but all such terms are used in this report in their common acceptation; as, for instance, the term "over-production" is used to indicate that condition of a locality, state, or country when more goods have been produced than are sufficient to meet the ordinary demand. Whether there is any such thing as over-production in the broadest metaphysical sense does not concern the matters in hand. "Cost of production," another expression which invites critical discussion, has been used in accordance with its simplest meaning; that is, in this report it relates simply to the cost so far as labor, material, and the other positive elements of production are concerned. "Under-consumption," which is often erroneously used as another term for over-production, only from a different point of view, means, so far as this investigation is concerned, the incapacity of a people, through crippled power, temporarily, from any cause, to consume what they would in a normal condition be able to consume. It is therefore seen, with these brief statements, that metaphysical definitions are not to be applied to the use of terms having a commonly-accepted meaning.

The best treatment of panics and depressions as they have occurred, with their nature, alleged causes, attendant conditions, and other features, seems to be by years or periods, taking up each country involved in turn.

GREAT BRITAIN.

1837.-For several years prior to the industrial depression of 1837 there had been a general overtrading with America and China on the part of English merchants, such overtrading having been facilitated by the expansion of the Bank of England issues and by a large increase in banking facilities consequent upon the formation of a large number of joint-stock banks. During these years unprecedented importations of cotton and tea were made, and large amounts of English capital had been invested in American securities. Through this division and absorption of capital there occurred a stringency in the money market, and the contraction of the issues of the Bank of England precipitated a financial panic in the latter part of the year 1836. The consequent pressure for money led to numerous failures in the American and East Indian trades, and there was a decline of 50 per cent. in the price of cotton and silk in the spring of 1837. In contrast to the decline in the value of other commodities, the price of provisions advanced so largely that when decreased employment occurred in the manufacturing districts the cost of living for wage earners had been greatly augmented. When the period of greatest depression occurred wheat steadily increased in price, as shown by the following figures of the prices of wheat per imperial quarter in each of the years from 1835 to 1839, in clusive: 1835, $9.44; 1836, $11.70; 1837, $13.40; 1838, $15.44; 1839, $16.92. The price of wheat was higher in 1839 than it had been at any ime since 1819. The industrial depression and period of commercial

discredit continued through the five years succeeding 1837, prosperity having been much retarded by the poor crops of 1838 and 1839, which necessitated large exports of gold to pay for foreign grain. The industrial depression of this period does not seem to have affected savings banks unfavorably, either as to the number of depositors or amount, of deposits the total number of depositors in savings banks under trustees in the United Kingdom and the total amount of deposits, including interest, being for the year ending November 20, 1830, 427,830 depositors, and $70,161,292.80 the total amount of deposits. For the year ending November 20, 1837, the total number of depositors was 636,066, and the total amount of deposits, including interest, $96,195,272. There was a decrease in the number of depositors for amounts exceeding $1,000, but such had been the case for more than a decade prior to 1837, and the decrease in that year was smaller than usual. November 20, 1838, the total number of depositors had risen to 703,529, and the total amount of deposits, including interest, to $107,261,184, and the increase in both number of depositors and amount of deposits steadily continued in about the same ratio as that between 1830 and 1838 until the end of the year 1846.

The industrial depression, by many writers, was attributed, first, to competition or the attempts among manufacturers to undersell each other, by which they reduced wages to a low average; second, to the state of the currency and banking system, which afforded at one time. undue facilities to overtrading, and, again, caused fatal revulsions in trade, conditions which aided in the reduction of wages below their natural level; third, to the corn laws, as keeping up the price of bread by the exclusion of foreign corn, thus giving a monopoly to land-owners and forcing the foreign capitalist to resort to manufacture instead of agriculture, on account of the corn laws preventing an exchange of produce, and enabling foreign manufacturers, from the cheapness of food abroad and its dearness in Great Britain, to undersell the British manufacturer, results leading to the transfer of cotton manufacture to America and the continent of Europe; fourth, to the faulty methods of manufacture by which large quantities of materials were stolen to such an extent that the sales of goods made from stolen raw material were made at such low rates as to seriously interfere with prices; fifth (and this many writers deemed the principal cause), to the superabundance of weavers, ascribed to the influx of Irish and others into the textile trades, to the necessity the weavers were under to increase their incomes by putting their children at an early age to the looms, to the effects of combinations in keeping weavers from entering into other trades, and to the application of machinery to many fabrics formerly wrought by hand.

The industrial depression beginning in 1837 was the result of financial and commercial causes, the industries becoming involved subsequently, and it lasted until the year 1843.

12854 LAB-2

1847.-During 1843 the great dullness in trade which had existed from the time of the panic of 1837 commenced to disappear. A spirit. of renewed enterprise was engendered, and notably manifested itself in the direction of railroad construction. December 31, 1842, there were 1,857 miles of railroad in operation in the United Kingdom. The following table shows the additional miles opened in the United Kingdom in each of the years from January 1, 1843, to December 31, 1852; also the amount of paid-up capital invested in railroads from December 31, 1843, to December 31, 1852, with the gross amounts of the paid-up capital on the respective dates:

RAILROADS OPENED IN THE UNITED KINGDOM, 1843-52.

For several years prior to 1847 the error of 1835 and 1836, of excessive importations of cotton, was repeated. In 1846 there was a failure of the potato crop and a partial failure of the wheat crop, necessitating an importation of grain to the value of $150,000,000. In 1847 the results of a bad harvest were much more serious than would be the case at the present time. The price of wheat rapidly increased from August, 1846, to May, 1847, but when the apprehension of a failure in the crop of the following year was dispelled the price of wheat declined. The average price of wheat per quarter (8 bushels, or 560 pounds) in each year from 1846 to 1850, inclusive, was as follows:

AVERAGE PRICE OF WHEAT PER QUARTER IN GREAT BRITAIN, 1846-50.

The contraction in the Bank of England circulation from September, 1846, to September, 1847, amounted to $14,050,000, the circulation on the respective dates being: September, 1846, $107,325,000; September, 1847, $93,275,000. January 14, 1847, the Bank of England raised its rate of discount from 3 to 3 per cent., and January 21 to 4 per cent., and finally to 5 per cent. April 8 following. The stringency of the money market continued to increase, until October 25 of that year the rate of discount was raised to 8 per cent.; many failures oc

curred in September, October, and November, and the year 1847 closed
in great gloom. The commercial crisis of 1847 and the suspension of
the bank act at once ended the period of industrial prosperity. The
abundant crops on the Continent in the year 1847 and the partial repeal
of the corn laws in 1846 stimulated the importation of wheat in large
quantities, and the prices of this cereal continued to decline for several
years, the average price per quarter in 1851 being the lowest since 1780.
All other forms of enterprise except that of railroad building were al-
most at a standstill from 1846 to 1849. As the year 1849 advanced there
was a revival of the foreign trade, and this, coupled with the low rate of
discount of the Bank of England, which November 22, 1849, dropped to
23 per cent., together with the depreciated price of many raw materials
and the low cost of food, developed great activity in every department
of trade. The discoveries of gold in California in 1849, and afterwards
in Australia resulted in a demand for shipping and for manufactured
goods, and a consequent general rise in prices and wages took place in
the years 1851 to 1853. The exports from the United Kingdom doubled
in value in five years, and manufacturers and wage earners enjoyed the
prosperity resulting from the favorable influences of the gold discoveries,
free trade, and rapid transportation. Owing, however, to the excessive
and reckless shipments of commodities to the sparsely settled gold re-
gions, many of which shipments did not pay the cost of carriage, a large
number of failures took place in the United States, in Australia, and
in England in 1854, which, with the declaration of war against Rus-
sia, created a stringency in the money market, and an increase in the
rates of the Bank of England discounts, the rate June 2, 1853, being
21 per cent. and June 11, 1854, 5 per cent. Trade continued to be
prosperous, however, until 1857, the anticipations of a general financial
panic not being realized in 1854. The depression of 1847 was much
more unfavorable to savings banks, both in regard to the number of de-
positors and amounts of deposits, than was the case during the depres-
sion of 1837. The following table shows the total number of depositors
and the total amount of deposits, including interest, in the savings banks
under trustees in the United Kingdom on the 20th of November of each
year from 1846 to 1856, inclusive:

DEPOSITORS AND DEPOSITS IN SAVINGS BANKS UNDER TRUSTEES IN THE
UNITED KINGDOM, 1846-56.

It will be seen from the foregoing table that the decrease in the total number of depositors and total amounts of deposits in savings banks under trustees in 1847 and 1848 was as follows:

DECREASE IN DEPOSITS IN SAVINGS BANKS UNDER TRUSTEES IN THE UNITED KINGDOM.

1857. The favorable influences which. inaugurated the return to prosperity in 1849 were not destined to continue for a protracted period. The cheap rates for money which ruled from 1849, together with the general prosperity of the country, led to great speculation and expansion of credit. The cost of food also increased in anticipation of war with France, and wheat, the price of which in 1851 averaged $9.26 per imperial quarter, averaged $12.78 per imperial quarter in 1853, and under the influence of the Crimean war the price was $17.28 in 1854 and $17.94 in 1855, the average, $17.94, in 1855 being the highest price since 1818. The rates of the Bank of England discounts were violently affected during the period of the war. September 13, 1855, the rate was 3 per cent., and October 18 following the minimum rate had reached 63 per cent., the average rate for 1855 being 43 per cent., and for 1856 52 per cent., and for 1857 63 per cent. The importations of cereals suddenly increased from $84,042,000 in 1855 to $110,589,225.60 in 1856, and the exports of gold and silver and specie to pay for food imports increased from $119,288,625.60 in 1856 to $161,121,446.40 in 1857. When specie is exported the rate of discount increases, credit contracts, and distrust spreads. The Bank of England rate of discount steadily advanced from 5 per cent. July 16 to 10 per cent. November 9, 1857, and this financial crisis abruptly ended the period of industrial prosperity. There had been a very gradual lowering of wages from 1854 to 1857, but in sympathy with the decline in the price of food, and the adverse financial condition of the country, there was a fall of about 25 per cent. in wages during 1858. Notwithstanding the fact that almost every industry in the United Kingdom was severely affected by the depression which followed the financial panic of 1857, railroad construction was not materially curtailed, the comparatively low prices of labor and materials which ruled from 1853 to 1864 being a great incentive to continued construction. The following table shows the miles of railroad opened in the United Kingdom in each year from January 1, 1853, to December 31, 1864, inclusive, also the amount of paid-up capital invested in railroads during this period, and the gross amounts of paid-up capital on the respective dates: