Kansas, the autumn months had been very rich in events, and what had happened was not calculated to strengthen the position of the party.

In entering on the duties of his office Buchanan had unhesitatingly left the president of the Union so far behind the partisan that he had used in his inaugural address a haughty tone which accorded badly with the actual state of things. Notwithstanding the many electoral victories the party had to record, not the faintest echo of this tone was now to be heard in his annual message. It began with a funereal jeremiad over the "deplorable" economic condition to which the country had been reduced, in a night, so to speak, notwithstanding its unbounded natural wealth and its rich harvests. The economic state of the Union, indeed, presented the picture of a luxurious country whose blossoming splendor and wealth of fruit had been suddenly ruined by a terrible and disastrous hailstorm. The sun, indeed, is wont to bid many a prostrate blade to rise again, and the devastation is generally not as great as is thought at first. That this case would be no exception to the rule was so certain that Buchanan rightly expressed the fear that rapidly returning prosperity would too soon make the people forget the lessons bitter experience had just taught them. But the probability of the realization of this fear must have been all the greater, the more absolutely and generally the people approved the view of the president, that the present economic crisis in contrast with all previous ones which were traceable to the co-operation of various causes-resulted "solely from an extravagant and vicious system of paper currency and bank credits." It was indisputable that this system could not be too severely condemned, and that it occupied the first place among the direct causes of the catastrophe. But that

the evil effects of the bad system had grown to such enormous dimensions and cast their roots so deep could be accounted for only by causes much more universal and of much earlier date. It was evident, in the first place, that the "crash" was by no means confined to the United States. The "crash" occurred in the United States first, and was the immediate impulse to the production of the entirely similar and, in part, no less violent commercial crisis in Europe; but the latter was not produced by it; it had its origin in the same general causes. In the crisis of 1857 the dark side of rapid and increasing consolidation, by the modern methods of trade and machine industry, of the national, economic life of civilized nations, into one great world-economy, became clearly manifest for the first time.

The transformation and new-formation of the economic life of Europe, in the sixteenth century, became so profound and was so rapidly accomplished, in comparatively so short a time, because the sudden and bountiful flow of silver from Spanish America was allied with the progressive derangement and change in the great commercial highways of the world between the Orient and Occident, which were a consequence of the sea route to India. The influence which the rapid increase of the production of gold exercised, since 1849, was certainly neither so great nor exactly the same as the former, but the two were essentially similar events; other and deep-rooted causes there cheaper ways of transportation and here new means of trade and production caused a new development which must continue uninterruptedly, but whose intensity is greatly added to and its tempo considerably accelerated by the rapid increase of the precious metals.

According to Buchanan's message, the gold yield of

California alone, during the last eight years, amounted to $400,000,000. Since 1851, the gold diggers in Australia, likewise, were numbered by thousands. According to Evans, the total annual production of £7,000,000-£8,000,000 in the year 1849 rose to £34,000,000–£35,000,000 in the years 1853-1857.1 Colossal as these figures are, one would remain far behind the facts, if, from them alone, one drew a direct inference as to the intensity of the impulse given to the whole economic life of the western civilized world, and especially of its leading countries, by this extraordinary increase of gold. On the firm basis of the precious metal, credit paper of every conceivable kind towered into a pyramid of giddy height. The demands made on capital by the utilization of steampower were so enormous that the flow of gold would not have overrun the bounds of a healthy economic development; nay, it even could not, by a great deal, have satisfied real wants. A large field of prosperous activity still remained to the modern system of credit. But it was more and more lost sight of, that, even in the age of steam, time must remain an essential factor in every process of development; and, discounting the future by decades, stirred the credit-fire under the boiler to such a heat that an explosion was inevitable. That conscious swindling, in this economic carnival, played a part is selfevident. It was not of decisive importance, however. The mischief had its source in the ignoring of the two facts that production may surpass the capacity for consumption, and that a business enterprise to be warranted should not only be desirable in itself, and become at some time or another undoubtedly remunerative, but must answer an already existing want, or at least be able probably to create such a want within a reasonable time.

1 The History of the Commercial Crisis of 1857-1858, pp. 27-29.

AN ECONOMIC REVOLUTION.

101

The United States would necessarily reap greater advantages than any other country from this co-operation of the new technic achievements with the sudden increase of gold, but, for the very same reasons, the right limits would necessarily be earliest and furthest overstepped in the United States. The largest part of the new treasures was dug out of its soil, and promised the quickest and greatest multiplication if intrusted to it again in the form of economic enterprises. Circumstances had made the desire of gain, skill in acquisition and a spirit of bold and venturesome enterprise the domineering and most striking traits of the national character; and the natural resources of the immense country had just been disclosed sufficiently to show clearly the impossibility of forming an idea now of what its economic greatness would one day be. Nowhere was it so difficult as here always to bear in mind that it is only in fairy-land that one can charm what he likes into existence out of nothing, but that real life knows only development, and that rapid as that development may be, the wishes and endeavors of individuals always greatly exceed the extreme limits of velocity set in the life of nations by the nature of things, to the possibility of development. Here scarcely an undertaking could be imagined which did not appear remunerative, if one only put the time in which it would be remunerative correctly into the calculation. But in this respect precisely, sober heads might too easily make serious miscalculations, because one was left entirely in the lurch by all the previous experience of mankind. Machines driven by steam had accelerated the material development of the whole civilized world, in a way of which earlier generations were able to form no idea. whatever. Even those who, now, not only saw the change going on before their eyes, and daily felt its ef

fects, direct and indirect, in a hundred ways, but who were active factors in it, were like swimmers in a powerful stream; even the weak and unaccustomed did not sink as easily as in shallow, stagnant water, but only the strong and skilful remained masters of their movements; the multitude rushed with it whithersoever it carried them with irresistible force. All, indeed, under the pressure of necessity, learned more or less well to reckon with the small part of the new facts which affected them most immediately; but even the clearest heads were not yet able to get a lucid and exact picture of the phenomena in their entirety, not only because the rapidity of the development was so enormously accelerated, but also because, in many essential respects, a far-reaching transformation of the entire organization of society began to be accomplished with the change in the conditions of production and trade. But in the United States the impulse was strongest and the resistance of friction weakest. Here there was no history of many centuries, with its social and political traditions, customs and institutions, to maintain a relative stability in the material circumstances and in the sentiments, thought and will of the people such as exists in Europe, and like a dam to keep the new economic era from deluging the land with the suddenness and violence of a cataclysm. Everything was in process of a growth of unparalleled extent and intensity. As the water must run down the valley until it meets the basin of a lake or finds its way to the sea, the settlement of the west had to progress unceasingly until civilization had taken possession of the continent from ocean. to ocean. The treasures created by the quiet labor of nature, during innumerable myriads of years, and yet untouched by man, had to be garnered up. The treasurediggers who annually pressed upon their predecessors