"A run on banks during such a period is natural, and many of them go down for want of sufficient reserve to pay all money deposited with them subject to check,
"I will illustrate it."
As he said this he unrolled a chart, and as he proceeded he disclosed others, illustrating the relation of primary money to credits.
"The base section of these columns," he said, pointing with a stick at the illustrations, "represents commodity or property money. The next, or second, represents credit money. The third represents checks, and all forms of personal credits payable on demand. The fourth represents notes, bonds, mortgages, accounts, and all forms of debts calling for money, made when contracted payable in the future. Thus we have one—two—three—sections of credit built up on primary money.
"The column marked first lesson presents a normal or healthy condition of things—a proportion which it would not be safe to greatly alter.
"The column marked second lesson shows a proportion brought about by over-confidence. It is what often happens when the country is prosperous. A man in ordinary circumstances finds that he can easily float $5,000 dollars in debts; and as his business is prosperous, he increases it to $10,000. This expansion becomes contagious. Cities, counties, corporations—all increase their debts.
"The column marked third lesson shows the result this condition produces.
"In this instance which I have illustrated, the fault, or cause of the panic, has been entirely with the second and third columns of credit. Primary money and the first column—credit money—have not been at fault. Such panics are not of long duration.
