Morning herald. [volume] (New York [N.Y.]) 1837-1840, 1837-10-07
The Vexed Question-Separaiion OF Ia \
from, State-AnaIysed and Settled.

The vexed Question: separation Of Ba@
from State-AnaIysed ana Settled
The great topics of the day are divorce OF bank
and state-a separation OF the government from the
paper sys,em-the locsfoco opinions Of Mr. Calhoun
the conservative notions of Mr.. Webster, &c. &c.
Now. on allthese subJecst the most profound gno-
rance exists in the minds of almost everypubc speak
erlans every public priat Fanatcism prejudice gno-
rance inpudence prevail on these matters 10 a most
prodiglous extent.
Where shall we 60 for information /! Where, but
10 those whs have experience? Who have this ex-
perence? The merchants-the merchants-the mer-
chants alone. Let Us therefore look back to the
history of the union between bank and state, only as
regards this city for the last five years. brief glance
will throw noon days radence over the subject
In 1885, the banks Of this city, after intrigue of
two years and six months procsred the great bulk OF
The funds OF the government but it was till 1884,
or perhaps the beginning of 1885, that they were left
in sndi.puted possession of the prize. During this
period the surplus revense began to increase each
year principally by the great of imports in the
Atlantic cities and the prodigious sales Of public lands
in the West.
But this connection between the government and the
banks beginning 1888, did dcvelope many of its
considered the honeymoon" of the union of bank and
state. First love is always engaging and nothing
especially unusual marked their conduct, unless it
little favor here and there to the relations Of
the bank managers But as the surplus revenue be-
gan to increase, and the banks began get rich in d.
ydends and profits, the evils Of the system indicated
strong symptoms of fraud, avariee corruption and
tyranny.
Il ucTrb hop " panop inf linn,
the cellars of Wall street. with their cousins nephews
sons brothers. agents and brokers to do business
in shaving notes and loanng money 10 merchants
The surplus government funds in the Wall street
banks about the middle of 1885 amounted to
" s5000,0O0. About the same period, the interest
on commercial paper began TO shoot beyond the legal
rate Al first, s, or 10 per cent was thought hea-
w and onerous demand upon those merchants, who
had been previously refused discounts at the bank.
Ifosr commercial readers will turn to the files of
the Herald of that date, they will find recorded in our
Wall street Reports the first germs of the aiuterous
connection Of the banks and the government, ndlca-
ted by very moderate usurous Of exchange and
interest.
Towards the fall OF 1885, as the surplus money in
creased in the banks, the interest on commercial pa
per, and the pressure in the money market also in
themselves Of their corrupt connection with the 60
vernment to tyrannize and lord It over the mer-
chants, is well known in this community. Let us
give an example. When merchant wanted to pro-
cure discount at the legal interest he presented his
note al the bank Endorsed and fortified usual. Next
day on going TO ascertain the fate Of his note he
met by the cashier with a smile
Sorry we can't do your note-money very scarce
49,
In the afternoon, or the mex, day. secret agent Of
that very bank, would, perhaps call upon the mer-
chant and ask whether he did not want money.
"Yes, de- have some good notes."
"Shew me them" He was shown them.
"Ill do them for ysu al or per cent per month"
Having been refused all accommodations by the
banks, the merchant thus compelled to pay the
high interest for the sum OF money.
Now, in almost every instance, tbs broker who
transacted such business would be the secret agent
OF the bank. This, therefore, was the perfection
OF the corrupt system caused by the adulterous
necton between the banks and the government. In
1886, this system extended itself to every bank in
Wall street Legitimate discounts TO merchants not
possessing control in any baak, was q thing IN.
known, unheard.
The surplus funds Of the government, which the
banks held without paying interest, was Thus the orr
gin of this singular system Of oppression upon the
whole mercantile community. All the ether banks
followed the same atrocIeus example. Even the
country banks began to curial their legal discounts
20 Their country customers, for the purpose Of send
ing Their funds 10 New York, TO be forced upon our
merchants at 2, 3 or per cent per month. The
spirit OF svarce spread wide and far. Beginning in
abe year 1885, a, per cent interest the value Of mo-
ney in January and February 1897, had reached the
extraordinary price Of 50 per cent interest for good
securities and on some OCCASIONS the bes, merchants
in New York had TO pay, for particular sums, at
short dates much AZ so or 30 per cent interest.
We make these Statements solemnl, seriousl,,
calmly before the phoie community Of Ne,o York
and zoe dare the corrupt banks 10 deny the assertion
or the fact.
The consequences Of this system originating in III,
union Of bank and state, soon began TO deyolope IL
sefin society, in commerce. in morals in Legislation
The whole trading community was converted int
TIVE classce-the few shaccrs and the many shapee
The banks divided their IL, 3 H. and II per cent p,
annum, on charter that only allowed per cent Il
she loan OF money. The old banking houses were pull
ed down. and splendid marble or granite palaces wer
erected Look at the glorious temple in Wall stree
built by the Bank Of America. The bankers, wit
their whole array Of cousins sens, nephews, relative
TO the third and fourth generation set M splendi
equipsges and astonshed the world with soirses prie