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The consequence is that, when for any reason a shade of doubt comes over men’s minds that the combination is not working, that the machine is at some point going to give way, that somebody is not playing his part fairly, the solid ground seems to shake under their feet, and we have some of the phenomena resulting from an earthquake, and among others blind terror. But to anyone who understands what this new social force, Credit, is, and the part it plays in human affairs, the wonder is, not that it gives way so seldom, but that it stands so firm; that these hundreds of millions of laborers, artisans, shopkeepers, merchants, bankers, and manufacturers hold so firmly from day to day the countless engagements into which they enter, and that each recurring year the result of the prodigious effort which is now put forth in the civilized world in the work of production should be distributed with so much accuracy and honesty, and, on the whole, with so much wise adjustment to the value of each man’s contributions to civilization.

There is one fact, however, which throws around credit, as around so many others of the influences by which our lives are shaped, a frightful mystery. Its very strength helps to work ruin. The more we believe in our fellow-toilers, and the more they do to warrant our belief, the more we encourage them to work, the more we excite their hopefulness; and out of this hopefulness come “panics” and “crashes.” Prosperity breeds credit, and credit stimulates enterprise, and enterprise embarks in labors which, about every ten years in England, and every twenty years in this country, it is found that the world is not ready to pay for. Panics have occurred in England in 1797, 1807, 1817, 1826, 1837, 1847, 1857, and there was very near being a very severe one in 1866. In this country we have had them in 1815, 1836, 1857, and 1877, and by panics we do not mean such local whirlwinds as have desolated Wall Street, but wide-spread commercial crises, affecting all branches of business. This periodicity is ascribed, and with much plausibility, to the fact that inasmuch as panics are the result of certain mental conditions, they recur as soon as the experience of the previous one has lost its influence, or, in other words, as often as a new generation comes into the management of affairs, which is about every ten years in the commercial world both in England and here. The fact that this country seems to be only half as liable to them as England, is perhaps due to the fact that the extent of our resources, and the greater ratio of increase of population make it much harder to overdo in the work of production here than in England, and to this must be added the greater strength of nerves produced by greater hopefulness. In spite of the enormous abundance of British capital and the rashness of the owners in making investments, there hangs over the London money market a timidity and doubtfulness about the future which is unknown on this side of the water, and which very slight accidents develop into distrust and terror.

Outside those who are actually engaged in a financial panic–such as brokers, bankers, merchants and manufacturers, who have loans to pay or receive, or acceptances falling due, and who are therefore too busy and too sorely beset to moralize on it or look at it objectively, as the philosophers say–there is a large body of persons who are not immediately affected by it, such as professional men, owners of secure investments, persons in receipt of well-assured salaries, ministers, newspaper writers, speculative economists, financiers, and farmers, to whom it is a source of secret enjoyment. They are obliged, out of sympathy with their neighbors, to look blue, and probably few of them are entirely exempt from the general anxiety about the future, but, nevertheless, they are on the whole rather gratified than otherwise by the thing’s having happened. In the first place, all those persons who give their attention to the currency question are divided into two great schools–the paper men and the hard-money men; and every panic affords each of them what it considers a legitimate ground of triumph. The paper men say that the crisis is due to failure to issue more paper at the proper moment, and the hard-money men ascribe it to the irredeemability of what is already issued; and each side chuckles over the convulsion as a startling confirmation of its views, and goes about calling attention to it almost gleefully. There is a similar division on the banking question. Indeed the feud between the friends of free banking and restricted banking is fiercer than that between the two currency schools, and has raged longer, and every monetary crisis feeds the flame. It is maintained, on the one hand, that if banks were let alone by the state their issues would be proportioned to the exact wants of business; and, on the other, that if the state would only restrict them more rigidly business would be kept within proper limits, and all would go well. Each disputant draws from a panic about the same amount of support for his views, because in the great variety of circumstances which surround it there are always some which favor any theory of its origin. In one thing, however, both sets of observers are apt to agree thoroughly, and that is in believing the “thing will not blow over,” and that “we are going to feel it for a long time.” They have long foreseen it, and have only been surprised that it did not come sooner; and they lower their voices to a hoarse whisper while telling you this.