There is little difference in the effect of one accident and another upon our credit system.

We must be prepared for all of them, and we must prepare for all of them in the same way--by keeping a large cash reserve.
But it is of great importance to point out that our industrial organisation is liable not only to irregular external accidents, but likewise to regular internal changes; that these changes make our credit system much more delicate at some times than at others; and that it is the recurrence of these periodical seasons of delicacy which has given rise to the notion that panics come according to a fixed rule, that every ten years or so we must have one of them.
Most persons who begin to think of the subject are puzzled on the threshold.

They hear much of 'good times' and 'bad times,' meaning by 'good' times in which nearly everyone is very well off, and by 'bad' times in which nearly everyone is comparatively ill off.

And at first it is natural to ask why should everybody, or almost everybody, be well off together?
Why should there be any great tides of industry, with large diffused profit by way of flow, and large diffused want of profit, or loss, by way of ebb?
The main answer is hardly given distinctly in our common books of political economy.
These books do not tell you what is the fund out of which large general profits are paid in good times, nor do they ex plain why that fund is not available for the same purpose in bad times.

Our current political economy does not sufficiently take account of time as an element in trade operations; but as soon as the division of labour has once established itself in a community, two principles at once begin to be important, of which time is the very essence.