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THE ATLANTIC MONTHLY,

A MAGAZINE OF LITERATURE, ART, AND POLITICS.

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VOL. I.--FEBRUARY, 1858.--NO. IV.

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THE GREAT FAILURE.


The _crucial_ fact, in this epoch of commercial catastrophes, is not the
stoppage of Smith, Jones, and Robinson,--nor the suspension of specie
payments by a greater or less number of banks,--but the paralysis of the
trade of the civilized globe. We have had presented to us, within the
last quarter, the remarkable, though by no means novel, spectacle of
a sudden overthrow of business,--in the United States, in England, in
France, and over the greater part of the Continent.

At a period of profound and almost universal peace,--when there had been
no marked deficit in the productiveness of industry, when there had
been no extraordinary dissipation of its results by waste and
extravagance,--when no pestilence or famine or dark rumor of civil
revolution had benumbed its energies,--when the needs for its enterprise
were seemingly as active and stimulating as ever,--all its habitual
functions are arrested, and shocks of disaster run along the ground
from Chicago to Constantinople, toppling down innumerable well-built
structures, like the shock of some gigantic earthquake.

Everybody is of course struck by these phenomena, and everybody has
his own way of accounting for them; it will not, therefore, appear
presumptuous in us to offer a word on the common theme. Let it be
premised, however, that we do not undertake a scientific solution of
the problem, but only a suggestion or two as to what the problem itself
really is. In a difficult or complicated case, a great deal is often
accomplished when the terms of it are clearly stated.

It is not enough, in considering the effects before us, to say that
they are the results of a panic. No doubt there has been a panic, a
contagious consternation, spreading itself over the commercial world,
and strewing the earth with innumerable wrecks of fortune; but that
accounts for nothing, and simply describes a symptom. What is the cause
of the panic itself? These daring Yankees, who are in the habit of
braving the wildest tempests on every sea, these sturdy English, who
march into the mouths of devouring cannon without a throb, these gallant
Frenchmen, who laugh as they scale the Malakoff in the midst of belching
fires, are not the men to run like sheep before an imaginary terror.
When a whole nation of such drop their arms and scatter panic-stricken,
there must be something behind the panic; there must be something
formidable in it, some real and present danger threatening a very
positive evil, and not a mere sympathetic and groundless alarm.

Neither do we conceive it as sufficiently expressing or explaining the
whole facts of the case, to say that the currency has been deranged.
There has been unquestionably a great derangement of the currency; but
this may have been an effect rather than a cause of the more general
disturbance; or, again, it may have been only one cause out of many
causes. In an article in the first number of this magazine, the
financial fluctuations in this country are ascribed to the alternate
inflation and collapse of our factitious paper-money. Adopting the
prevalent theory, that the universal use of specie in the regulation
of the international trade of the world determines for each nation the
amount of its metallic treasure, it was there argued that any redundant
local circulation of paper must raise the level of local prices above
the legitimate specie over exports; which imports can be paid for only
in specie,--the very basis of the inordinate local circulation. Of
course, then, there is a rapid contraction in the issue of notes, and an
inevitable and wide-spread rupture of the usual relations of trade. But
although this view is true in principle, and particularly true in its
application to the United States, where trade floats almost exclusively
upon a paper ocean, it is yet an elementary and local view;--local, as
not comprising the state of facts in England and France; and elementary,
inasmuch as it omits all reference to the possibility of a great
fluctuation of prices being produced by other means than an excess or
deficiency of money.[A] In France, as we know, the currency is almost
entirely metallic, while in England it is metallic so far as the lesser
exchanges of commerce are concerned; there is an obvious impropriety,
therefore, in extending to the financial difficulties of those nations a
theory founded upon a peculiarity in the position of our own.

[Footnote A: A failure of one half the cotton or wheat crop, we suspect,
would play a considerable part among "the prices," whatever the state of