Phenix gazette. [volume] (Alexandria [D.C.]) 1825-1833, 1826-10-05

banking Within the last few years, in which
the notes Of individuals without any real capl.
tai, and who were from the beginning in state
of insolvency, have continued 70 circulate Tor
| long period In company with the notes OF the
best established houses, and to enjoy an equai
degree of credit 1t is obvious, too, lnasmuch
as the profits made by banking company, oy
the issue of notes. must depend upon the ex-
cess of the paper they have af1oat over the dead
stock they are obliged to keep in their Golfers
to meet the demands of the public, that such
country banks as have little capital, must, ge-
morally speaking, be extremely anxious to get
their paper into circulation. Rich and old es-
tablished houses have their choice OF business;
and can afford to be cautious as to the bills
they discount. But those who depend for sup
port on the profits to be derived from the num-
Der Of their notes abroad, and who have little
or nothing of their own to lose, are necessarily
less scru2ulous 1t is to them, therefore, that
SPECTATORS, engaged in hazardous adventures,
uniformly resort; and during periods when con-
6dence is high, and prices on the advance, the
most worthless paper is sure to be negotiated
Many Of the English country bankers, who fail
ed during the late crisis, were not only in the
habit of discounting the paper of those engag-
commission TO persons employed TO circulate
their notes! In fact, their only object seemed TO
be, to get themselves indebted TO the public
Nor, when establishments, conducted on such
principles, ard enjoying an unlimited degree OF
credit, were to be met with in every district OF
the empire, and when individuals, who never
were masters of any real capital oil their own,
frequently succeeded in obtaining, by their
means, the command of immense sums, can we
be surprised that every sort OF wild anc prottl-
gate adventure should have abounded THAT In
cpient t!elusion should have been converted IN
to absolute insanity or that the most dreadful
recoil should have been experienced, when
shock was given TO the system?
Had the country bankers been compelled, as
every banking company, whether it consists OF
ten or ten thousand partners, ought to be, to
give full security for the payment of their notes,
such a state of things as we have just described
could not possibly have taken place. Banking
companies possessed, as those who give secu-
rity for their issues must necessarily be, of am
pie capitals, would have exercised proper de-
gree OF caution in the discount of paper; and al
though it is possible that the currency might,
even under such system, have become redun-
dant, the redundancy ,UouH hare been limited to
the degree in aU}ich the exchange oCaS depressed and
each and all of the banks would have had the
means, without laying themselves under the
least difficulty, of Withdrawing such portion
of their paper from circulation, as would have
restored the currency to its proper level, and the
exchange 10 par. But under our present sys-
tem--a system which, to use the just and forci-
BILE expression Of Lord Liverpool, "allO,cs a cob
Ter or cheesemonger 10 usurp the Royal prerogative,
and TO issue money With0ut check or CONTROL" the
paper of large proportion oflhe country banks
cannot be withdrawn And when the exchange
becomes unfavorable, and the Bank Of England
is in consequence obliged to narrow her issues,
all confidence Immediately ceases; and the run
which then takes place upon the country banks
is not limited 70 the withdrawal of such por-
ton of Their paper as might be required to bring
the country currency 10 the same level as that
Of London-which would most certainly be its
full extent, if the banks gave security for their
issues-but is converted into panic, by the sus-
picion Of insolvency, that must necessarily at
tach more or less, TO almost every banking
company organised under the present system.
1t should be observed that very slight fall
in the exchange is at present sufficient to cause
an expectation of gold coin Previously to 1918,
the expectation of coin, or of bullion formed
out Of coin, was forbidden under the severest
penalties; and though there is abundan, evidence
TO shew, that that this prohibition was altogeth-
er Intellectual to retain the coin al home when
the exchange afforded a sufficient profit on its
expectation, still it is quite clear, that the trou
BILE, expense, and extra risk incurred in conse-.
quence of this prohibition must have had the
effect to render considerable greater depres-
sion of the exchange necessary to occasion such
an expectation, than will now suffice for that
purpose. We have been assured by some OF
the best informed bullion merchants, that dill
ference Of one eighth per cent. in the price OF
gold in Great Britain and the Continent, is
quite enough to occasion its instant exporta-
ton: And as our coin is at present in state OF
very great perfection, and Government has cho-
sen to burden itself with the expense of coinage
"a regulation just about as wise, as if it were
TO manufacture tea-pots and vases, or hats and
pantaloons gratis, 10 all who have demand for
such artces-it has become desirable artl-
Gle Of traffic, and its expectation takes place in
very large quantities, under circumstances
when no part of it could formerly have lett the
country.
It's, therefore, quite evident, that if the late
contraction of the currency had been confined
to the removal Of such portion OF the super
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