Economists make a distinction between panics, crises, and depressions. An industrial or financial crisis reaches its peak in a PANIC, when commodity and security prices fall sharply. The panic is usually followed by a period of depressed activity and readjustment, until confidence is restored and business again reaches a normal level. Almost invariably a crisis is preceded by a period of abnormally high activity, when prosperity is accompanied by inflated prices of commodities, of securities, and of real estate. The earlier crises or panics were mostly the result of European difficulties, and were not so severe or widespread in the U.S. In 1793 the unexpected declaration of war between France and England was followed by troubles for American shipping, and caused a period of decline. Again, after 1802, the peace of Amiens was followed by maritime prosperity, to be ended abruptly by the Embargo and Non-Importation troubles in 1807 and 1808. The War of 1812 brought industry in the U.S. to a low point, from which it recovered rapidly, for several years, only to suffer a slump in the years 1819-22. The first major panic and crisis came in 1837.
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| Politician: I'll stop your horse, sir. Bank Director: Do it then, like a good fellow, but take care; see what I got for trying to stop him in my way. |
