Dictionary.net

The crisis produced when the bounds which separate overtrading and rash speculation from legitimate commercial risk have been passed. When bankers contract their accommodation, the discounter draws on the resources of the Bank of England, which attempts to check such applications by raising its rate of discount. If the rate be raised to a height which causes a collapse of credit, large bankruptcies follow, and the result is a panic ; traders of undoubted solvency, and possessed of a capital more than able to meet all claims, being often involved in the calamity.