Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1835-01-24


when they find that their paper coming more rapid
iy than they had calculated they compelled to with
draw portion of their loans In the MANNER
iorescen contingencies may derange their plans and
obliec them To curta heavily, themselves from
Bankruptcy. bad crop, the prospect of wal.
tual the failure of other Banks pressure upon the
money market any account and variousothcr causes
may lead 20 the results These causes affect them
the scnsbly, inasnuch as the constant trndcn.
cy OF Banks, is Gn the language of Mr.. Biddlc) Ito
lend too much. and to put nlany in circua-
on 1t is their interest always to ncreas, their issues
10 the verge OF safety and thus very slight matter may
create alarm and induce them - contract alarm,
which returning prosperity easily dssipacs they
expand "Such (says Mr. Bid,le again. ''is the circle
mixed currency Is always describing and it is pre-
csc because 1t does describe and always describe
tst circle that system of credit founded on it is
safe and dangerous The alternate cnntract:ons and
expansions of Bank credits constitute one of the
greatest evils of the system; and they its neces-
SaTy Incidents They destroy the uniformity of cur
rency, produce ruinous fluctuations in the value of
property are exceedingly preudical 10 the progress
OF productive industry, and 81 baleiul extern.
sion OF embarrassment, insolvency. litigation and isho-
nesy alike subversive of social happiness and morals
MIR Huskisson thus notices the evil of his speech
es and contrasts it with better state of things at
was the natural course said he. 'that in such uc.
tuatng state of currency all classes of society must
IN their turn be afflicted by and therefore the sooner
get rid OF that iuctuation and return to n sound
healthy, and permanent circulating medium, the better
Tor the community at large If they wished prove the
value of steady and Interchangeable currency they had
Vt in the history of France That country had been
twice invaded by foreign arIny-hcr Capital had been
twice taken possession of and she obliged to pay
large sums to foreign countries; but they had steady
metallic currency, and however such vsitations may
nave affected the grcat-however the extensive
tractor may have been injured ruined-thc body of
the population remained unoppressed The storm MIGHT
have crushed the forest tree but passed without
inurng the humble reed. This be attributed to
te permanent footing upon which the currency of that
country had been established
Thus, the first objection TO the Norfolk proposition s
that the avaablc credit proposed be obtained in
rcncy and muplies the evils of expansions and
fractions. And il is worthy of observation, that Banks
are compelled to contract when the demand for money
greatest and that when the natural demand is least
they are able and willing to expand the most; so that
this clasticy of Bank medium" in which. according
Mr. Biddlc chief value consists is not at all suit
ca 10 the wants OF the community But this all
There u.s. III other respects, great difference between
sound and artificial credit Sound credit is limited TO
the rendering of that capital productive which would
otherwise be unproductive and to giving employment
to those persons who would otherwise be idle This kind
OF credit is the offspring of just laws enforcing honest
contracts and of sound currency not liable TO uctua
tons The extent of it naturally depends the surplus
wealth accumulated each year by the labou ondivdua
which they cannot employ do not choose employ
their business. In that event they either loan ont
this surplus wealth themselves place in Banks to be
loancd-and the comparison TO be made is between the
two systems. lfhey loan it Themselves the Investment
is not only likely TO be SAFE but advanta geous the bor
rowers The lenders, transacting their own business
ana acquainted with the resources, whether mental
physical OF the borrowers will take to place their
loanablc capital in and available hands and will
be disposed to extend the time ofcrcd enable the far
mer or mechanic to bring their enterprises TO successful
completion, the young professional man TO reap the
first fruits of his talents and industry Moreover the
sums loaned will be measured by a prudent regard
to the real circumstances and situation and wants of the
borrower; and will not be likely encourage dcncss
or pamper luxury Bank credits the other hand are
regulated by different considerations As to time they
are uncertain and contingent AS amount, dependent
sometimes on caprice farOr, sometimes endorsers
but more frequently the disposition of the Directors
10 put greater quantity of their paper into crcula-
TON When an Expansion is determined on, men not
the most responsible, sometimes solicited borrow
and to all who furnish ndorscr the
of
OF plenty, leads to rash enterprises extravaganza v
ing to numerous bankruptcies and enormous frauds
The community is deceived by false appearance
of wealth, and implicitly trusts it, In the mean time
the Bank debt accumuatesone loan leads to another
the slime OF scarcity arrives-curtails commemorative
Banks and the endosers secured by special
mcnts, in which they made "preerred creditors
and all Others with whom the any dealings
are ruined or greatly injured Has not something of this
kind occurred not many years ago. Norfolk itself as
well in all the cities of the Union And is il not now
dlcuit to lind any where, old merchant of thirty
forty years Standing who has been able survive the vi
cisstudes of artificial credit What is the reason that
there are vastly bankruptcies in the u States than
IN any other country of the world, and many annually
as occur in Holland for century but that the expansion
OF Bank credits induces merchants ovcr-trade and
contractons force them to sacrifice their property?
Formerly il was not soPrcvious to the Revolutionary
war, 1T Is said there but three bankruptcies in
Philadelphia among the large dcaersand in other parts
of the Union they rare and portentous events ex
citing wonder and sympathy--Now they excite neither
for to sympathy, IL pretty well understood that the
nsoiven in his deed of assignment other way
means good one.
As illustration of some of the foregoing remarks
take the following extract from report of committee
OF the Legislature of Pennsylvania made in 1921 after
the Bank system in all its 'exiension had been frl;
tried.
Before the establishment of Banks i'm the terior the
farmer who possessed credit and character experienced
little difficulty in borrowing his simple bond for one
or more years, any sum which il thought could b.
Prudently loaned to him. Embarrassmcnts and failures
were scarcely known in those days among our husband
men, and society moved by regular sure, and hap
Ply march. In cities, the contrary, were loans
have been chiefly made by our Incorporated Banks We
have seen continued succession of bankruptcies and
had it not been for the practice universally prevalent
amongst merchants of securing the Banks for the sake
of endorscrs, Banking would long since have been
abandoned as improbable trade"
think the Norfolk meeting, before its members asked
for 'extended banking privileges for themselves and
proposed to the other towns in the State unite in the
application ought at least to have hcwn that the present
banking capital is insufficient supply the circulation
with a medium for ehecting exchanges They have moi
done so, and it ought to be with the Legislature pre-
minary inquiry The banking capital of the State in
GLIDING the lately established Wheeling bank amounts
believe, to So 800 00C of this Norfolk has think one
million besides branch of the u. S. Bank; as it had
OF the Old Bank ofthe States before any other portion
of the State participated in the supposed benefit Is not
this capital, which the meeting says may be made
available to twice thrice its nominal amount 4"
sufficient 10 supply the wants Of the State for a
circulating medium unless it is intended drre all The
gOtd and SDcr array and supply their place with paper
I'm the late report of the Secretary of the Treasury all
the clrcuatons OF the country estimated 81 nil
lions, giving active circulation per head to our popt.
ation Of ~ millions of 81 each OF this 03 millions
the U. s. Bank furnishing rs millions and the State
banks the residue. As population