The panic, although spreading over the whole Union, raged especially in
New York. Without wishing to expatiate upon its primary causes, the
Comptroller of the Treasury could not help remarking that it had shown
itself under the same circumstances as recently as in 1873; above all
there were issues for new enterprises; the speculation had rushed to
take them up at a premium, and people now asked their true value.
At this juncture railroad earnings, instead of increasing, showed
weakness, and suffered a slight reaction; the solvency of houses
interested began to be doubted; new loans were refused them, and
immediately the artificially constructed edifice gave way.
To advance prices on the Stock Exchange, the banks had made immense
loans on the shares and obligations of the new railway issues, and as
soon as quotations, artificially maintained at the rates to which they
had been carried, began to drop, everything became unsalable. Until this
occurrence, led on and fascinated by the rise in prices, every one had
bought; hardly was the advance arrested when every one reversed their
operations at the same time. The bankers had loaned not only their
capital but in addition a part of their clients' deposits; brokers had
encouraged a speculation which brought them business; and thus it was
that all hands had flung themselves upon a path that could only lead to
ruin.
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