hat the volume of
credit, that is, the promises of money, ceased to bear any
ascertainable proportion to the money, still less to the commodities,
actually in existence. Under such a system, frequent and periodical
crises were necessitated by a law as absolute as that which brings to
the ground a structure overhanging its centre of gravity. It was one
of your fictions that the government and the banks authorized by it
alone issued money; but everybody who gave a dollar's credit issued
money to that extent, which was as good as any to swell the
circulation till the next crises. The great extension of the credit
system was a characteristic of the latter part of the nineteenth
century, and accounts largely for the almost incessant business crises
which marked that period. Perilous as credit was, you could not
dispense with its use, for, lacking any national or other public
organization of the capital of the country, it was the only means you
had for concentrating and directing it upon industrial enterprises. It
was in this way a most potent means for exaggerating the chief peril
of the private enterprise system of industry by enabling particular
industries to absorb disproportionate amounts of the disposable
capital of the country, and thus prepare disaster. Business
enterprises were always vastly in debt for advances of credit, both to
one another and to the banks and capitalists, and the prompt
withdrawal of this credit at the first sign of a crisis was generally
the precipitating cause of it.

"It was the misfortune of your contemporaries that they had to cement
their business fabric with a material which an accident might at any
moment turn into an explosive. They were in the plight of a man
building a house with dynamite for mortar, for credit can be compared
with nothing else.

"If you would see how needless were these convulsions of business
which I have been speaking of, and how entirely they resulted from
leaving industry to private and unorganized management, just consider
the working of our system. Overproduction in special lines, which was
the great hobgoblin of your day, is impossible now, for by the
connection between distribution and production supply is geared to
demand like an engine to the governor which regulates its speed. Even
suppose by an error of judgment an excessive production of some
commodity. The consequent slackening or cessation of production in
that line throws nobody out of employment. T