64 IV. G. Lanpworthy Taylor 



refined and real and hence the more elusive, it is also true that 

 Nature does also make decided breaks and apparent discontinu- 

 ities. It is these discontinuities that affect principally the mind 

 of man. It is his observation of them that forms the ground of 

 his judgments and of his reality. It is precisely they that have 

 trained him to be a reasoner by contrasts, a neglecter of the con- 

 trolling forces. Volcanic eruptions and earthquakes are the occa- 

 sion of vast loss of life, but are hardly to be counted as a part of 

 the more fundamental geological processes ; and similarly, crises 

 are the occasion of a high financial death-rate, but they are not 

 the fundamental causes of it. Earthquakes are necessary to 

 restore an equilibrium that has been unbalanced by a strain upon 

 the earth's crust, caused by secular deposits of detritus, and crises 

 are necessary to force a liquidation really caused by the strain 

 of personal obligation gradually accumulated by the process of 

 progress. 



It is generally agreed by serious students that "credit" is the 

 chief category of crisis phenomena. Whatever be the favorite 

 fads in the assigning of deeper causes, such as "overproduction, " 

 "lack of purchasing power," etc., all concede that credit makes 

 the whole display at the final catastrophe. "Credit" is the popu- 

 lar term for the congeries of contracts that witnesses the indi- 

 vidual relations of promise and guaranty between producers. 

 These promises are an evidence of the stimulus, which, passing 

 from producer to producer, causes a surplus. Through the inter- 

 vention of the banking system and its guaranties, they are gen- 

 eralized as before described and become subject to independent 

 management and direction. From the country and local banks 

 they are collected into more central institutions and added to by 

 the immediate contributions of the greater producers, until they 

 reach the highest levels of finance. On these levels they are so 

 detached from their materialistic origin that they do not react 

 at once from the technical influences of the conditions of pro- 

 duction. The great capitalists (who are the great debtors) form 

 their own conclusions as to the future prospects of productive 

 undertakings, and they encourage or discourage investment with 

 a free hand. Thus it is that small variations in the technical 



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