Advance apologies for being two years late and perhaps a bit sour for today’s ebullient mood…
But a copy of “A Brief Popular Account of all the Financial Panics and Commercial Revulsions in the United States, From 1690 to 1857: with a More Particular History of the Two Great Revulsions of 1837 and 1857” found my hands in recent days. (Google eBook here)
Written at a time when the United States’ “business system” was laboring under “difficulties” (i.e., 1857), the author endeavors to uncover “the causes of financial revulsions” and distinguish them from financial panics, with the ultimate aim of “prevent[ing] the recurrence of similar periods of panic and disaster.”
Whereas a panic “is a pressure in the money market without adequate cause,” a revulsion “is pressure with adequate cause, and that cause invariably is a previous Destruction of Value” (1).
In other words, “a national Revulsion is a national pay day. The nation has been drawing on the Future, and the Future dishonors the draft. The forcing process is then applied, widespread ruin is the result, and long period of paralysis ensues.”
A simple insight and a memorable analogy–business transactions flourish or cease, largely based on the beliefs we hold about the future. Most of the time, our beliefs imperceptibly wax and wane; of course, when they change in an instant, we write a book about it.
Wide Moat Investing 