eal estate, though it follows later.

The starting of a railroad line involves the purchase of station sites,
and almost surely the laying out of villages at intervals along the line.
The promoters of the railroad are likely to be promoters of town sites as
well. And this increased demand for farms and lots brings a larger faith
in the future of these locations. Everyone who can save a little from his
income hopes to increase that little indefinitely by investment in the
chances of increased value of a lot or a home. Under such circumstances
the machinery of credit moves easily, and one does not hesitate to extend
his credit to the utmost for the purchase of what is increasing in value
each day. The result is a temptation to larger expenditures.

People who are counting their future gains are sure to have larger wants,
and their seeming prosperity in accumulation of value gives them a larger
credit among dealers. The next step is an enlargement of sales of current
supplies of all sorts and an increasing manufacture of such supplies to
meet the increasing wants and naturally enhancing price. Soon the staple
products of farms and factories and mines become themselves objects of
speculative purchase. Men buy simply to hold for the increase in price.
This speculation itself is a temporary cause of success, and goes on until
some accident somewhere reveals the exaggerated proportions of
expectation. Sometimes this speculative spirit continues for a series of
years, in which case it pervades every circle of producers and consumers.
Sometimes it is temporary and local, being produced by some special
undertaking and destroyed by a special failure. Sometimes the death of an
enterprising man destroys the "boom" he has created. When speculation is
rife over a large territory, everybody is employed to his utmost ability,
and the times are said to be good. All property of every kind is counted
at its highest price in the mind of the owner, and all credits are easily
extended from month to month, or from year to year, because of the
universal faith. There seems to the casual observer no reason for doubt,
and the most conservative judges overestimate the ability of the people.

_Financial crisis._--At such a time as that described, when credits of
every kind are interlocked and expectations are high, the so-called
floating capital of the country, under indefinite promises to pay, is
gradually being actually locked up in huge plants of