to the forethought of the bank in providing | herself with an addition to her bullion by a loan, her position was so strong at the critical moment as to prevent the occurrence of any general alarm. Men did not rush to supply themselves with money one day, in fear that they might find it difficult to procure it on the following day, but attended to their businesses without excessive anxiety as to the supplies of capital. Caution prevailed, but not panic, and the distinction is a very clear one.1

We

As to the effects of crises and panics, there is perhaps but little to be said. It has been already pointed out that trading people soon recover their spirits and their confidence when the panic is once well over. So it comes to pass that prices which, before and during panics, have been in some instances severely depressed, quickly rise to their former level, and men cease to consider the money market in their dealings, being no longer afraid of monetary trouble as to the discount of bills, or otherwise. The statistics of our trade seem to confirm this view. Spite of panics, our aggregate trade has gone on increasing, with fluctuations no doubt, but not with fluctuations which seem to point to panic as the great disturber of our commerce. have had divers "depressions" in trade, often very difficult to account for, and they are generally followed by improvement and even speculation, often little expected, and arising no one knows why. But certainly, in recent years, neither depressions nor elevations can be traced to the effects of panic. Vast changes have taken place, thanks to "many inventions," and prices have fluctuated beyond all precedent without any very marked oscillations in credit. The supply of loanable capital since 1866 has been, on an average of years, ample, and this has no doubt lessened the tendency to panic amongst traders generally. But there have been these great fluctuations although the money market has been so stable, and this recent experience tends to confirm the opinion

1 The contrast of the three great crises with reference to the reserves of the bank in its banking department, is shown by the following Table.

465

that we should not attribute much permanent effect to the panics of former periods. No one is likely to forget the temporary effects of a panic if he has lived through one, but, as to permanent results, panics are probably not important.

Certainly the progress of the United States has not been materially hindered by their panic troubles, although they have been, like other American disasters, on a "magnificent" scale. 1873 and 1884 will not soon be forgotten in the States. The effects of 1873 are said to have been felt for five years, just as were the effects of 1837, but the country made extraordinary progress throughout, and seems now to be moving on more rapidly than ever. If there was a check, it is not very easy to say where it is to be seen. Probably the civil war had far more to do with causing such a check, if there were one, than even the panic of 1873.

It is interesting to observe that countries where panics are rare, as France and Germany, do not appear to make greater commercial progress than England and the States, where panics have been, comparatively, not infrequent.

In fact, in countries of great enterprise, and where credit attains a great development, it is obvious that there must be a danger of undue expansion followed by excessive alarms. Such people use up their means too closely, no doubt, but, on the other hand, they do far more business and acquire far larger profits from their enterprise than can be secured by people who are no doubt more prudent, but are less energetic. The very prudent nations escape panic, but they at the same time must accept a smaller return on their capital. They no doubt keep larger reserves than less cautious traders, but such reserves are expensive to maintain, and it may be well doubted whether in the long run more is not gained by the more enterprising peoples, even though they may subject themselves to occasional alarms of a serious and painful nature.

The general result seems to be that, however remarkable the phenomena of crises may be, they are not of great permanent importance, nor are they to be regarded as an inevitable consequence of an active and enterprising conduct of business. They are really spasmodic symptoms, and not symptoms of any serious and continuous disease which has to be brought under some legislative remedy. They illustrate the results of a temporary suspension of the laws which regulate the ordinary currency of a nation when confidence between man and man is lost, but events so exceptional defy regulation, and the cure for such evils will probably be found rather in the practical good sense of men of business than in any expedients invented by ingenious law makers.

It has, however, been suggested that some kinds of legislation may aggravate panic; as, for instance, the law of the United States of 2 H

466

America as to bank reserves, and our own law as to the issues of the Bank of England. We certainly think that the experiences of 1847, 1857 and 1866 (to say nothing of 1890), show that such a law as ours, which gives no power of expansion to the bank, as such, no matter how grave may be the emergency, is one of very doubtful wisdom. It would, we believe, be far more reasonable to adopt something like the plan adopted by the German Bank law of 1875, whereby the bank can issue beyond the usual limit on paying at the rate of per cent per annum to the government on all extraordinary issue, as a sort of penalty-an arrangement which ensures a reasonable charge to the public on such extra issues, and thus compels contraction of obligations by a sort of automatic process. Panic is thus avoided, while a wholesome warning is extended to the trading world, and the money market is brought under the rule of law, and is not, as with us, dependent in the worst times on the caprice of a Chancellor of the Exchequer, who may be a man ignorant of the dangers and difficulties of commerce, or who only knows them vaguely, as set forth in the books of mere theorists. W. F.

CRISES, PERIODICITY OF. In the world of physics the idea of "periodicity" of "cycles" is familiar. The twenty-eight years period of the sun is a simple illustration of a regular cycle.

The recurrence of commercial crises over a century, at intervals of ten or twelve years, has been frequently noticed by economists, and the suggestion made that possibly the physical law which, every ten or eleven years, brings good vintage years to Europe and droughts to India, may control the commercial fortunes of men. An enumeration of recorded years of acute commercial distress-1753, 1763, 1772-73, 1783, 1793, 1815, 1825, 1836-39, 1847, 1857, 1866, 1878, 1890-suggests periodicity. During these 140 years trade and banking have been carried on in war and peace, with a silver standard, with a gold standard, under a suspension of cash payments, in times of plenty, and in times of want; but the fatal years have come round with a considerable approach to cyclical regularity. While admitting that the commercial crises to which this generation has been exposed have been less acute than those which afflicted the close of the last and the beginning of the present century, the fact of their recurrence in something like periodicity remains a fact which it is easier to record than to explain. Space only permits a statement of some of the more important crises, with a reference to works from which fuller information may be derived.

To commence with the beginning of this century, the question of the periodicity of cycles is discussed by Henry Thornton, whose wellknown sagacity caused him to be greatly consulted on financial questions by William Pitt,

in his work, An Enquiry into the Effects of the Paper Credit of Great Britain, 1802. Thornton speaks of the crisis of 1793 as the first material one of the kind which had for a long time happened. He points out that the panic greatly abated, and mercantile credit began to be restored, so soon as the intention to issue exchequer bills was announced. He also mentions as worthy of notice that, though the failures had originated in an extraordinary demand for gold, it was not any supply of gold which effected the cure, but the idea of general solvency which was created by the promised issue of exchequer bills (pp. 49-51). He further mentions (p. 152) that the fluctuation in the balance of trade with foreign countries which we experience had also become larger than heretofore, in consequence of the greater extent of our population and commerce. "The scale of all things having increased, the scale of this balance may have increased also in a degree unexpected by the bank."

Tooke, in his History of Prices, vol. i. p. 176, gives a clear account of the progress of events leading up to the disasters of 1793. Tooke states that immediately preceding that crisis a great revulsion and derangement of commercial credit had occurred, due to a pre-existing and undue extension of credit and paper circulation.

In vol. ii. p. 5, in discussing the causes which led to the discredit of 1816, he explains that the speculation in exported commodities, which had its first rise in the prospect of the downfall of the power of Napoleon I. in Europe, reached its height in the spring of 1814, and that the tardy discovery that the effective demand of the continent had been over-rated precipitated the crisis of 1815-16.

The causes of the crisis of 1825 are discussed by Tooke (vol. ii. pp. 149-159). In 1822, the British 5 per cent had been reduced to 4 per cent; this had led to a general restlessness among those whose incomes were reduced, and a readiness to invest in foreign loans, the principal borrowing states being South American. The South American loans ultimately entailed a loss of nearly the whole of the sums subscribed. The exaggerated views of coming prosperity allowed full scope for an undue enlargement and abuse of credit.

The panic of 1836 is fully described by Tooke (vol. ii. p. 274). It is noticeable that whereas the disasters in 1825 were principally due to foreign speculations, those of 1835 were due to home speculations, an undue extension of credit arising from gambling in shares of railways, joint-stock banks, etc.

In vol. iv., speaking of the crisis of 1847, Tooke says: "In August 1845 the specula. tion assumed all the apparent characteristics of a mania. Symptoms of an approaching revulsion were, however, then clearly discernible."

It is noteworthy that the gradual develop.

ment and overgrowth of credit indicated by Langton, Jevons, and Mills, are clearly stated by Tooke.

A variety of causes brought about the serious crash in 1847-railway calls in excess of the means of the country, high price of corn, etc.; but the evidence of a culmination of previously developing causes is as clear on this occasion as on the others which have preceded and followed that date.

Mr. William Langton, of Manchester, speaking of periodicity says (Transactions of the Manchester Statistical Society, December 1857): "These disturbances are the accompaniment of another wave which appears to have a decennial period, and in the generation of which moral causes have no doubt an important part. The prompting cause of these convulsive movements appears to lie in the inordinate use of credit."

The doctrine of periodicity was held strongly by Professor Jevons, who carried his investigations into the subject over a great length of time, and with his noted ability. In a communication on the study of periodic fluctuations, British Association 1862 (Cambridge), Jevons says, "There is a periodic tendency to commercial distress and difficulty during these months (October and November). It is when great irregular fluctuations aggravate this dis tress, as in the years 1836-39, 1847, 1857, that disastrous breaches of commercial credit occur." In elucidation of Jevons's allusion to "great irregular fluctuations," a quotation from his paper on "The frequent pressure in the money market," Journal of the Statistical Society of London, 1866, vol. xxix. p. 235, may be useful. "These changes arise from deficient or excessive harvests, from sudden changes of supply or demand in any of our great staple articles, from periods of excessive investment or speculation, from wars and political disturbances, or other fortuitous occurrences which we cannot calculate

upon, and allow for." Still further developing the notion of periodicity, Jevons (Political Economy, 1878, Science Primers) says, "Good vintage years on the continent of Europe, and drougnts in India, recur every ten or eleven years, and it seems probable that commercial crises are connected with a periodic variation of weather affecting all parts of the earth, and probably arising from increased waves of heat received from the sun at average intervals of ten years and a fraction."

The influence of solar radiation, and the possibility of a relation between the sun-spot period and the price of corn and other events, formed a subject of inquiry suited to the exact and scientific mind of Jevons. For this the reader may be referred to his Investigations in Currency and Finance, in which his detached papers are collected, and Letters and Journal of

W. S. Jevons.

The invention of the term "credit cycle" may

467

be traced to Mr. John Mills of Manchester (Paper on "Credit Cycles and the Origin of Commercial Panics," Transactions of the Manchester Statistical Society, December 1867). Mr. Mills discussed the pathology of crises; and after alluding to "the occult forces which swell or diminish the volume of transactions through a procession of years," thus spoke of periodicity. "It is an unquestionable fact that about every ten years there occurs a vast and sudden increase of demand in the loan market followed by a great revulsion and temporary destruction of credit.

"The periodicity of commercial crises is at any rate a fact. The decades interposed between the great commercial crises are normal cycles of development of credit under certain existing conditions; that during each of these decades commercial credit runs through the mutations of a life, having its infancy, growth to maturity, diseased overgrowth, and death by collapse."

Mr. Mills enters into a minute examination of the life-history of a credit cycle in a communication made to the Manchester Statistical Society, Transactions 1871. Four years earlier, in his paper read before the Manchester Statistical Society in 1867, Mr. Mills had discussed the possibility of finding remedies for the periodic recurrence of commercial panics, in seeking for which he laid stress on the increased spread of information. Mr. Mills's anticipation appears to have been verified in some measure by the course of events.

[Max Wirth, Geschichte der Handelskrisen, 1883.-Clément Juglar, Des Crises Commerciales et de leur retour périodique en France, en Angleterre, et aux États-Unis, 1889.]

G. H. P.

CROMBIE, ALEXANDER (1762-1842), born at Aberdeen, was for some time Presbyterian minister, and then schoolmaster, in London. He was known for his writings on etymology and syntax, especially for his Gymnasium, a book of exercises in Latin composition; but he wrote also on theology, philosophy, and political economy. Apart from his books, he seems to have had a wide personal influence. Major Torrens dedicated to Dr. Crombie his Essay on Money and Paper Currency (1812), and speaks of him with great deference in the Essay on the External Corn Trade (1815). 1813 Crombie published, in the Pamphleteer (vol. x.) a Letter to David Ricardo containing an analysis of his pamphlet on the Depreciation of Bank Notes; but Ricardo did not regard him as a perfectly faithful exponent of his views. Crombie's Letters on the Agricultural Interest (1816) would seem to have been the last of his economical writings.

In

468

cian and economist, was born at Sengwarden, in the territory of Kniphausen. He studied theology at Halle, and was for some time instructor of the hereditary prince of Dessau. From 1787 to 1831, he filled the chair of statistics and cameral science at Giessen. He is called by Roscher the "Haupt-theoretiker des Rheinbundes," having persistently defended that confederation, and maintained it to be "a liberation for Germany, alike beneficent to rulers and to the people." He expected that under its influence a better national economy would be introduced, founded on the principles of Adam Smith, "as improved by Soden, Hufeland and Jakob." In Deutschland's Krise und Errettung im April und Mai 1813, which appeared immediately after the battle of Lützen, just when the national rising against Napoleon was coming to a head, he attempted to show by statistical reasonings the madness of opposing the "great hero," as certain to lead to the ruin of the fatherland. This publication raised a storm which was only partially appeased by his treatise Ueber Deutschland's und Europa's Staats- und National- Interesse bei und nach dem Congresse zu Wien, 1814. His other principal works were, Europa's Produkte, 1782; Grösse und Bevölkerung der Europ. Staaten, 1785; Ueber die Culturverhältnisse der Europ. Staaten, 1792; and Geographische Statistische Darstellung der Staatskräfte von den sämmtlichen zu dem deutschen Staatenbunde gehörigen Ländern, 1820-1828. He translated into German (1795) the treatise entitled Governo della Toscana sotto il regno di Leopoldo II., 1790, which was the work of that prince himself. Crome undertook the translation by Leopold's desire, and, in the comments which he added, he appears as an advocate of an enlightened and reforming absolutism, such as that of which the book is a history. He was also author of an autobiography. (See Roscher, Geschichte der NationalOekon. in Deutschland, p. 649). J. K. I.

CROSS DRAWING. Another term for the making of an ACCOMMODATION BILL (q.v.) When such an instrument has been wilfully put into circulation by a fraudulent trader, as if founded on a real transaction, the nicest penetration and judgment of experienced business men, such as bill-brokers and bankers, will sometimes be put to the test to discover the true origin and character of the instrument. Bills of this description are sometimes termed "Wind Bills," or 'Kites," from their want of substantial basis.

[Hutchison, The Practice of Banking, vol. i. p. 125.]

CROSSED CHEQUE. The crossing of cheques is now regulated by §§ 76 to 82 of the Bills of Exchange Act 1882 (see CHEQUES, LAW OF).

CROWN DEBTS. Debts due from a subject to the crown have priority over all other debts,

and may be recovered by the summary process known as an extent. Every person who has money belonging to the crown is a crown debtor. Formerly, in order to enjoy priority, a crown debt required to be a debt of record or to be secured by deed, but since the 32 & 33 Vict. c. 46, which abolished the priority of specialty debts, any crown debt takes priority to all others. Crown debts do not affect land until a writ of execution has been issued and registered.

[Elphinstone and Clark's Law of Judgments and Searches, London, 1887.-Prerogatives of the Crown, by J. Chitty, London, 1820.]

469

CROWN LANDS. In Saxon times the king owned three kinds of property in land: (1) private estate which he could dispose of by will; (2) demesne lands that could be alienated only by consent of the witan; (3) certain rights over his folkland. The folkland tended to become merged in the royal demesne (Stubbs's Constitutional History, i. ch. vi. § 59; c. vii. § 75), a process that was completed by the Norman Conquest (lb. ch. ix. § 95).

An

From Domesday we learn that the income from royal lands amounted to £20,000 (Pearson's Early and Middle Ages, i. 385). important portion of the royal demesne consisted of forests which were exempt from the ordinary law, and subject to royal regulations of great severity (Pearson's Hist. Maps, pp. 4448; Ellis's Intr. i. 103-116). The crown was supposed to defray the expenses of the household, of the administration of justice, and of the military forces. Though the crown revenue was greatly diminished by the loss of the French possessions, it was increased by

marriages and by the dissolution of the monasteries. The alienation of the crown lands to favourites led to the attempts of the barons to limit the king's power of giving (Stubbs, ch. xvii. p. 284), and to the passing of various statutes with the same object.

By the 1 Anne, c. 1, §§ 5-8; 10 Geo. IV. c. 50, § 127; and 1 & 2 Vict. c. 2, §§ 1, 2, the right of alienation was limited to leases for lives or a term of years. By the last-mentioned act the crown surrendered its hereditary revenues (see Rogers's Economic Interpretation of History, Oxford, 1888, ch. xix.) The management of the crown lands is entrusted to the Commissioners of Woods, and is governed by a series of statutes enumerated in The Chronological Table and Index of the Statutes, 10th ed., London, 1887. See also The Landed Interest, ch. x., by J. Caird, London, 1878.

The crown, it is said (Chitty, Prerogatives of the Crown, ch. xi., London, 1820), is owner of the foreshore between high and low water mark in ordinary tides, unless a grant in private ownership can be proved, but Moore, in his History of the Foreshore, London, 1888, maintains that the theory of the crown's ownership of the jus privatum of the foreshore did not exist until the reign of Elizabeth, and that its origin is due to successful attempts to extend the prerogative. See also

Hall's Rights of the Crown and the Privileges of the Subject in the Seashore, by R. L. Loveland, 2nd ed., London. Some writers also maintain that the crown owns all land under the marginal seas to the distance of a marine league, a view taken by a minority of the court in R. v. Keyn, L.R., 2 Ex., D. 63; but others deny such a right, conceding only a right of jurisdiction (see Hall's International Law, Oxford, 1880).

Forfeited estates formerly vested in the crown (see 33 & 34 Vict. c. 23), and the crown is owner of considerable private property in land. In theory, state lands in our colonies are vested in the crown, but control over them is vested in the colonial legislatures. All crown lands, including all private lands not disposed of, descend with the crown.

J. E. C. M.

CRUSADES, ECONOMIC EFFECTS OF. The crusades cover a long period of time, from the 11th to the 13th century, and their early triumphs were followed by complete and disastrous failure. This long duel between the west and the east, between Christianity and Islam, exercised the most profound influence upon Europe: upon the position of popes, emperors, and kings; upon the relations between church and state; upon the progress of literature, education, and art. To the crusades are due the breaking up of classes and the rise of nations. No less marked was their influence upon the economic conditions of medieval Europe. The fall of the western empire and the triumph of the Teutonic invaders had resulted in the complete separation of the east from the west, and in the annihilation of that maritime commerce which had been first inaugurated by the Phoenicians and developed by the Greeks. So completely had naval enterprise been neglected that the early crusaders had no alternative but to march overland to Constantinople and to cross the Hellespont into Asia.

The first result of the crusades was to revive maritime trade in those countries whose

geographical position fitted them for this, especially in the Italian coast towns and such cities as Marseilles and Barcelona. By the 13th century the Mediterranean had become once more the centre of a world-embracing