Madison Whig advocate. [volume] (Canton, Miss.) 1839-1841, 1840-01-25

eNiioA oS silS uitS Sii1u pleasure TO state
exempted from all blame on account q
this second delinquency. They nave
to their great credit, not only continued
TO meet their engagements, but have
even rePudiated the grounds of snspen
sion now resorted to. It's only by such
course that the confidence and good
Will oil the community can be preserved
and, IN the sequel the best interests Of
the institutions themselves promoted.
New dangers 10 the banks are also
daily disclosed from the extension of that
system of extravagant credit OF which
they are the pillars. Formerly our for
eIgn commerce was principally founded
on an exchange of commodities, incIud-
ing the precious metals, and leaving In
| It's transactions but little foreign debt.
1 Such is not now the case. Aided bv the
/ facilities afforded by the banks, mere
credit has become too commonly the ba-
SIS of trade. Many Of the banks them
selves, not content with largely stimulat
1 ing this system among others. have
usurped the business, while they impair
! the stability OF the mercantile conmuni-
ty; they have become borrowers instead
Of lenders; they establish their agen-
cies abroad. they deal largely in stocks
and merchandise; they encourage the
/ issue of State securities until the foreign
market is glutted with them, and unsatis-
fed with the legitimate use Of their own
capital and the exercise Of their lawful
privileges, they raise by large loans adj
dltIonal means for every variety Of spe-
culation. The disasters attendant on
this deviation from the former course of
business Ia this country. are now shar-
ed alike by banks and individuals, TO an
extent Of which there is perhaps no pre-
vious example in the annals of our coun-
try. So long as willingness of the
foreign lender, and sufficient export of
our productions TO meet any necessary
partial payments, leave the flow Of Gre
dit undislurbed, all appears to be pros
pei ous. and as soon as il is checked by
any hesitation abroad or by any inabili-
ty 10 make payment there in our pro-
ductions, the evils ot' the system are dis
closed. The paper currency might
serve for domestic purposes, is useless
to pay the debt due in Europe. Gold
and silver are therefore drawn, in ex-
change for their notes, from the banks.
70 keep mp their supply of coin, these
institutions are Obliged TO call upon their
own debtors, who pay principally in their
own notes, which are as unavailable 10
them as they are to the merchants 10
meet the foreign demand. The calls of
the banks therefore, IN such emergen-
cies of necessity, exceed that demand !,
and produce a corresponding curiall-
ment of their accommodations and Of
the currency, at the very moment when
the state Of trade renders ii NEST incon-
venient to be borne. The intensity Of
this pressure on the community is in pro-
portion to the previous liberaiity Of Gre
DIT and consequent expansion of the cur
rency; forced sales Of property are
made at the time when the means of pur
chasing are most reduced, and the worst
calimities 10 individuals are only at last
arrested, by an open violation OF their
obligations by the banks, a refusal to
pay specie for their notes, and an Impo-
sition upon the community of huctuat-
ing and deprecated currency.
These consequences are inherent in
the present system. They are not in
fuenced by The banks being large or
small, created BY national or state gov
ernments. They are the results of the
irresistible laws of trade and credit
In the recent events which have so stFik-
ingly illustrated the certain effects Of
these laws, we have seen the bank Of
the largest capital in the Union. estab-
lished under national charter, and late
ly strengthened. as we were authoritative
ly Informed, by exchanging that for a
State charter, with new aud unusual
privileges-in a condition too, as 1t was
said, Of entire soundness and great pros
perity-not merely unable to resist these
effects, but the first to yield to them
Nor Is il TO be overlooked that there ex-
lists chain of necessary dependence
among these Institutions which ooliSes
them, 10 a great extent, to follow the
course of others, notwithstanding lis IN
Justice to their own immediate creditors,
or injury TO the particular community 10
which they are placed. This depend
ence of bank, which is in proportion to
the extent OF It's debts for circulation and
deposifes. is not merely on others IN It's
own vicinity, bat on all those which con-
meet it with THE centre OF trade. lis
tant banks may fail, without seriously
affecting those in our principal CONNER
cal cities; but the failure OF the latter
is fell at the eNfremities o. the Union
The suspension at New York. in 1897,
was every where, with very few exceP-
tious. followed. as soon as il was known;
that recently al Philadelphia immediate
ly affected the banks OF the south and
west in a similar manner. This depen-
dance of our whole banking system on
the institutions in a few large cities, Is
not found in the laws OF their organiza-
ton. but in those of trade and exchange
The banks al that centre 10 which cur
rency flows, aud where il is required IN
payment for me rchandise, hold the pow
err OF controlling those in regions whence
it comes, while the latter possess no
means OF restraining them; so tina; the
value of individual property and the
prosperity Of trade through the whole
nterior of the country. are made to de-
ne nj on the good or bad manage ment OF