ABSTRACT
To many people, who today speak of unprecedented disaster, historic precedent is not only inconclusive but distasteful. There is some practical wisdom in this attitude, as far at least as it implies protest against misleading analogies in a world in which nothing ever reproduces itself with the mechanical exactness of a laboratory experiment. But recurrent the depressions are and certain features repeat themselves; and these recurrent features as well as those which are peculiar to any one crisis show some truths, which it would be much more laborious to establish without such illustrative material. Take for instance the crisis which occurred in this country in 1896. Up to this date the crises of the nineteenth century had been international. But the American crisis of 1896 was not. In all other countries 1896 was a year of fair business — of distinct prosperity in some, of moderate prosperity in others. Common sense leads us to look for some cause peculiar to this country. And we have not far to seek. The peculiar cause stands out clearly, and every history of business cycles registers it—the Bryan campaign and the threat of silver inflation. The case is instructive. Many persons, perhaps most, would argue that Americans, expecting inflation, would have rushed into contracts, started building, ordered industrial equipment, “bought now,” thereby producing a boom. In fact, they did not. On the contrary, although underlying conditions were by no means unfavorable for an upswing, business went to pieces. But as soon as sound money was assured, the wheels of the economic machine started moving again of themselves. Lesson: our industrial system is sensitive to political, especially monetary, disturbances. The system may be a very imperfect one, to be improved or even quite cast aside. But this is beside the point when we discuss crises and recovery. Nothing prevents recovery as effectively as fear of political action; nothing promotes it as does firm and sober handling of the existing situation under the existing conditions.
