that it is likely to be permanent. A similar impression has often been found to prevail at such times, and it will be interesting to inquire whether it is now, for once, well founded, or whether in reality the depression is not much less than those to which trade has often been subject, and is not as likely as any other to terminate in a new period of prosperity.

I.

Endeavoring to answer the question we have put, what we are first struck with, in a general survey of the last three or four years, is the universality of the depression. Almost every civilized country has been affected. The beginning was in 1873, with the great Vienna panic and crash in May of that year, a crash which was accompanied by immense agitation throughout Germany and in England, and the occurrence of incidents on almost every European Bourse, which only stopped short of panic. Next came a great panic and crash in the autumn of 1873 in the United States, perhaps the greatest event of the kind to which that country, though it has had many great panics, has ever been subject. This was accompanied by a renewal of agitation in England, as well as generally on the Continent, as the rates of discount in November, 1873, significantly prove. At that date the minimum bank rate of discount was in London no less than nine per cent, the maximum being two and three per cent higher; the minimum in Paris and Brussels was seven per cent; in Berlin and Frankfort, five per cent; Vienna, five per cent; and Amsterdam, six and a half per cent. The following year was comparatively quiet, but it was marked by great monetary disturbances in South America, and by a great fall in prices both at home, on the Continent, and in the United States. In 1875 came renewed disturbances in South America, a renewal of agitation in the United States and Germany; and then the Im Thurn, Aberdare, Collie, Sanderson, and other failures, constituting the commercial crisis of that year in England. This was in turn succeeded by a great collapse in foreign loans, which had been heralded and partly rehearsed in 1873, on the occasion

of the bankruptcy of Spain, and of which the conspicuous incident now was the non-payment of the Turkish debt interest. To all these events succeeded renewed depression and stagnation in trade at home, as well as on the Continent, the crisis in Russia in 1876 being very marked, and the whole continuing till it seemed to have a fresh cause in the apprehension and actual outbreak of the present war. Thus the depression has been widespread and general, Italy, Spain, and France perhaps escaping with little hurt, but Austria, Germany, Russia, the United States, and the South American countries having all been in deep distress.

This universality, on a comparison with former periods of crisis, may be in fact apparent only, arising from the greatly increased facilities of observation at the present day. There never was a time, probably, since commerce was sufficiently advanced in more countries than one to admit of crises, in which the commercial misfortunes of one country did not react on countries with which it did business. At such periods as 1825, 1837-39, 1857-58, 1861-62, and 1866-68, it is undoubtedly the case that the crisis in England has been accompanied by more or less severe crises elsewhere, — France, America, England, Holland, and the German towns on the Elbe, having shared each other's misfortunes more or less during the whole period. Now the crisis is felt to be more extended, because we are immediately informed of the events in most distant places, because we see at once the association of failures at centres remote from each other, and because we also see at once the effect in one place of the call upon it to render assistance at another disturbed centre of business. But it is also true that commercial relations are themselves far more extended than was the case before railways and telegraphs; that there are wide regions in the United States, for instance which could not have been the subject of crisis twenty or thirty years ago, because they were unpeopled; that such countries as Austria and Russia have lately shared more largely than before in industrial development; and that Germany has also advanced farther in the path which makes it possible for it to be the subject of a commercial crisis. There

is consequently a real reason for the greater extension of the commercial depression of the last three years as compared with anything before witnessed, while it is equally true that steam and telegraphs, by facilitating communication, have destroyed the natural barriers between the different countries of the commercial world. The London money market appears to be the great equalizer of markets, because it receives the shock of every important business event throughout the world, and transmits the shock of what it feels to every other centre. But whatever the nature of the connection, it is certain that there is a connection between commercial crises in different parts of the world, and that the wider range of business increases the possible area of disaster when once disaster has set in.

II.

The next important characteristic of the depression, and perhaps the most important characteristic of all, appears to be that the conspicuous industry which has failed is that of the "exploitation" of new countries with little surplus capital, and whose business is mainly that of producing raw materials and food for export, by old countries which have large surplus capital, and are largely engaged in manufacturing; in other words, the investment in new countries by the capitalists of old countries. Much bad business is brought to light in every depression; but it is the peculiarity of the commercial cycle, as we have noticed, that there is a change from time to time in the favorite business, so that every period has its special trade development, and special trade disease. The favorite business for many years before 1873 had become that of foreign investment, and now the depression occurs where there was the greatest expansion. Direct evidence in such matters is difficult; it would hardly be possible to measure precisely the extent of the various descriptions of disaster which combine to make a crisis; but there are many facts and circumstances which can leave little doubt in the mind that the direct evidence, if it could be obtained, would wholly confirm the conclusion stated.

The order of events in the crisis affords of itself a very striking confirmation of the assumption. The difficulties commenced in the countries more or less farmed by the capital of England and other old countries; whose industries are nourished by public loans from England, and by the investment of private English capitalists within their territories, principally in the form of English iron and manufactures. The crisis in Austria, which was the first in the whole series, was a crisis in a country answering this description to some extent. To the United States, where the next crash occurred, the description is still more applicable. The South American countries, whose prolonged suffering was the special feature of 1874, are almost a domain of England; and Russia, too, is largely developed" by English capital. Some of these countries, especially Austria and Russia, have not been exclusively dependent on English capital. They have also benefited by the accumulation of capital in Holland, Belgium, and France, which had been drawn largely to Germany before 1873, through the French indemnity, and had overflowed thence into Austria and Russia; but the indemnity payments, though they helped to precipitate and aggravate the crisis in Austria, did not alter the power of the crisis to react on England. No doubt, in 1873, as already noticed, the collapse of the foreign loan financing had been foreshadowed; but the anticipatory events of that year were in themselves comparatively unimportant, so that down to 1875 what chiefly happened was a succession of monetary and commercial crises in countries dependent on England, but from which England by comparison escaped. In 1875 these crises were succeeded by a crisis in England itself of very great intensity, naturally leading to a renewal of crisis and distress elsewhere, though not of actual panic, and the whole culminating in the financial disorders of the foreign loan collapses, which will probably form, in after years, the most conspicuous feature of the whole series of liquidations. There appears to have been a natural order, therefore, in the successive crises to which the countries dependent on England have been subjected, leading to a crisis in England itself, and finally to a financial as well as a commercial collapse.

We have next to adduce in evidence the fact of the great expansion of the business of investment in foreign countries previous to the depression. The great multiplication of foreign loans in the period is now familiar. Not to speak of Turkish and other loans, which were so largely mere borrowings to pay interest, there was a loan of £32,000,000 for Egypt, after there had been large loans in 1868 and 1870; Chili in the same time (1867-73) borrowed £5,250,000; Peru, £24,000,000; Brazil, £10,000,000; Russia, £77,000,000; and Hungary, £22,000,000, —— exclusive of minor borrowings by guaranteed companies and otherwise. These were the nominal amounts of the loans, and the real money or money's worth ever transmitted to those countries in respect of them must have been much less; but, making all deductions, they indicate an immense direct credit opened up in this country in favor of the States named. The minor borrowings we have referred to were equally important, if not more important, and, especially in the case of the United States, the aggregate of small loans for railways and other purposes was immense. All this direct borrowing likewise implied a great investment of capital privately in foreign countries. Merchants and traders were induced to set up establishments abroad to facilitate the business which the loans brought into existence, and accommodate the wants of emigrants to the new fields of industry. The result was a luxuriant industrial growth in the new countries by means of this vast direct and indirect credit which old countries were giving. Thus in the United States, immediately before 1873, the length of the whole railway system had been doubled in seven years; in Russia almost the entire system of 12,000 miles has been created since 1868; in Austria there had been an increase from 2,200 miles in 1865, to over 6,000 miles in 1873; and in South America, Brazil, the River Plate republics, Chili, and Peru, had all been endowed with railways in a very few years, the loans for these countries above enumerated, and especially the above loan of £24,000,000 for Peru, being avowedly all for railways. And never was there a more rapid development of the foreign trade of the United Kingdom. The total import and export