tions are discounted in Wall Street as freely as promissory notes. Sentiment is often as powerful as fact in the regulation of values. Is this due to chance rather than Natural Law? Not at all, for sentiment is a natural law in the human constitution. It is a complex blending of tendencies both within and outside of man that constitutes political economy.

Rarely are panics such unmitigated calamities, or booms such blessings, as they are painted by the human fancy. They have wrapped up in them self-regulative forces which in due time make their power visible.

When everybody is buying it is time to sell, for such a condition cannot continue. The reverse is equally true. When under the influence of a common impulse to sell, values seem to have no bottom, the wise investor will profit by the acquisition of sound properties.

The panic of 1890 was only an echo, though a startling one, of the collapse of the great house of Baring Brothers in London. While not accompanied by any distrust of the currency, it caused an important shrinkage in values and a general stagnation which was slow to mend. Financial disturbances in Australia and South America also cast their shadows over the United States and caused a considerable withdrawal of English investments, all of which tended to retard recovery. An unhealthful over-capitalization and speculation in "industrials" also prevailed between the panics of 1890 and 1893. With that partial exception, the great panic of 1893 was not preceded by the unwholesome inflation in values which usually forms the antecedent of violent disturbances.

The panic of 1893 was distinctly a currency panic. At first glance it would seem anomalous that such a disturbance should come at a time when the volume of currency was unprecedentedly large and constantly increasing. But the inception of the disaster had to do with its quality

rather than its quantity. The coinage of 420,000,000 of silver dollars of the sixteen to one standard, during the period from 1878 to 1893, resulted in a depreciation of their bullion value of $175,000,000, or about forty per cent. To this already overweighted currency there was added the monthly coinage of depreciated metal provided for by the "Sherman law," which was causing a steady and persistent inflation. During the early part of 1893 an extensive outflow of gold on foreign balances increased the general apprehension. The redemptive gold reserve was depleted; and serious doubts prevailed, both in Europe and America, as to the ability of the government to maintain the parity of gold and silver. A great drop to a silver basis seemed to be impending. From the nominal ratio of sixteen to one, the bullion value had changed to twenty-eight to one. This state of affairs led to the return from Europe of large amounts of American stocks and bonds, to be realized upon before the apprehended change should take place. The strained situation also led to a general hoarding of gold, which caused a sudden contraction and further loss of confidence. Runs on banking institutions began, and fears of general disaster culminated in such a contraction that currency in small denominations commanded a premium of three to four per cent. There was, in reality, plenty of currency but even more distrust. As money and coinage are more fully considered in a special chapter, these points are only briefly touched upon in this connection as directly bearing upon the notable panic of 1893.

The repeal of the silver purchasing clause of the "Sherman law," Nov. 1, 1893, by the Congress which was convened for that special purpose, restored confidence and assured the commercial world that the existing volume of silver coin would be maintained on a parity with gold. This could only be done by a free exchange of the more precious metal for silver coin whenever demanded. Inter

changeability is absolutely necessary to the continuance of equality.

The panic of 1893 was unique in its inception, characteristics, and outcome. It was also peculiar in the fact that legislation was required as a remedial measure. Previous faulty legislation had produced the disturbance, and its repeal was therefore required to allay it.

The economic relations between the leading commercial nations are now so intimate and responsive that any financial disturbance in one sends its corresponding vibrations through all.

It is probable, however, that the panics of the future will be less severe than those of the past. Present business methods and conditions make it improbable that such convulsions as those of 1837 and 1857 will again occur. Rapid communication tends powerfully toward world-wide evenness of prices, and promotes the gradual discounting of what would otherwise be violent fluctuations. There is also a growing sentiment against excessive individual indebtedness, and business is more generally conducted on a cash basis. International commerce also conduces to steadiness of prices, and any abnormal prosperity or depression in one country receives a corrective influence from others. There is a better understanding of Natural Law, and a more general appreciation of the certainty of the penalties for its violation. When all are familiar with unerring natural principles, and have confidence in their continuous operation, they will become less susceptible to such impulses as issue in a financial crisis. When exciting and disquieting rumors prevail, even the strongest will sometimes lose their equanimity. Anything like a stampede in the financial world is disastrous. Reassuring influences are very necessary at such times. Often a firm and united stand taken by the banks, with mutual assistance when necessary, accompanied by a temporary increase of circulation, or an

issue of clearing-house certificates, will alleviate the worst features of an economic convulsion. A subsequent steady and slow contraction on the part of the banks, after the excitement subsides, will generally take place, to conform to the changed business conditions. The greatly increased general foresight in determining the future tendency of market prices will do much to prevent any repetition of severe panics, for dangers foreseen can be largely avoided. Steady and even markets do not present good opportunities for speculation and rapid accumulations by the unscrupulous, but are favorable for labor and all legitimate business and industry.