Mercantile Conditions of Crisis of 1893 95 



which was in liabilities lower than before or since and in 

 numbers not unusual, showing that necessity, if not in- 

 clination, forced conservatism. "Extravagance'' repre- 

 sented normal liabilities, and in numbers caused fewer 

 failures than in the year before and has since continued to 

 improve; 1892 was a bad year and restriction was neces- 

 sary. "Neglect" showed falling liabilities and normal 

 numbers. "Competition" showed about average liabilities 

 and a very much smaller number of failures — representing 

 only 1.2 per cent of all failures — while in other years from 

 1890-97 the per cent ranges from 1.6 to 5.2. All these con- 

 ditions harmonize and are in perfect line with the tend- 

 encies noticeable in the years before the crisis. Here 

 again is suggested the presence of crisis conditions and 

 forces before the period of the acute panic that intro- 

 duced what is the crisis proper of 1893. Quite naturally 

 "speculation" fell in 1893, as it had fallen before, and has 

 fallen since. Unless the beginnings of the crisis are pushed 

 back, here is an instance, in addition to that of the gradual 

 liquidation and fall of prices of previous years, where Jug- 

 lar's test of a crisis fails. ^ I believe the correct solution is 

 to push the date back, not in order to save the theory, but 

 because it seems to give us the truth. Speculation and 

 crisis are antipodes; they are conterminous, but they do 

 not overlap ; one creates the other, which then destroys its 

 creator. The element of "fraud" gives a somewhat similar 

 though less extreme testimony. 



Taking up the remaining causes, "incompetency," a dis- 

 quieting element in 1892, represented a very low percent- 



iJuglar's symptoms of an approaching crisis are: Wonderful prps- 

 perity marked by numerous new enterprises and schemes; rising 

 prices of land, houses, and commodities; full employment; low in- 

 terest rates; speculative efforts to grow rich at once, and "a very 

 large amount of discounts and loans and bank notes, and very small 

 reserve in specie and legal tender notes, and poor and decreasing de- 

 posits." 



SOI 



