Now at the time of a crisis a general contraction of credit occurs, and all borrowers with maturing obligations are faced with bankruptcy.

The effort of the business man at such a time is not to make a positive profit, but to save what he can from the threatened wreck.

The demand for short-time loans, therefore, in such times of stress, fluctuates rapidly, and exceedingly high interest rates prevail in these loan markets for a few days or a few weeks, rates which have only a remote relationship with the usual capitalization of most agents.
The distress of the business man is magnified by the fact that it is just at such times that both the equipment he has bought and the products he has made become temporarily almost unsaleable at prices as high as he paid for them when he bought them with the borrowed money.
He may know that prices will soon be higher, but he cannot wait.
Various courses are open to him in this emergency; he may borrow the money at a very high rate of interest, holding the goods for better prices; or he may sell the goods under the unfavorable conditions; or he may sell other capital such as stocks and bonds.

The end sought is the same--to get ready money; and the methods are not essentially unlike--the exchange of greater future values for smaller present values.

The sacrifice sale thus reveals the merchant's high estimate of present goods in the form of money.