Northern Times.
Liverpool, Merseyside, England, 1857-11-13 00:00:00

THE COMMERCIAL CRISIS IN THE UNITED
STATES.

(FROM AN AMERICAN CORRESP NDENT.)
You will have heard before this reaches you, of the
recurrence of one of those overwhelming monetary revul-
sinus necessarily incident to any system of mixed currency.
It has come upon us suddenly, and to most persons unex-
pectedly. Two months ago the whole country seemed in
a high state of prosperity. Immense crops were coming
forward ; every branch of industry was fully employed—
the manufacturing, and agricultural, and mercantile—all
Feemed full of activity and hope. Now all is stagnation,
depondency—almost despair. That such a change should
come over a people possessing such a p ,wer of production
is a marvel and a mystery to the great mass—to all who do
not Fee into the hidden but efficient cruses which produce
such baneful effects. A eingle spark ignited the combus-
tible ma's; and the conflagration is spreading terror and
dismay throughout the nation. A few weeks ego, a corpor-
ation called the Ohio Life and Trust Company, with a
capital of two millions of dollars, and having a business
agency in New York, failed. That event set the ball in
motion, causing the failure of several bookers and stock-
desiers involved with it ; that. in turn, created suspicion
of others connected with stock transactions ; one der
another of them stopped payment; this extended the
alarm, and in a short time the merchants, manufacturers,
and banks became involved in one general calamity. The
banks having suspended specie payments, the whole country
is left with an irredeemable paper currency. May of the
h:aviest mercantile houses and manufacturing companies
have followed the example of the banks ; and these failures,
or suspensions as they are often most properly called, are
not confined to those who have been engaged in reckless
speculation or wild extravagance, but include no small
number cf the ablest merchants of the con ;try. some of
whom show a surplus over their indebtedness of a million
of dollars in good assets. It seems now as if the explosion
would be as general and as terrfic in its effects as the g: eat
revulsion of 1837. You are not unacquainted with such
periodical tornadoes, in your own experience in England ;
for you, like us, have a mixed, and therefore a flustuating
currency. But we go to a far greater extreme in money
affairs, as in everything else. Our system of currency has
no al-quate check or salutary restraints. We have about
1,500 banking institutions in the United States, with
capitals varyingfrom 50,0 to 3 000,000 of dollars scattered
all over the land bat particularly numerous in New England,
and the middle States. All these are allowed to issue their
promises as money. These notes go in o circulation The
banks compete with each other in getting out the largest
circulation—the largr r the greater the income. As the
noes cast nothing, and draw fall interest when loaner!,
each:bank strugges to get out as much paper money as
possible. They are not restricted at all, except in one or
two states as to the proportion between their specie and
their circulation. They may issue tee or ten, or a hun-
dred for every dollar of specie in the bank. As a meter
of fact, many banks issue their notes to the amount of 20
or 30 times as much as the specie they hold. To refer to
the currency of Massachusetts, regarded as amongst the
very best in all the States, there was, by the last annual
report, a circulation of 20 millions, easainst 41 millions of
specie, while at the same time theso banks owed some 24
millions of "deposits," in all nearly £0 millions of imme-
diate liabilities, sg'inst 4 it millions of immediate roc urces.
The moment a panic strikes upon such a currency, what
must, of necessity, happen ? These banks of course at
once stop all loans, and take in their hills as soon as pos-
sible. And that is just what has been going on for the
past six weeks. There are 172 of these institutions in
Messahhusetts, with a popalstion of about 1,100,000, or
one bank to 'about 6 500 inhabitants. Of these 136 are
in the country—that is, out of Boston —the great
commercial city. These country banks, by late
returns, had 15 750 000 of bills in circalation,
and only 1,000,000 of specie, but little over
6 per cent ; yet these are the banks on which the
business of the people is based. That a terrible revolution
should take place under such a system of banking ought to
ocession no surprise to any one. Yet, strange as it may
seem, the greater part of the people regard the present
financial crisis as quite unaccountab'e. The reason of
this is, the complete infatuation throughout the country
in regard to piper money. So entirely has this money
driven out all other money, that the people practically
know no other. The bills issued by our banks are for a
as small a sum as one dollar, and from that sum all the
way upwards. Gold and silver are seldom seen amongst
the people, except the latter for small change. The
illusion is universal and complete. The banks are so
numerous a d have got so entirely the p-ssession of the
monetary afftire of the c mutry, that the people look to
them as the only source of prosperity. Yet the moment
there is any unusual demand for specie for shipment, or
any panic from want of confidence, the whole business of
the community feels the shock Far example, if a bank,
which has out ten times as much of its bills as it has of
specie, is called on foe 5,000 dohs of the latter, it must
take in ten times that amount of belle, that is 50,000 dole.
Hence the terrific effec's of the present crisis. The
currency rapidly disappears, and those who have relied
upon it, as all do. are thrown into the greatest distress.
such was our sad experience in 1.837, as the people
of England but too well know, and suc'a is our experience
now. There is, however, on several accounts an inpor-
taut difference between the present crisis end that of 1837.
Ist. At the occurrence of that contraction the merchants
were greatly indebted to the G )verntnent for duties. Now,
all the du'ies having been pre-paid in specie, the Govern-
ment had on hand a large sum—about 20 million dollars—
at the commencement of this contraction, which it is now
paying oat for the public service, and thus aiding the banks.
2nd Le 1837 exchange on England was high, and we
were continually shipping specie Now it is very low ; and
specie is flowing towards this country.
3rd. In 1837, so much had speculation been en-
gendered, and the business operati his of the country
deranged by the issue of paper money, so much had
agriculture been neglected, that we were obliged to import
large quantities of wheat from the Black Sea. Now, the
country is flooded with breadstuffr ;, and we are *early
sending a large amount to Earope. These fats will
greatly alleviate the present distress; and the catastrophe
of 1857, though general and terrific, will not produce such
lasting results; we shall not be so long disabled. How
you^ monetary affairs may be affected I cannot say ; but
should naturally expect that our troubles would cause much
embarrassment on your side of the water ; and I am not
without the few! that a general explosion of the paper
currency of Europe will soon take place. That such an
event will come is certain enough ; but when it will come
no one can csnfidsntly predict. Many unforeseen events
may postpone, though they cannot possible prevent, the
catastrophe The impression seems to be gaining ground
amongst the reflecting classes, that our present paper
money system is doomed; th .t it will never regain its
former supremacy, but must be greatly reformed or totally
abolished.

INCBEA3E OF PAI:Palt MI IN PIVST 3N.—anirg the last
row weeks, in co, segaeoce of the mills in Pres on having
been either wholly or partially stopped, there has been a
large aueinen'atio it in the number of able-holied p tupers
in that town. To such an extent Iris this increase already
art ire', that the guardians are unable to find work for the
various applicant., which weak, by the Poor-law Board's
orders, they are conurelled to find for ab'e-luli: d p ople.
Yesterday, at the meefiag of the hoard of gun.. diens, the
chairman said it was highly necessary, in cansupieuce of
he great access in this particular, that the general board
should be applied to to rel..x their rule. The feeling was
partieip-aed in by the guardians g nerallT, and a resolution
to the effect named was unanirno,:sly adopted. . •
TIIE LITTLENICA3 AND GREATSFES OF "Niwq.--Whett
by masurem:.nts, in which the evidence of the method
advance .s eq tally with tho precision of the results, the
volume of the earth is reduced to the millioneth part of
the volume of ;la FUll ; when the sun himself, transported
to the regions of the stars. t ics up a very modest place
among the thousands at millions of thus; bodies that the
tsleseope has revelled to us ; when the :18,000,000 of leagues
which s-parat 1 the earth from the sun have became, by
reason of their c .riaparative smallness, a base totally insuffi-
cient for ascertaining the dimensions of the viii)le universe ;
when even the swiftness of the luminous rays (77,000 leagues
per second) barely st_ffices for the common valuations of
science; When, in short, by a ehaie of irresistable proof=,
certain stars have railed to distances that helot csuld not
ravetse ii less than a million of years: we feel as if anni-
hilated by suahimmaßsities. Ii assigning to man, and the
planet that he inhibits, E 0 small a position in the material
world, astronomy seems really to hay.: made progress only
to humble us. Bat if, on the other bar d, we regard the
subject from the opposite point of view, and reflect on the
extreme feebleness of the natur .1 17.0,17 S by the help of
which so many great problems have kea attacked and
colvd ; if eve consider that to obtain and measure the greater
put of the quawities now forming the basis of astronomical
.g
cinnputation, man has had greatly to itnprove the most deli-
cate of his organs, to add immensely to the power of his
eye ; if eve remark that it was not less requ'site for him to
discover metho )6 rdapted to no3airin vary
long in!ervals
of time, up to the prec.sion of ten..las of sec ands; to combat
against the na 'se. micro,ieopie (flee s that earnttet variations
of temperature produce in metals, an'', therefore, in all in-
strut:ants ; e, gaarl against the innuanirable illesions that
a cold or hot atmosphitie, dry or heimitt, trenq iii or agi-
tated impresses on the medium through which the
obsorva'ions have inevitably been made; the feeble being
resumes ell his advantage : by the side of such wonderful
labours of the mind, what signifies the weakness, the
, fragility of onr body; what signify the dimensions
i of. the
, planet, our residence, the grain of sand on which
f happened to us to appear for a few moments,—Arago'c
4 Biographies of Distinguished Men."
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