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Panics, Depressions and Economic Crisis Prior to 1930
 
The Panic of 1819
 
Panic and Depression 1832

Panic and Depression 1836

The Panic of 1837

Six Year Depression 1837-1843

The Panic of 1857

Panic and Depression 1869-1871

The Panic of 1873

The Panic of 1893-Financial World

The Panic of 1893-Presidential Papers

The Panic of 1901-Market Fails, Panic Reigns-Part I

The Panic of 1901-Market Fails, Panic Reigns-Part II

The Panic of 1901- At The Stock Exchange

Panic and Depression of 1929

Brief Financial Notes based on 1875-1907

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In 1807 The Clermont made its maiden voyage from New York City to Albany making the vessel the first successful steamboat.

 
Continuation from page 3
A period of depression cuts down the existing stock of goods, and the retrenchment of production, coupled with the constant increase of population, creates a void in the market. To fill this there is a renewed activity; as prices begin to rise, existing plants find it difficult to meet the demand. Plants are remodeled and extended. Preparation for future production on a large scale takes place. Large investments of fixed, capital are made in buildings, machinery and the like, and those branches of industry which chiefly serve the purposes of construction, such as the iron industry, make extraordinary advances. Mills and railroads are built to supply an anticipated demand. This is usually overdone, and the facilities of production increase more rapidly than the effective demand for products.  Credit is unduly expanded, and it is natural that the money markets feel the first shock when the inevitable readjustment takes place.

While the phenomena of a crisis and its attendant consequences are generally recognized, the widest variety of opinion exists as to the causes of such economic disturbances. Writers are prone to lay stress upon local or temporary conditions, and to generalize from them. In truth, the phenomena of a crisis are so complex, and the conditions which may aggravate it so numerous, that it is not surprising to see the latter considered as primary causes. Thus, speculation, the currency, the tariff, bad harvests, have all been made responsible for crises. These are frequently concomitant forces impelling a crisis, but crises are so numerous that there must be some deeper underlying cause. 

It has already been noted that panics are most severe in the most advanced and most rapidly developing countries. They are apparently an incident of a changing economic organization. Stationary nations do not feel them. A change in the economic organization of a nation is not the result of plan, but the resultant of individual initiation in trade and industry. The adoption of new machinery, of new motive power, and new means of communication displaces the old, and renders some portions of capital useless. This waste of capital, and its absorption in enterprises not immediately remunerative, disturbs the normal relations of capital to employment and causes crises.

We come, in short, to the conclusion that crises are caused by a lack of coincidence in the laws of growth, of production, and consumption. Changes in the former are rapid, those of the latter slow and gradual. Production is always prone to advance more rapidly than consumption. This proposition seems at variance with accepted theories of political economy, but in reality it harmonizes with them. The struggle for existence which lies at the root of economic life is a contest between Nature's limitations and potential consumption, which is unlimited. But concrete consumption and potential consumption are two different things.

Indeed, we seem to be drawing near the familiar proposition that crises are caused by overproduction. This proposition has been vigorously opposed by those who have taken it in an absolute sense, and have revolted at the idea that production could ever outstrip man's needs, as implying man's incapacity for further development. But if we understand overproduction as a false distribution of products over a series of years in comparison with man's actual consumption, and a false choice of objects of production in comparison with man's potential consumption, we need not revolt at the statement that overproduction---along certain lines---is the cause of crises. Such a statement of the causes of crises seems to lack the precision which characterizes the attribution of crises to definite phenomena, but it must be remembered that the more complex the phenomena to be accounted for, the more general must, of necessity, be the cause to which they are ascribed.
 
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