The Caledonian. [volume] (St. Johnsbury, Vt.) 1837-1867, 1840-01-07

TO issue Treasury notes 10 supply the deficiency
thus created:
1t now appears that there other motives than
want of public confidence under which the
banks seek to justify themselves in refusal TO
meet their obligations. Scarcely were the country
and Government relieved, in Il degree, from the
difficulties accustomed by the general suspension of
1887 when partial one, occurring within thirty
months Of the former, produced new and serious
embarrassments, though, ii had no palliaTion in
IN such circumstances as alleged in justifca-
lion of that which had previously taken place.
There was nothing in the condition Of the country
to endangGr well managed banking institution /;
com nlerce WAS deranged by no foreign every
branch of manufacturing industry crowned
with rich rewards and the more than usual a.
bundance of oar harvess, after supply wing our do.
nestle wants, had left our granaries and store
houses filled with surplus for expectation. 1t is
in the midst of this, that an lrredeemab!e and de-
preciaed paper currency is enlailed upon the peo-
Pile by a large portion OF the banks. They
not driven to il by the exhibition of loss of pub
lie confidence of n sudden pressure from their
depositors or noteholders, but they excuse them
selves by alleging that the current Of business and
exchange with ioreg countries, which draws tho
psecious metals from their vaults, would re-
quire, in order to meet it, larger curtailment of
their loans 10 omparativoly snalI portion Of the
community than il WIZ be couvericnt for them to
bear, Or peyhaps safe Sor tho banks to exact. The
plea has ceased to be one of necessity. Conve-
nicnce and policy now deemed sufficient TO
warrant these Institutions in disregarding their
solemn obligations. Such conduct is not merely
an Injury individual creditors, but it is wrong
TO the whole community, from whose lberalIty
they hold most valuable priv eges, whose rights
they violate, whose business they derange, and
the value OF whose property they render unstable
and insecure. 1t must be evident that this new
ground for bank suspensions, In reference 10 which
their action s not only disconnected with, but
wholly independent of, that of the public, gives
lcharaCter 10 their suspension more alarming thah
any which they exhibited before, and greatiy in
creases the improperly of relying on he banks IN
the transactions Of the Governments
a large and highly respectable portion of our
banking institutions are, II affords me unieigned
pleasure to state, exempted from all blamn on &C
count Of this second delinquency. They have, TO
their great credit, not only continued TO meet their
engagements, bur have even repudia,ed the grounds
Of suspension now resorted to. 1t is only by such
course that tie confidence and good will of the
community be preserved, and, in the sequel
the best interests OF the institutions themselves
promoted.
New dangers TO the banks are also daily discIos.
ed from the extension of that system Of extravagant
credit OF which they are the pillars. Formerly
G,reign commerce was principally founded on an OK
change of commodities, including the precious met
ais and leaving in lis transactions but little foreign
debt Suchis not now the casc.-Aded by the
facilities afforded 10y the banks, mere credit has
become toe commonly the basis OF trade Many Of
The Banks themselves, not content with largely
stimulating this system among others, have usurped
the business. while they impair the stability of the
mercantile community; they have become borrow
crs instesd offenders; they establish their agencies
disc: they encourage the issue OF state securities
until the foreign market is gutted with them; and
dissatisfied with the Legitimate use of their own
caui,ai and the exercise of their lawful privileges,
,hev raise by large Loans additional means for every
variety of speculation. The disasters attendant
this deviation from the former course of business
in Tins country ure now shared alike by banks and
individuals, to extent of which perhaps there is
no previous example in the annals OF our country
So lorg us willingness of the foreign leader, and
"A sufficient export o! our productions TO meet any
.,;,l, Inoy bn 40, ~ ,,J
il undisturbed, all appears 10 be prosperous; but
soon rs it is checked by any hesitation abroad,
by any inability to make payment there is our pro-
auctions the evils of the system disclosed The
paper currency which might serve for domestic
nurposes is useless to pay the debt due to Europe
Gold and silver are therefore drawn, in exchange
for their notes, from the banks. To keep up their
supply Of CON- these institutions nre obliged to call
upon their own debtors, who pay hem principally
in their own notes, which are unavailable to them
as they are To the eichanls 10 meet the foreign
demand The calls Of the banks, therefore, III such
emergencies of necessity, exceed that demand, and
produce corresponding curtalled ct their accommo-
dalions and of the currency, at the very moment
when the state OF trade renders II most inConven-
lent TO he borne.The intensity of this pressure on
Tho community is in proportion to the previous lib
crafty Of credit and consequent expansion of the
currency; forced sales OF property are made the
time when the means OF purchasing are most redu
ced and the worst caamitIes to individuals on
~ a last arrested by an open vlTlalou of their OBJ
legations by the banks, Il refusal To pay specie for
their notes, and an imposition upon the community
of fluciualing and deprecated Gu rrcncy.
These consequences arc inherent in the present
S, stem They are not Influenced by the banks be.
ing large small, created by National State
Governments They are the result of the irresis.
table law of trade and credit. In the recent events
which have srikinsly illustrated the cer,aln eff
fecs of these laws, we have the banks of the
largest capital in the Union, established under a
National charter, and lately strengthened, as, we
were au,horitatively informed, by exchanging that
for State charter with new and unusual privileges
in condition too, as it was said, of entire sound
ness and great prosperity not merely unable to re.
sst these effects but the first TO yield to them.
Nor is il to be overlooked that there exists chain
Unnecessary dependence among these institutions
which obges them, to great extent, to follow the
course of others, notwithstanding It's injustice to
their own muediae credtors,or injury to the par
tcular community in which they are placed The
dependence of bank, which is in proportion to
the extent of its debts for circulation and deposites
is not merely Others IN its vicinity, but on
all those which it with the centre of trade
Distant banks may fail, seriously affecting those in