2 Ira Ryncr 



way enterprises. To put it in the concrete, the amount of capital 

 invested in railways was out of proportion to the amounts de- 

 voted to other industrial enterprises. Now what part did the 

 crisis play? It must have come in simply as a reaction from an 

 over-stimulation in a certain branch of industry. Capitalists and 

 investors, overestimating the future demand for transportation 

 facilities, continued to launch railway enterprises until the supply 

 exceeded the demand. A readjustment or crisis was the inevi- 

 table result. 



The statement that the crisis is the result of erratic business 

 tending- to establish its normality may be objected to, since the 

 very opposite inference may be drawn. But the reply can be 

 made that history affords abundance of evidence that human na- 

 ture is such as to be subject to extremes, and that there are bound 

 to be periodical outbursts of speculative fervor. It is an estab- 

 lished fact that capitalists and investors do speculate to extremes 

 and that they do invest until the supply exceeds the demand. 

 But this evil seems to be one against which human ingenuity is 

 powerless. In fact, it seems to be a part of human nature to go 

 to such extremes. The only practical solution which offers itself 

 is to evolve a new man with foresight sufficiently keen to see the 

 approaching calamity in time to steer clear of it. But it is very 

 evident that that man is not the normal business man of the pres- 

 ent nor of the past, but of a future ideal society with which at 

 present we have nothing to do. 



In fact, the crisis is much more complicated than would appear 

 from the illustration given. Instead of confining itself to one 

 branch of industry, speculation may spread from industry to in- 

 dustry until it has practically involved the whole industrial field. 

 A disproportion of investment in one field of industry or in sev- 

 eral, or a disproportion between the total of circulating and the 

 total of fixed capital may result. 



With this as a working hypothesis, then, that the crisis is sup- 

 plemental to the normal social movement, we take up the study 

 of the three crises periods: 1836-39, 1847-48, and 1857. 



In this study of crises, we shall treat the movements chrono- 

 logically, taking up each cause for consideration in the order in 



144 



