Mercantile Conditions of Crisis of 1893 97 



different years. The average of this ratio for twelve years 

 preceding 1893 was 50.6. The ratio in the crisis year of 

 1884 was, however, 54, which was the highest in the twelve 

 years. The average for 1883-80 was 50.2. In 1893 it leaped 

 to 65.0, and for the four years 1893-96 averaged 58.3. The 

 effect of a crisis in dragging down, because of the inter- 

 connections of our intricate industrial system, firms of 

 high assets and the best of credit is thus graphically 

 shown ; and no less the peculiar prominence of this element 

 in the late crisis. Of course the merging of all failures, 

 good and bad together, masks this feature from direct ob- 

 servation, yet its presence is apparent. It was one of the 

 phenomenal characteristics of the crisis of 1893. During 

 the nine months from January to September, 1893, the 

 ratio stood 70, thus showing still higher before the after- 

 math of failures was added; the coiTesponding ratio in 

 the years 1890-92 averaged just 50. 



If we take this ratio of assets to liabilities for the fail- 

 ures due to each cause, ^ we find that in 1893 it was 67.1 

 per cent for "disasters," 64.4 for "unwise credits," 62.0 

 for "extravagance," 59.2 for "speculation," 58.8 for fail- 

 ures "due to the failure of others," 58.0 per cent for "com- 

 petition," 53.8 for "inexperience," 51.5 for "incompe- 

 tence," 49.7 for "lack of capital," 40.7 for "neglect," and 

 40.1 for "fraud." Thus again, pure commercial "disas- 

 ters" show the highest ratio; with "unwise credits" — un- 

 wise because men do not adapt themselves to the new en- 

 vironment of crisis conditions — naturally next; and "ex- 

 travagance" (under crisis conditions again) third. Per- 

 fectly natural, too, is it that "fraud" and "neglect" stand 

 last, and that "lack of capital" should follow. So, too^it 

 is clear that purely "speculative" failures, i. e., failures 

 due to speculation in normal years could not show such 

 a hijih ratio. And so on. 



'Appendix VI. 



303 



7 



