trade and finance are built upon credit—that is, confidence in the fulfilment of obligations, upon security of tenure in titles, upon the enforcement of contract according to law—and that if credit is seriously shaken, there is not a section of the elaborate fabric which is not affected.
The more our commercial system gains in complication, the more does the common prosperity of all of us come to depend upon the reliance which can be placed on the due performance of all contracts. This is the real basis of "prestige," national and individual; circumstances stronger than ourselves are pushing us, despite what the cynical critics of our commercial civilization may say, towards the unvarying observance of this simple ideal. When we drop back from it—and such relapses occur as we should expect them to occur, especially in those societies which have just emerged from a more or less primitive state—punishment is generally swift and sure.
What was the real origin of the bank crisis of 1907 in the United States, which had for American business men such disastrous consequences? It was the loss by American financiers and American bankers of the confidence of the American public. At bottom there was no other reason. One talks of cash reserves and currency errors; but London, which does the banking of the universe, works on the smallest cash reserve