The Hillsborough recorder. [volume] (Hillsborough, N.C.) 1820-1879, 1837-10-20


and bis friend and that Of The bank! The
known and established credit u the bank
may be one reason. bus there is another
and Posegful one. The governms.a
treats The credit ol the hank a. ge!e and
silver in all is Transactions. and Jass gs.
treat The credit Of individuals in ihe sane
manner. To test The ruth. lei Us rrteise
The case. and suppose the government 10
treat the joint credit Of Ibe individuals as
money, and not the credit Of the bank,
and IS il not obvious that instead Of bor-
rowing from The hank and paying six per
cent. discount. the bank would be glad 10
borrow from him on the same Iermsl--
From this We may perceive The pow erful
influence which bank circulation derives
from the connection with the credit of the
government
II follows as q necessary consequence,
that 10 the extent Of this influence, the is
sues Of the banks expand and contract
Nth the expansion and contraction OF The
fiscal action Of the government; with the
increase Of us duties, taxes. income and
expenditure; with the deposiies in its
vaults acting as additional capital. and
the amount Of bank notes Withdrawn,
in consequence, from circulation; all of
which must directly affect The amount of
their business and issues, and bank cur
rency must oil course parIske Of al those
vibrations 10 which the fiscal action ofthe
government is necessarily exposed. and
when great and sudden. must expose The
system to cataslrophes, such as We now
witness. Ia fact. more suitable instance
cannot be selected. TO illustrate the truth
Of what ] assert, Than the present; as /
shall proceed TO show:
To understand The causes which have
led TO the present STATE Of things, We must
60 back 10 the year 1924, when the tariff
system lriumphed in COngress--a system
which imposed duties, not for the purpose
Of revenue, bu, to encourage the industry
Of one portion Of the Union at the ex-
pense Of the other. This was followed
. up by the act Of 1928, which consumma-
ted the system. II raised The duties so ex-
! travaganily, that out Of an annual impor-
Iation Of sixty-four millions. thirty-lwo
passed into the treasury: that is, govern
ment took one half for the liberty of in
Producing the other. Countless millions
were thus poured into the treasury beyond
the wants of the government, which be-
came in time the source Of the most ex-
irsvsgsn. expenditures. This vast in
crease Of receipts and expenditures. was
followed BY corresponding expansion
| of the business Of the banks. They had
TO discount and issue freely 10 enable The
merchants to pay their duty bonds, as
well as to meet the vastly increased ex-
penditures Of the government. Another
! effect followed the act of 1928, which
gave a sllll further expansion To the ace
IIOn Of the banks, and which is woTthy Of
notice. II turned The exchanges with
England in favor OF this country. That
portion Of the proceeds of our exports,
which in consequence of the high duties
could no longer return with profit, in the
usual articles, " hich we had been in the hs-
biz Of receiving principally from that coUn-
try in exchange for our exports, returned
10 gold aud silver, in order to purchase
similar articles al The north. This was
the first cause which gave that western
direction 10 the precious metals. the re-
vulsive return of which has been follow
ed by so many disasters. With the ex-
change in our favor. and consequently no
demand for gold and silver abroad, aud
the vast demand for money attendant on
an increase Of The revenue. almost every
restraint was removed on the discounts
and issues of the banks, especially in The
northern section ofthe Union, where these
causes principally operated. With their
increase, wages aud price of every Je-
scription rose in propurlion, followed Of
course by an increasing demand on the
banks for further issues. This is the
true cause of that expansion OF the cur
rency, which began about The commence
Inent of the late administration; but which
was enormously charged by il to the Bank
of the United States. 1t rose out of the
action Of the government. The bank in
increasing its business, acted in obedi-
ence to The condition Of things at The time,
and in conformity with the banks gene
rally in the same section. II was at this
iuncture that the late administration came
into power junclure remarkable in
many respects, but more especially in
relation TO the question of the currency.
Most Of the causes which have since ter
minated in the complete proslralion Of
the banks and the commercial pros perity
Of the country were in full activity.
Another cause about that time, Il do
not remember the precise date, began to
produce powerful effects; | refer To The
last renewals Of The charter of The Bank
of England. 1t was renewed for ten
,,no,, aha.