machinery in great
railroad routes, in vacant city lots, and uncultivated farms held for
future sale, or in warehouses and elevators full of the products of
industry,--especially such products as do not immediately deteriorate in
quality, such as grains, cloths, raw materials of every kind and machinery
of general use. This is apparently the property of the holders, but
against it are the claims of all those who have contributed by loans on
time, by credit for sales, by labor unpaid for and by provisions on
account. One can easily see that with all these people bound together by
credit a single failure may be far-reaching in its effects. The inability
of a single man to meet his promises, if those promises are widely enough
distributed, may bring a panic among his creditors, their creditors, and
so on down to even the solid men, supposed to hold the accumulation of
years untouched by speculation. For every channel of trade is full of
credit, which now everybody loses.

In 1873 the promoter of the Northern Pacific railroad had borrowed
everywhere, even the small savings of widows and workmen, through his
intimate connection with banking. All this accumulation of savings had
been expended for labor upon what was only a huge embankment, making no
possible returns to any owner. The only possible means of continuing the
work was continued borrowing, or the sale of additional stock. The revenue
promised upon the means already used could be given only by larger
borrowing. On a certain day the amount to be borrowed was less than the
amount to be paid, and the failure of Jay Cooke to meet his expectations
and promises was known. Within six hours every village in the land felt
the disaster. The financial crisis was seen and realized. Bargains
partially completed were stopped in the midst. Materials about to be
shipped were held at the station. Deposits at the bank were needed
immediately, notes due at the bank could not be extended, collectors of
accounts appeared at every corner, thousands of workmen directly and
indirectly employed on the great railroad building were out of employment
and out of wages due, the banks were unable to furnish even paper currency
to their depositors, and the whole world felt absolute loss of confidence
in any undertaking or any expectation.

I select this particular panic because its beginning was so comparatively
simple, its progress so evident and its results so well defined. Any other
failure o