] and a
very small reserve in specie and legal-tender notes and poor and
decreasing deposits.
On the other hand, the lowest point of depression following a panic is
accompanied by the converse of the symptoms just enumerated.
Bank balance sheets reflect in cold figures the result of the above
influences. Prices being high, and discounts and loans large in
proportion to deposits, and having steadily increased for years, danger
is near; further, when discounts and loans are not only large in
proportion to deposits, having increased steadily for years, and then
suddenly fallen off noticeably for a considerable time, only to increase
again, danger is imminent.
On the other hand, a steady and radical reduction of loans and
discounts, following a panic and extending until new enterprises are
very scarce, till prices are very low, till there is wide-spread
idleness among workmen, a decrease in salaries and in interest rates,
when the public is wary and speculation dead, and expenditures are cut
down as far as possible, may be taken to mean a rapid and continued
resumption of every prosperous business: but if the above process is
only partially performed, renewed trouble must result;--in other words,
liquidation to really be helpful (to congested business) must be
thorough.
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