The spirit of the age. [volume] (Woodstock, Vt.) 1840-1844, 1840-05-15
bankruptcy and ruin. Alas how are the mighty


Why this is faith against fact speculation against
experience. 7 his would be to adopt, as our grand
regulator, an inslituton precisely similar to that
which has been the great author Of our vast bank
expansions, and our b,oated credit system and
which has fallen under the weight of its own ex-
travagnce, With all the experience which the
people ofthe United States have had upon this
subject, it will be long, trust, very long, before
they return to /, Bank of the United States.
But proposed to prove that, even if a Bank OF
the United States hndthr disposition TO restrain the
loans and issues of the State banks, it would rot
possess the power. ! suppose case for the sake
of the argument, which can scarcely ever exist,
because, as Il regulator of the currency, it would
have a duty to perform directly at war with the
interest of its stockholders.
The only mode by which it has been thought
that this object could be accomplished. was for the
Bank of the United States, conInng its own bust
ness within safe and proper limits, to receive the
notes Of the State banks ON deposite and in pay
ment, and to call upon them at short periods to
pay the balances i'll specie But, in the nature Of
things, it would he impossible for such Il bank to
receive the notes, and restrain the overssues Of
more than very few of the eight hundsed banks,
which are now scattered over this country. Each
of these banks has its own limited sphere of circu
id'lon, anu Hot ItCtNc
paper of each othet. In point of fact, this is not
generally done; not could any Bank of the United
States be required to receive all the notes which
these eight hundred paper manufactures are con-
santy pouring ont upon the pubic. From the
law which regulates currency, that which is the
worst, has always the most extensive calculation.
individuals will always hold fast by the gold and
silver, and pass away the bank notes; and of these
notes, they will pay out the doubtful, and preserve
those which are above suspicion. No Bank of the
United States, however great its capital, and en-
tended its powers, could ever reach the evil. II
could never transact business with one bank in
ten, might say in twenty, of the whole number,
But it is in vain to speculate upon this subject,
Experience is the bsst teacher, One fact is worth
one hundred arguments. independently of the add
verse experience of our own country, the expert
mcnt has been tried by the Bank of England under
the most suspicious circumstances, and it has utter
" failed,
The real capital of the Bank of England is about
seventy millions of dollars, and it has ten branches
at the most commercial and manufacturing points
of the kingdom. In 1886, the rate of foreign ey-
change was largely against England. The specie
of the Bank was, therefore, gradually drawn from
its vaults for expectation. 1t became necessary,
for its own salvation, that il should make vgor-
Gus effort TO diminish the amount of the circulating
paper medium, and thereby restore the equilibrium
Of the foreign exchanges. The bank credits and
currency of England had become 50 inflated and =,
IN consequence, the prices of all aricals had ad-
vanced 10 such standard that to use the language
of one of their own satcsmmen, it had become the
best country to sell in and the worst country To
buy in, throughout the world. 1t was profitable,
therefore, to import every foreign production which
could be admitted to entry, and on account Of the
high paper prices of their domestic productions,
their exports were greatly diminished. The conse-
quencc was, continued and ruinous drain Of
specie from the Banks of England TO adjust the
balance of the trade against that country. The
bank well knew that, if it could limit the amount of
the paper circulation, ii would reduce the price of
their home predictions in the same proportion, and
thus render it profitable for foreign merchants TO
export British manufactures instead Of specie
For this purpose it contracted its loans and issues,
in the vain hope that the joint stock and private
banks would be compelled to follow It's example.
In our slang, it put the screws upon them. What
was The result? shall not enter upon detail of
particulars. II i sufficient to say, that, as it con-
lractcd, the other banks Of the Kingdom expanded
their loans aud their issue and that, too, in grea-
ter proportion than It's loans and issues were dim
inished. Prices still continued to rise, and bullion
expectation. The utter Impotence of this grand
regulator Ofihc currency to control the other banks
and keep the paper currency ofthc kingdom within
such limits as arrest the expectation of gold and
silver, has thus been 50 clearly demonstrated, that
many Of the ablest British statesman despair uf ac-
comprising the Object in any other manner than
by restricting the issues of paper money 10 singe
bank, and regulating their amount by the agency
of the Government. Here, then, is an important
fact incOntcstaby established. If this be true, and
there can be no question of its truth, would ask
the Senator how a National Bank, even with
capital of fifty millions OF dollars, could regulate
and restrain within proper limits, the loans and
issues of eight hundred State banks, scattered over
the whole extent of this vast country The thing
is impossible. 1t could not be accomplished by
such bank
And what is the condition of the Bank of Eng.
land a, the present moment According 10 the
testimony of Mr. lIcrs'cy Palmer, lis president,
given before the secret committee Of the House of
Commons, previous to its recharcr in 1888 the
principle on which il had proceeded in regulating
its issues, was TO keep ns much coin and bullion
in its Golfers amounted 10 third part of lis lia
bi'ilies including sums deposited, as well as notes
in circulation Experience had established The fact,
that this rule Of one for three of circulation and
ucposles was tne suc proportion. us ncce>:iiles
have compelled it 10 depart widely from this RUE
of its own creation. Instead Of being able to reg.
ulatc the loans and issues Of other banks, il has
with difficulty been able to save Itself II has been
going down and down, until. according to the last
quarterly statement Of its condition which have
seen, it had not one pound sterling in bullion for
seven of its circulation and deposes. In this re-
speci it is in n much worse condilion than many of
the banks in our own country. In order TO save
itself from utter ruin, British pride has hunbled il
self so much, that the Bank of Eng and became
suppant 10 that OF France for supply of bullion,
which was rraciously, though condescending'y,
granted. 7 his fact is the highest evidence i, is
possible to present of the advantages which coun-
try, the basis of whose circulation is god and silver
enjoys over another country, whose paper currency
is greatly expanded The Bank Of England will
probably never see the day, under its present char
ter, when its bullion will again be equal to one
third of its circulation and dcposiies Indeed, one
bad crop, in its present condition, would drain il of
it, gold and silver for the purpose of purchasing
foreign grain, and compel it 10 suspend specie pay
menls Neither this bank, nor the Bank of the
United States, can ever be relied upon as rcgula-
tors Of the loans aud issues Of the other banks of
their respective countries.
The Senator from Kentucky would have ss1 ,rcU