The Rhode-Island Republican. [volume] (Newport, R.I.) 1809-1841, 1837-05-31
RHODE-IsLAND BANKS & BANKING.

We have not heretofore attempted to II
muse, or enlighten the public, on the sub
ject of the money concerns of the country |;
the causes Of its ebbs and flows the bene-
fits afforded by the system of banking and
the evils with which it is always pregnant.
Move have left that subject for wiser beads
TO theorise upon, and we still mean 20 leave
it in other hands. But as far as the practi-
cal effect Of banking is concerned in. little
II. Island, (which, by the by, is world Of
great interest to us,) we beg leave to
give our humble opinion, and must stand
or fall in proportion as we state facts and
draw conclusions. The banks in Rhode
Island having got within their control near
ly all the money and trading capital of the
State in the shape Of bank stock and de-
posites, the people wanting to use the for
mer obtain it by way Of loan from said banks,
on interest, depending on the banks not on
" for discounts but also for the supply of
n wholesome, convenient and available
currency, at all times convertible into gold
and silver at the par value. In the most
flourishiug times all this is within their pow
er, and even more-for discounts then may
be obtained, not only for the necessary pur-
poses of regular trade--but large surplus
for peculation-which surplus is generally
used for purposes injurious to the great body
of the people, and at the same time, in most
cases, to the injury Of the speculator him
self-for few of his golden dreams are ever
realized and secured-but the effect of
his first speculation, if successful, will gen.
orally lead the spcculator on with bold
and confident ardor, until some sudden md
overwhelming misfortdnes rouse him from
his golden dreams and consgn him and his !
family to wreichedness aud despair. Since
the multiplication of banks and consequent
increase of facilities for extensive specu-
lation, the trade of this country has been
subject to almost periodical vicissitudes,
varying but little from four years each. The
periods Of depression have been about the
years lSl6-I9-2429-31and 81; and the Pc
RODS of falacous and short lived prosperity
were lSlS--22-27-3l and 36, making five
Gibbs and four floods in the tide of money ST
airs, in the space of is years. We would
ask the wise men of this enlightened age, if t
these GIBBS and flows have not, IN a consid- Il
cradle degree, been caused by the natural I
resulting from the trading q
wealth of the people having been committed
to the custody and control of Bank Direc-
tors, in too great proportion to that retain
ed in the hands of the people. In days of
apparent prosperity and general confidence
he banks are enabled to expand their dis I
counts, on an extended circulation of their
'ills and accumulation of deposites, to an u
xtent wholly inconsistent with their own d
alety at other times. As soon therefore u
S the banks find the tide begins to ebb, n
and they are about the first to discover it) "
egular course of curtaiiment commences, II
ut little perceived at first even by the banks u
until they are alarmed by the 3
lminution of deposites made by their Gus i,
and, Immediately after that admon-
ton, by the rapid return of their circulation. I
The mystery of all this change is, that the
'anks not being ableto continue extraordin-
Try facilities, their customers have To hus-
'and their own resources, and bv doing so u
he deposits are Withdrawn aud the bills of il
he banks are forced home in the payment 9
If debts to the banks /; having been forced A
out when the banks were extending loans.
Besides, by this time the banks themselves =.
become alarmed, aud take every means to
their circulation, to bring it with
n their diminished aud still declining means p y
If redemption. Now comes the pnch--but L
ew discounts are made, and those to the T
directors, or some of their immediate friends =,
The interest of money increases out of
loors; and it is too often the case that notes -
ire shaved in the street at and per cent O
month, by persons who have the power to a
procure the same notes to be discounted by
nc banks at q per cent per year; So to Gre
'te new fund to shave upon second time, T
md the same to be repeated as long as the P
'ank or banks can be squeezed for that
purpose. AT length the outdoor borrowers
ecomc known, and suspected of being in D
esperate circumstances the usual faciE- ID
es before given them in their business are T
arrowed, or wholly refused whence the
ext step is the bankruptcy of few of the
lost rotten members in the trading COM I
'unity, aud if the gap cannot be suddenly d,
opped, every one takes the alarm The
anks require payment or security; money tt