This article appeared in the September 25, 1873 edition of The Nation.

On Wall Street, the Panic of 1873 was more like brute terror.

It is impossible to see, much less experience, a financial panic without an almost appalling consciousness that a new and terrible form of danger and distress has been added in comparatively recent times to the list of those by which human life is menaced or perplexed. Any one who stood on Wall Street, or in the gallery of the Stock Exchange last Thursday, and Friday, and Saturday, and saw the mad terror, we might almost say the brute terror (like that by which a horse is devoured who has a pair of broken shafts hanging to his heels, or a dog flying from a tin saucepan attached to his tail) with which great crowds of men rushed to and fro, trying to get rid of their property, almost begging people to take it from them at any price, could hardly avoid feeling that a new plague had been sent among men, that there was an impalpable, invisible force in the air, robbing them of their wits, of which philosophy had not as yet dreamt. No dog was ever so much alarmed by the clatter of the saucepan as hundreds seemed to be by the possession of really valuable and dividend-paying securities; and no horse was ever more reckless in extricating himself from the debris of a broken carriage than these swarms of acute and shrewd traders in divesting themselves of their possessions. Hundreds must really, to judge by their conduct, have been so confused by terror and anxiety as to be unable to decide whether they desired to have or not have, to be poor or rich. If a Roman or a man of the Middle Ages had been suddenly brought into view of the scene, he would have concluded without hesitation that a ruthless invader was coming down the island; that his advanced guard was momentarily expected; and that anybody found by his forces in possession of Western Union, or Harlem, or Lake Shore, or any other paying stock or bond. would be subjected to cruel tortures, if not put to death. For neither the Roman nor the Medieval could understand a rich man's being terrified by anything but armed violence. Seneca enumerates as the three great sources of anxiety in life the fear of want, of disease, and of oppression by the powerful, and he pronounces the last the greatest. If he had seen Walt Street brokers and bankers last week trying to get rid of stocks and bonds, he could not of course have supposed that they were poor or feared poverty; he would have judged from their physical activity that they were in perfect health, so that he would have been driven to the conclusion that some barbarian host commanded by Sitting Bull or Red Cloud was entering the city, and was breathing out threatenings and slaughter against the owners of personal property. If you had tried to explain to him that there was no conqueror at the gates, that the fear of violence was almost unknown in our lives, that each man in that struggling crowd enjoyed an amount of security against force in all its forms which no Roman Senator could ever count upon, and that the terror be witnessed was caused by precisely the same agency as the flight of an army before it has been beaten, or, in other words, by "panic," be would have gazed at you in incredulous amazement. He would have said that panic in an army was caused by the sudden dissolution of the bonds of discipline, by each soldier's losing his confidence that his comrades and his officers would stand their ground; but those traders, he would have added, are not subject to discipline; they do not belong to an organization of any kind; each buys and sells for himself; he has his property there in that tin box, and if nobody is going to rob him, what is frightening him? Why is he pale and trembling? Why does be run and shout and weep, and ask people to give him a trifle, only a trifle, for all be possesses and let him go?

If you were then to set about explaining to Seneca that the way the god Pan worked confusion in our day in the commercial world was by destroying "credit," you would find yourself brought suddenly face to face with one of the most striking differences between ancient and modern, or, even as we have said, medieval society. The most prominent and necessary accompaniment or incident of property in the ancient world was possession. What a man owned, he held. His wealth was in his farm, or his house, or his granary, or his ships. He could hardly separate the idea of property from that of possession, and the state of society strengthened the association. The frugal man hoarded, and when he was terrified, he buried his money, a practice to which we owe the preservation of the greater portion of the old coins now in our collections. The influence of this sense of insecurity, of the constant fear of invasion or violence, lasted long enough in all Continental countries, as Mr. Bagehot has recently pointed out, to prevent the establishment of banks of issue until very lately. The prospect of war was so constantly in men's minds that no bank could make arrangements for the run which would surely follow the outbreak of hostilities, and, in view of this contingency, nobody would be willing to hold paper promises to pay in lien of gold and silver. It is therefore in England and America, the two countries possessing not only most commercial enterprise, but most security against invasion, that the paper money has come into earliest and widest use. To the paper of the banks have been added the checks and bills of exchange of private individuals, until money proper plays a greatly diminishing part in the operations of commerce. Goods are exchanged and debts paid by a system of balancing claims against claims, which really has almost ceased to rest on money at all. So that a man may be a very rich man in our day, and have really nothing to show for his wealth whatever. You go to his house, and you find nothing but a lot of shabby furniture. The only thing there which Seneca would have called wealth is perhaps his wife's jewels, which would not bring a few thousand dollars. You think his money must be in the bank, but you go there with him and find that all he has there is a page on the ledger bearing his name, with a few figures on it. The bank bills which you see lying about, and which look a little like money are not only not money in the sense Seneca understood the term, but they do not represent over a third of what the bank owes to various people. You go to some safe-deposit vaults, thinking that it is perhaps there he keeps his valuables, but all you find is a mass of papers, signed by Thomas Smith or John Jones, declaring that he is entitled to so many shares of some far-off bank, or that some railroad will pay him a certain sum some thirty years hence. In fact, looked at with Roman eyes, our millionaire seems to be possessed of little or nothing, and likely to be puzzled about his daily bread.

Now, this wonderful change in the character and incidents of property may be said to be the work of the last century, and it may be said to consist in the substitution of an agency wholly moral for an agency wholly material in the work of exchange and distribution. For the giving and receiving of gold and silver, we have substituted neither more nor less than faith in the honesty, and industry, and capacity of nor fellow-men. There is hardly one of us who does not literally live by faith, We lay up fortunes, marry, eat, drink, travel, and bequeath, almost without ever handling a cent; and the best reason which ninety-nine out of every hundred of us can give for feeling secure against want, or having the means of enjoyment or of charity, is not the possession of anything of real value, but his confidence that certain thousands of his fellow-creatures, whom be has never seen, and never expects to see, scattered, it may be, over the civilized world, will keep their promises, and do their daily work with fidelity and efficiency. This faith is every year being made to carry a greater and greater load. The transactions which rest on it increase every year in magnitude and complexity. It has to extend itself every year over a larger portion of the earth's surface, and to include a greater variety of race, and creed, and custom. London, and Paris, and Berlin, and Vienna now tremble when New York is alarmed. We have, in short, to believe every year in a greater and greater number of people, and to depend for our daily bread on the successful working of vast combinations, in which human character is after all the main element.

The consequence is that, when for any reason a shade of doubt comes over men's minds that the combination is not working, that the machine is at some point going to give way, that somebody is not playing his part fairly, the solid ground seems to shake under their feet, and we have some of the phenomena resulting from an earthquake, and among others blind terror. But to any one who understands what this new social force, Credit, is, and the part it plays in human affairs, the wonder is, not that it gives way so seldom, but that it stands so firm; that these hundreds of millions of laborers, artisans, shop-keepers, merchants, bankers, and manufacturers hold so firmly from day to day the countless engagements into which they enter, and that each recurring year the result of the prodigious effort which is now put forth in the civilized world in the work of production, should be distributed with to much accuracy and honesty, and, on the whole, with to much wise adjustment to the value of each man's contributions to civilization.

There is one fact, however, which throws around credit, as around so many others of the influences by which our lives are shaped, a frightful mystery. Its very strength helps to work ruin. The more we believe in our fellow-toilers, and the more they do to warrant our belief, the more we encourage them to work, the more we excite their hopefulness; and out of this hopefulness come "panics" and "crashes." Prosperity breeds credit, and credit stimulates enterprise, and enterprise embarks in labors which, about every ten years in England, and every twenty years in this country, it is found that the world is not ready to pay for. Panics have occurred in England in 1797, 1807, 1817, 1826, 1837, 1847, 1857, and there was very near being a very severe one in 1866. In this country we have had them in 1815, 1836, and 1857, and by panics we do not mean such local whirl-winds as have desolated Wall Street, but widespread commercial crises, affecting all branches of business. This periodicity is ascribed, and with much plausibility, to the fact that inasmuch as panics are the result of certain mental conditions, they recur as soon as the experience of the previous one has lost its influence, or, in other words, as often as a new generation comes into the management of affairs, which is about every ten years in the commercial world both in England and here. The fact that this country seems to he only half as liable to them as England is perhaps due to the fact that the extent of our resources and the greater ratio of increase of population make it much harder to overdo in the work of production here than in England, and to this must be added the greater strength of nerves produced by greater hopefulness. In spite of the enormous abundance of British capital and the rashness of the owners in making investments, there hangs over the London money market a timidity and doubtfulness about the future which is unknown on this side of the water, and which very slight accidents develop into distrust and terror. If this theory be correct, our next great panic will be due about the year 1877, immediately alter the Centennial Exposition. Let us hope, however, that the present slight attack may inspire enough prudence and good sense to ward it off.