The Rhode-Island Republican. [volume] (Newport, R.I.) 1809-1841, 1837-06-07
RI1DE.IsLAND BANKS x BANKING.
NO.

We have not heretofore attempted TO III
mnse, or cnighten the public, on the sub
ject of the money concerns o! The country !:
he causes of its ebbs and flows the benei-
fits afforded by the system of banking; and
the evils with which it is always pregnant.
Move have left that subject for wiser heads
10 theorise upon, and we still mean to leave
it in other hands. But as far as the pracli-
cal effect of banking is concerned in little
4. 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 nll the money and trading capital of the
State in the shape of bank stock and de-
positcs, the people wanting to use the for
mer obtain it by way of loan from said banks,
" for discounts but also for the supply of
wholesome, convenient and available
currency, at all times convertible into gold
and silver at the par value. In the most
fourishing times all this is within their pow
cr, and even more-for discounts then may
be obtained, not only for the necessary pur-
poses of regular trade-but large surplus
for specuation-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 speculn,or him
sclf-for few of his golden dreams are ever
realized and sccured-but the effect of
his first speculation, if successful, will gen.
orally lead the speculator on with bold
4. Il 10, 4
overwhelming msfortunes rouse him from
his golden dreams and consign him and his
family to wre,chedness and 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 vicissitudcs,
varying but little from four years each. The
periods of depression have been about the
years 3iind 81; and the Pc
riods of f,lacous and sho IT lived prosperity
were lSIS--22-21-3I and 36, making five
Gibbs and four floods in the tide of money af-
Mrs, in the space of l5 years. We would
nsk the wise men of this enlightened age, il
these Gibbs and flows have not, N a consid-
cradle degree, been caused by the natural
consequences resulting from the trading
wealth of the people having been committed
to the custody and control of Bank Direc-
tors, in too great II proportion to that retain
cd in the bands of the people. la days oI
apparent prosperity and general confidence
the banks are enabled to expand their dis
counts, on an extended circulation Of thei
bills and accumulation Of deposites, to ar
extent wholly inconsistent with their own
safety at other times. As soon therefore
rs the banks find the tide bc-ins to ehb
land they are about the :irs, to discover ) a
regular course OF cWtdiknem commences,
but little perceived at frs, even by the banks
themselves, until they are alarmed by the
dlmnuiion Of deposites made by their Gus.
tomers,e aud, Immediately offer that admon-
ition, by the rapid return of their circulation.
The mystery Of all this change is, that the
banks not being able to continue extraordin-
ury facilities, their customers have to hus-
band their own resources, aud bv doing so
the deposits are Withdrawn aud the bills of
the banks are forced home in the payment
OF debts to the banks; having been forced
out when the banks were extending loans.
Besides, by this time the banks themselves
become alarmed, aud take every means to
withdraw their circulation, to bring it with
III their diminished and still declining means
ut redemption. Now comes the pinch-bu,
lew discounts are made, aud those to the
directors, or some Of their immediate friends.
rhe interest Of money increases out of
doors; aud !, is too often the case that notes
are shaved IN the street at 2 and 3 per cent
"oh'n' ny persons who have the power to
procure 'he same notes to be discounted by
sDepgsses continued to dimiuixh un,iI ~. ,,,.,.i