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Governor Henry M. Hoyt, "The Causes of the Panic of 1873," from his first inaugural address, 1879.

"The question uppermost in the mind of the country relates to the revival of business. The last five years will be memorable in our national history as a period of industrial depression, and consequent social distress. These five years have disclosed the causes of our troubles, and their experience should lead us up to the true methods of recovery. They will be found to lie in the moral forces of society, and not in legislative enactments or executive interference. I shall offer you no discourse upon the financial theories which have vexed us during these years. We have come, with great unanimity, to recognize the actual facts which lie at the bottom of this whole subject. A generation of younger business men had come upon the stage at a period of excitement, following the war, and of speculation, fairly reaching the degree of gambling. The vastly expanded credit, which men gave, one to another, in all forms of business, the result of an inflated currency, led to unnatural values, as measured in such currency. The temptations for contracting debts were great, and not easily resisted. We spent more than we earned; we forgot that 'the extravagance of the rich was not the gain of the poor' - that 'profusion and waste were not for the good of trade' - and that everything consumed and destroyed was so much lost in the labor which had produced it. Circulating capital was locked up in fixed property. The wages-fund was impaired. We abandoned the maxims of experience and the simplest truths in political economy. We measured values by a standard not common to the civilized world with whom we were in daily and necessary commercial intercourse. We failed to remember that the issue of paper money, whether green backs, national bank notes, bills of exchange, or checks, did not add a dollar to the wealth of the nation, and that while indispensable as a circulating medium, it could only have a representative value. We did not advert sufficiently to the present physical and financial fact, that by the tacit agreement of the nations, the precious metals are the only standard of value, the only ' current money with the merchant.' We did not seem to know that the instincts of a practical, shrewd, and enterprising nation of business men must finally and forever reject the use of an irredeemable currency. At the last, pay day came, as it always must, and bankruptcy came with it, as it always will under like causes. Our capacity to consume was destroyed. The producer was without buyers for his merchandise. Debtor and creditor alike had to pause for the day of settlement. A system of economy and saving was forced upon us, and it was the one process to restore us. It cost us a hard struggle, self-denial and suffering, but the result was health, moral and financial. The virtues of sobriety and industry, renewed in practice, give us discipline and strength. They widened and deepened our manhood and womanhood. Discarding the cheap devices of mere theorists, the dishonest proposals of mere agitators, and the charlatanry of a political economy undertook to teach us how to create wealth without labor, we are now ready to go forward. Henceforth we are to produce and exchange actual things, and not gamble in merely fictitious values. Resumption has taken place, confidence is restored, and business will flow in healthy channels so long as values are stable and their measure honest. Pennsylvania is an empire in its resources, and her people in the past have developed and used them only by the virtues of labor and economy. For the future we must accept the same conditions."



Credit: Pennsylvania State Archives
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