Thus a new tariff is a quite accurate
forewarning of a panic, and is also to no inconsiderable extent a
contributory cause. (See foot-note on page 5, _seq., Interrelations of
Panics, Tariffs, and the Condition of Agriculture_, etc.; and
especially what is said of the panic of 1848, on page 10.)
M. Juglar has fully analyzed the three phases of our business life into
Prosperity, Panic, and Liquidation, which three constitute themselves
into the business cycle, that for forty years past (that is, since the
present Bank of England Act, and practically since that of the Law
governing the Bank of France, both of which then increased the required
specie reserve) has been of about ten years. These ten years may be
apportioned roughly as follows: say, Prosperity for five to seven years;
Panic a few months to a few years, [Footnote: The panic after 1873 is
the only one I know extending to anything like the length it attained.
This may be ascribed to the immense development and consequent
speculation, and to the inflation of the currency coming after the
period about the Civil War.] and Liquidation about a few years.
I have already pointed out the signs of prosperity, of panic, and of
liquidation, but in view of existing conditions perhaps it may be well
to restate here the quite familiar fact that the completion of
liquidation that precedes the beginning of another period of prosperity
is characterized by lack of business, steady prices, and a marked growth
in available banking funds.
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