, there is a wide difference of opinion, even among our most intelligent men. and we think very truly, charge “it to the defeat of the principle of protection to home industry, and the triumph of the friends of free trade in the election of 1892. Democrats are equally positive that the cause should be looked forun the failure of their party in congress to repeal the “robber tariff” and establish free trade. The populists are as positive, and a great deal more noisy, in asserting that the whole trouble originated in the ! “crime of 1873;” notwithstanding the conceded fact that since that crime (?) was perpetrated we have had ten years of the greatest prosperity.in the history of the country. The “crime of 1873” has had about as much to do with it, in our opinion, as the changes of the moon. The general election of 1892 was carried by a popular craze, the unreasoning voters being “carried off their feet” by the cry of “robber tariff.” Evidently encouragby the success of that campaign, the populists are hoping to win by the same game in 1896, substituting the equally deceptive cry of “free silver,” for the “robber tariff.” They know that the great mass of voters of both the old parties are as good silver men as themselves, and better; for while they believe in keeping the silver dollar as good as any other, they also believe in a currency of gold and paper of equal value with the silver. The populists claim to be not only the sole and exclusive friends of silver, but the only people in all this broad earth that know anything about money. That they may win in this game ofv deception is possible, but if they dc\ we more universal feeling of regret when the consequences of the change become apparent, than was the case after the election of 1892; and none will more regret it than the populists themselves.

H. N. M.