380 REMARKS ON SPECIE RESERVES AND BANK DEPOSITS. 
which do not pass through the banks. Indeed, in the larger transactions, bank-bills 
need not be used at all, for, as we have seen, certified checks are just as good, and far 
more convenient ; while in the smaller ones, some specie must be used for the purposes 
of change. 
We come now to the question, whether it is possible to make any such use of the de- 
posits as will alleviate the pressure of a panic, or what is usually called a commercial 
crisis. To alleviate the crisis, we say ; not to avert it, for that is impossible. Trade can- 
not exist without speculation, for all trade is speculation ; and speculation cannot fail to 
become excessive, when credit is very easily granted, as it always must be in the period 
after one panic, when the creditor class find that they have large deposits lying idle, and 
when they consequently become eager to lend them in order to obtain interest for their 
accumulations. As they were desirous, during the crisis, to change their investments 
from prospective private debts to immediate bank debt, so now, after the crisis, they are 
eager to obtain good private notes, payable on interest at a future day, instead of their 
unproductive deposits. But when abundant credit is offered on easy terms, and prices 
are unusually low as another consequence of the recent pressure, merchants will make 
large purchases in the hope of profiting by a speedy rise of prices; and in this hope 
they are not disappointed, as these very purchases cause the expected rise. Others are 
thus incited to follow their example, and speculation again becoming excessive, a panic 
ensues, and the former pressure in the money market is renewed. 
But the fact has not been sufficiently noticed, that the creditor class of depositors are 
as much affected by this panic as the debtors, and that their injudicious proceedings, 
when thus affected, greatly enhance the very evil which they dread. As the bill-hold- 
ers, by making a run upon a bank whose credit is shaken, make the suspension inevi- 
table which might otherwise be averted, so the creditor depositors, by allowing the 
notes due to them to mature without making further loans, cause many to become 
insolvent whose assets under ordinary circumstances would pay all their liabilities and 
leave a surplus. Mercantile debts are paid, as we have seen, only by a free circulation 
of the deposits. But when the creditor class refuse to make further loans, these depos- 
its accumulate in sluggish masses to their own credit, being seldom transferred on the 
bank books to the credit of the debtor class, and every failure thus caused only 
enhances the difficulty. Because A cannot obtain a loan, he is unable to pay a debt 
to B, who is therefore also driven into insolvency ; and his failure, by diminishing 
the receipts of C and D, obliges them also to fail. It is not unlikely that C and D 
may be largely indebted to the very same capitalist, or * creditor depositor," whose 
eagerness to change his funds from prospective private debt to immediate bank debt — 
