The nature of capital and income

Bibliographic data

Monograph

Identifikator:: 102659555X

URN:: urn:nbn:de:zbw-retromon-82920

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The nature of capital and income

Place of publication:: New York

Publisher:: The Macmillan Company

Year of publication:: 1923

Scope:: XXI, 427 Seiten

Digitisation:: 2019

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. Capital and income

Collection:: Economics Books

Ld Sec. 21] THE RISK ELEMENT 297 transmitted to thousands. A great mob of easily led in- vestors, eagerly searching for “straight tips” which may bring instant wealth, make their mistake in common, and when the mistake is disastrous they try, en masse, to escape. A sudden rush of all the passengers on a ferry-boat to one side will produce a “list ”’ in the boat’s position, and some- times cause it to capsize, though the independent move- ment of the individual passengers will seldom or never produce disaster. So also the sudden general realiza- tion of unforeseen danger on the part of the investing public may submerge the craft of credit and those whom it has hitherto borne along in safety. In short, a general crisis bears the relation to individual bankruptcies which a general conflagration bears to individual fires. The key to the study of either crises or conflagrations is the exist- ence, in place of independent hazards, of interdependent ones. So far as conflagrations are concerned the prin- ciple of interdependence is distinctly recognized by stu- dents of fire insurance, and in consequence, each company strives to keep its own fire risks independent of each other, by not having too many in the same locality; but so far as crises are concerned, the principle has not yet been sufficiently emphasized by students of economic history. The same principle applies to the phenomenon of a run on a bank. The opinions of the bank’s solvency are not formed independently but interdependently. A year or more ago the newspapers reported that, a policeman and a crowd of people being collected on the steps of one of the Wilkes-Barre savings banks to escape the rain, two Hungarian depositors who were passing jumped to the conclusion that the bank had been attacked by burglars, and circulated the disturbing news in the Hungarian colony, with the result that when the bank opened for busi- ness many depositors made a run upon jt.o ol a = We see, then, that where speculation is imitative, it is dangerous alike to those who engage in it and to the public.

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