On the Crises of iS^y, 1847, and 18^/ 



43 



gold. Our population was making rapid strides, and in addition 

 the United States within a few years had greatly enlarged their 

 share of ocean shipping.^ These things partly, if not fully, 

 offset an apparently unfavorable trade balance. 



Now what were the financial forces, if any, set in motion to 

 accelerate or retard the crisis ? According to Gibbons, the whole 

 cause of the crisis was the near-sighted policy pursued by the 

 banks in suddenly contracting their loans upon the first suspicion 

 of approaching financial distress. The crisis once under headway, 

 he attributes its further course to the depositors who withdrew 

 their deposits as suddenly and with almost as disastrous results 

 as accompanied the contraction of loans. "In twenty-one days, 

 the deposits fell 25 per cent, w^hile the loans were reduced but 1 1 

 per cent — a complete transposition of the movement following 

 the 22d of August when they fell but 11, while the loans de- 

 creased 29 per cent."^ 



^ankJiate in the llnited'States. 



Frem fit h*r, "A/tprtcia tion and Inttrest'p 94. CA art. iH 



But this explanation of the crisis is superficial. At least it 

 appears much sounder to say that the causes were deeper seated 

 than this ; that in fact the cause or causes were closely connected 

 with the general methods of doing business at this time. Per- 



* Dunbar, Economic Essays, 268. 



''Gibbons, Banks of New York and the Panic of 1857, 370. 



185 



