From the prefaces to the French editions of 1860 and of 1889, and other
introductory matter, I have condensed his theory as follows:

A Crisis or Panic may be defined as a stoppage of the rise of prices:
that is to say, the period when new buyers are not to be found. It is
always accompanied by a reactionary movement in prices.

A panic may be broadly stated as due to overtrading, which causes
general business to need more than the available capital, thus producing
general lack of credit. Its precipitating causes are broadly anything
leading to overtrading:

In the United States they may be classed as follows:

I. PANICS OF CIRCULATION, as in 1857, when the steadily increased
circulation, which had almost doubled in nine years, had rendered it
very easy to grant excessive discounts and loans, which had thus
over-stimulated business, so that the above relapse occurred; or, we may
imagine the converse case, leading to a quicker and even greater
disaster: a sudden and proportionate shrinkage of circulation, which, of
course, would have fatally cut down loans and discounts, and so
precipitated general ruin.

2. A PANIC OF CREDIT, as in 1866, when the failure of Overend, Gurney, &
Co. rendered the whole business world over cautious, and led to a
universal shrinkage of credit. [I take the liberty of adding that it
seems evident to me that such a danger must soon confront us in the
United States, unless our Silver Law is changed, because of a finally
inevitable distrust of the government's ability to keep 67-cent silver
dollars on an equality with 100-cent gold dollars.]