Financial difficulty

“ The banking and financial system is presumed to serve in furnishing the essential lubricant to the wheels of industry, agriculture, and commerce, that is, credit. Its diversion from proper use, its improper use, or its insufficiency instantly brings hardship and dislocation in economic life. ”

“ The economic financial incubuses you have created now control your lives, from the day of your conception, until long after your death. With your money they directly control your most essential industries; and indirectly hold ownership through their loans, and mortgages, of your business, your homes, farms, stock, lands. ”

“ As used in economics, the term, however, implies a sudden change of business conditions for the worse, a collapse of prosperity. What precedes has not the appearance of disease, but rather that of exuberant health. Crises in economics may be distinguished as industrial, speculative, and financial, according as one or another influence seems to be more potent, but all are essentially financial. The change that occurs always is connected in some way with the use of money and credit. ”

“ This, the greatest economic catastrophe that the modern human structure has known, immeasurably more calamitous than any other that ever occurred, was borne by the financial system of the United States almost without a tremor. ”

“ These derangements of business would seem to be of interest primarily to the bankers and brokers or to the large borrowers—to the capitalist class. The counterpart of the picture is to be found in the effect of the crisis upon the man [Pg 630] of small means and upon the poor. Inability to borrow may mean considerable inconvenience or even financial ruin for the man of large affairs but it does not usually mean actual suffering. ”

“ Looking at the scene in its political aspects, we behold one class of disorders, and looking at it in its financial aspects, we behold still another,—both together constituting a fearful sum-total, where financial disorder mingles with political. ”

“ So grave were the financial disturbances that several of the States were swept from their honest moorings by the cheap money craze, and irresponsible banks were created almost without limit or restraint, all of which brought speedy and fearful disaster to the people. ”

“ The inability of the debtor class to meet their obligations increases the risk of business investments, and the accumulation of money in the hands of the financial class depriving the channels of commerce of the needed medium of exchange, a stagnation of business will ensue, which readily accounts for the accumulation of all kinds of products in the hands of the producers and for the consequent dearth of employment. ”

“ From one point of view ... every economic crisis is a financial crisis. For since values are expressed in terms of money, and since the modern business superstructure is erected on the basis of credit, every economic revulsion expresses itself through the medium of a change in prices; and since the bank is the center of credit operations, every crisis inevitably involves a revolution in the conditions of credit. ”

“ But I mean the disappointed speculators, who, instead of following the path of frugal and steady industry, tried quickly to get rich on their wits, by getting up large financial operations on a small capital of their own or on borrowed money, and who finding themselves baffled by an unfavorable turn of things, and involved in heavy liabilities, now want “the people's money” to help them out of the lurch and to pay their bills. ”

“ In the course of my task I shall describe such parts of the general financial structure as will place my readers, especially those unfamiliar with its more complicated conditions, in a mental state to comprehend the methods by which the savings they think are safely guarded in the banks, trust and insurance companies, are so manipulated by the votaries of frenzied finance as to be in constant jeopardy. ”

“ Broadly the community has cooperated to meet the needs of honest distress, and to take such emergency measures as would sustain confidence in our financial system and would cushion the violence of liquidation in industry and commerce, thus giving time for orderly readjustment of costs, inventories, and credits without panic and widespread bankruptcy. ”

“ In financial crises the thing men want is money; that which everybody must receive in payment of debt or forever thereafter forego all claim of interest thereon. What men want in such seasons of panic and distress is that which will pay a note in a bank, will meet the exactions of government, will avert the sacrifice of homestead, warehouse or other property by sheriff’s or marshal’s sale ”

“ Americans from all walks of life are continuing to feel the effects of the financial crisis. In recent weeks, concerns about the availability of credit, the safety of financial assets, and the volatility of the stock market have made many families understandably anxious about their economic future. ”

“ And yet there remains with us to-day in full strength and activity, as an incident of that tremendous struggle, a feature of its financial necessities not only unsuited to our present circumstances, but manifestly a disturbing menace to business security and an ever-present agent of monetary distress. ”

“ Whether we regard the distressed condition of our labourers at home, or look to the disturbed state of affairs abroad, the importance of closely and earnestly considering what may be the wisest course to take, in order to improve our finances, must be equally apparent. ”

“ And further, I apprehend that their confidence of being helped out in the event of ill-fortune, will mainly depend on their opinion of their own individual credit, with, perhaps, some consideration, not of the quantity of the currency, but of the general state of the loan market. They are aware that, in case of a commercial crisis, they shall have difficulty in obtaining advances. ”

“ Under a disastrous financial system our income had been reduced to three thousand ducats; yet I could not comprehend how we were in such straits as she had described. When people were unable to maintain a decent state in the capital, they could live at ease in the country at one-third of the same cost. Houses ought to be let, and not sold. Still my father had the power to make any contract he thought right ”

“ So far as material conditions are concerned, I must admit that the money crisis weighs heavily upon us. The most disagreeable feature of the present state of affairs is the dreadful scarcity of money. It is impossible to convert anything into cash ”

“ There are several sadly bloody spots in the financial history of our race. It could probably be shown, however, if one cared to take time to show it, that it is easy to get vexed about mismanagement of the finances without knowing how they might be better managed. ”

“ I've practically no capital to enlarge the business, and I don't care to mortgage what I have and pay a high rate of interest when, just at the critical moment, we might have a commercial crisis and I would then lose everything. ”

“ It destroys the happiness of his household.
Even those who are in the regular receipt of large incomes, feel crippled, often for years, by the incubus of debt. Weighed down by this, what can a man do to save—to economise with a view to the future of his wife and children? A man in debt is disabled from insuring his life, from insuring his house and goods, from putting money in the bank, from buying a house or a freehold. All his surplus gains must go towards the payment of his debt. ”

“ I was now too proud to work as a mere journeyman, and I commenced business for myself; but I began without capital, and a gourd of sorrow hung over me, while I stood upon sand. I had some credit; but, as my bills became payable, I ever found I had put off, till the very day they became due, the means of liquidating them; then had I to run and borrow five pounds from one, and five shillings from another, urged by despair, from a hundred quarters. My creditors grew clamorous; my wife upbraided me; I flew to the bottle—to the bottle! ”

“ Above all, I deprecate a starving system, which has already produced great distress, lowered our funds, augments the necessary amount of the loan, increases its interest, and which has thrown a gloom over our affairs, and spread an universal terror in the market. ”

“ In the course of my life I have often known, and sometimes felt, the difficulty of getting money, but I now find myself involved in a much more singular distress, the difficulty of placing it, and if it continues much longer, I shall almost wish for my land again.
I perfectly agree with you, that it is bad management to purchase in the funds when they do not yield four per cent.,* [209] and I incline every day more and more to the encrease of the mortgage. ”

“ At the worst, too, the nation would not dock me of more than half my income, so I should still be as well off as before my investment, and in the meantime I shall be drawing a double income until the catastrophe arrives. A nation doesn't become bankrupt more than once in a century, so I shall have plenty of time to amass a little capital out of my savings. ”

“ I have since been occasionally reminded of this scene, by those calm, sunny seasons in the commercial world, which are known by the name of "times of unexampled prosperity." They are the sure weather-breeders of traffic. Every now and then the world is visited by one of these delusive seasons, when "the credit system," as it is called, expands to full luxuriance, everybody trusts everybody; a bad debt is a thing unheard of; the broad way to certain and sudden wealth lies plain and open; and men are tempted to dash forward boldly, from the facility of borrowing. ”

“ When bills are scarce, and merchants have difficulty in procuring these ready means of discharging their debts, they are anxious to pay a price for them, in order to be spared the inconvenience of transmitting money. ”

“ The debt of the borrower loads his heart, cramps his hands, and dulls his labour. The gain of the lender hardens his heart, fouls his brain, and puts every means of mischief into his otherwise clumsy and artless hands. ”

“ On every hand we see people living on credit, putting off pay-day to the last, making, in the end, some desperate effort—generally by borrowing—to scrape the money together, and then struggling on again with the canker of care eating at their hearts; but their exertions are vain; they land at last in the inevitable goal of bankruptcy. If they would only be content to make the push in the beginning, instead of the end, they would save themselves all this misery. The great secret of being solvent and well-to-do and comfortable is to get ahead of your expenses. ”

“ The consequence of this ambiguity is, that as soon as scarcity of money in the latter of these senses begins to be felt,—as soon as there is difficulty of obtaining loans, and the rate of interest is high,—it is concluded that this must arise from causes acting upon the quantity of money in the other and more popular sense; that the circulating medium must have diminished in quantity, or ought to be increased. ”

“ Any change in a money system must, of necessity, cause some disturbance of business, and such change should be so devised as to cause the least possible disturbance, and do as little injury to vested interests and existing obligations as possible. ”

“ At this juncture any accident to our venture might affect the whole American business fabric, and no one realized the danger of the situation better than Mr. Rogers and myself. During the anxious days that were passing we canvassed the dire possibilities that the situation contained, just as children tell each other ghost stories when left alone in the darkness of the night. The great catastrophes of finance, we remembered, had all been born of the unexpected—of unforeseen contingencies—far beyond the range of human foresight. ”

“ So, our inflationists pretend to have discovered the art of honestly discharging debt without paying them, and of enabling you to acquire wealth without producing more than you consume, or earning more than you spend. ”

“ These difficulties might occur in the case of the man with the surplus who owed money, if he could be supposed ignorant both of his balance and of his debt, while suffering the inconveniences due to both. ”

“ When this grows to such an extent as to require all or most of the money in the country to pay the interest on debts, then commerce slackens and there is little or no money among the people except as loaned out by the banks and others whose business it is to loan money. They are dealing in the blood of commerce, and when they take it from the arteries of commerce there is commercial sickness and distress. ”

“ When the treatment of a man's business surplus is spoken of as an investment problem, it is meant, of course, not his working capital, which should be kept in liquid form for immediate needs, but that portion of his surplus which is set aside for emergencies. ”

“ Outside those who are actually engaged in a financial panic—such as brokers, bankers, merchants and manufacturers, who have loans to pay or receive, or acceptances falling due, and who are therefore too busy and too sorely beset to moralize on it or look at it objectively, as the philosophers say—there is a large body of persons who are not immediately affected by it, such as professional men, owners of secure investments, persons in receipt of well-assured salaries, ministers, newspaper writers, speculative economists, financiers, and farmers, to whom it is a source of secret enjoyment. ”

“ The fact that at the present moment loans are comparatively easy in the money market has been referred to as contradicting this view. It does not contradict it at all. The crisis has crippled enterprise generally, and especially speculative enterprise. ”

“ Under the operation of the present system, by which prices are constantly falling and money is constantly increasing in value, the surplus earnings of the people are flowing in a steady stream into the vaults of money-lending institutions, and into the pockets of creditors. ”

“ See what we will do for you."
"Yes, it's free trade," bawled one newspaper.
"It's nefarious England," snarled another.
"It's the greed of Wall Street, the crime against silver, the burden of the mortgage," vociferated a third.
"It's 'hard times,'" the meek sighed, and furbished up last year's clothes, and cut the butcher's bill.
"Yes, it's 'hard times,' a time of psychological depression and distrust," softly said the rich man. "A good time to invest my savings profitably. Real estate is low; bonds and mortgages are as cheap as dirt. ”