Chapter 10: Crises and Industrial Depressions

REFERENCES.

_Dewey, D. R._, Financial history of the United States, 4th ed.,
1912. Ch. X.

_England, Minnie T._, Promotion as the cause of crises. Q. J. E.,
29: 748-767. 1914-1915.

*_Hamilton_, Readings, 91-93, 93-95, 95-98.

_Hobson, J. A._, Evolution of modern capitalism. Ed., 1912. Ch. 7.

_Jones, E. D._, Economic crises. 1900.

_Juglar, C._, and _Thom, C. W._, A brief history of panics and their
periodical recurrence in the United States. Ed., 1916.

*_Materials_, 391-396.

_Mitchell, W. C._, Business cycles. 1913.

_Moore, H. L._, Economic cycles: their law and cause. 1914.

_Nelson, S. A._, The A B C of Wall Street. 1900.

_Patterson, E. M._, The theories advanced in explanation of economic
crises. A. A. A., 59: 133-147. 1915.

*_Phillips_, chs. XXVIII, XXIX.

*_Source Book_, 138-156.

_Sprague, O. M. W._, The crisis of 1914 in the United States. A. E.
Rev., 5: 499-533. 1915.

_United States Bureau of Labor_, Annual report for 1886.

QUESTIONS.

1. What is a financial crisis? An industrial depression?

2. Describe the trade, banking and price conditions which obtain just
preceding, during and immediately following a crisis.

3. State clearly and explain the movement of prices of stocks, bonds,
mortgages, land, commodities generally, wages and interest rates on
long time and short time loans, before, during, and after a crisis.

4. Tabulate for a series of years covering periods of prosperity and
depression, the prices of stocks, bonds, real estate, and of some
commodities.

5. What economic changes occurred in your own community in the panic
of 1893-94, or in the years 1903-04, or in 1907-08?

6. Is it possible that the amount of all goods produced shall be in
excess of the community's power of consumption?

7. "As the average American can produce far more than he can consume,
it has been proved repeatedly that as long as the sale of his products
is confined to the home markets, over-production is certain to be a
natural consequence of every prolonged period of activity. For half a
century, therefore, with regularly recurring seasons of surplus
production, there came those inevitable commercial crises which
emphasized with increasing force the necessity for foreign markets."
(This passage is taken from a reprint of a speech of a congressman.)

Criticize the view as to the cause of commercial crises expressed in
the above statement.

8. Is a crisis caused by too much or too little money, or by some
other influence?

9. If there were twice as much money in the world, would panics take
place?

10. In a period of depression is there less money than usual in the
country? In the banks?

11. In what ways and to what extent are trade conditions apt to be
affected by:

The increasing gold supply?

The trust movement?

Increasing armies and navies?

The agricultural situation?

12. Explain the difference in the motive of the borrower at ordinary
times and in times of panic.

13. How are loans affected when the reserve limit as established
either by law or custom is reached in England, Germany and the United
States?

14. What in your opinion is the correct explanation of crises?

15. In what ways is business affected by the condition of the crops?
Within what limitations? In the case of which crops is the connection
closest?

16. What element of security is furnished by clearing houses during
panics?

17. Describe the method used by the banks in meeting demands of
depositors during the panics of 1893 and of 1907. (Dunbar is
especially valuable. Also O. M. W. Sprague, History of crises under
the National Banking System, pub. by Nat. Monetary Com.)