Page:A History of Banking in the United States.djvu/447

 the specie and specie funds also underwent a slight decrease. The New York City banks generally had more specie than circulation, while there were on all sides the greatest evidences of prosperity. It is true that the number of banks in the city increased from twenty-five in 1849 to fifty-two in 1853, and that the number did not go above fifty-five before the war. The capital also increased from $25 millions in 1849 to $44 millions in 1853, and $59 millions in 1857; but it went on steadily increasing to $69 millions in 1860. The deposits also, which were $36.9 millions in 1851, steadily and rapidly increased to $70.6 millions in March, 1857; but in June, 1858, they were $74.8 millions and kept on increasing until, in December, 1861, they were $91.4 millions. There was, therefore, no bank inflation at New York in the special period preceding the crisis of 1857. The justest view of the case is that there had been an expansion of prosperity and enterprise, stimulated by the new gold, which had gone on with such rapidity that a crisis was produced in its development. Comparing 1857 with 1849, the imports had increased one hundred and thirty-three per cent.; the bank capital, one hundred and sixty per cent.; the bank loans, one hundred and forty per cent., and the bank deposits two hundred per cent. The leading features of this crisis were that it was world-wide, very sharp and sudden, and quickly over. The crisis was a very severe one, but it was only a halt in a course of rapidly advancing prosperity. It may be added that it was also especially a banking crisis.

A definite discrimination is intended here between the terms crisis and panic. When certain forces have been set in operation in the commercial organization by antecedent acts or occurrences, their consequences must follow. They may combine in such a way, or advance to such a pitch, that a "crisis" is produced. A "panic" is properly psychological. It is a wave of emotion, apprehension, alarm; it is more or less irrational; it is superinduced upon the crisis, which is real and inevitable, but it exaggerates, conjures up possibilities, takes away courage and energy. It is not possible to preach down a crisis. It is a fact and is there; it must run its course and be accounted with for all there is in it. The soberest man appreciates the facts the best. It is useless to preach "confidence" to him in the face of the facts which infuse suspicion and warning. A panic can be partly overcome by judicious reflection, by realization of the truth, and by measurement of facts. The one thing, however, which kills a financial panic is a prompt and fearless offer by the banks to grant loans to all solvent customers at a rate such as the market calls for. A man who is told that he can have no help on any terms falls into a panic, seeing no escape from failure; one who is told that he can have a loan, if he cannot get along without it, but at some enormous rate, recovers from panic and goes home to see if he cannot manage some other way rather than pay such a rate. Banks, however, in order to be able to apply this remedy, must be strong and suffer from no panic themselves.