Litchfield enquirer., 1840-01-02

ihis new ground foF bank suspoaaonn il reference to
 which their action is moi only disconnected with, but
 wholly lndependsnt of thet ot the public, gives .
 any winch they exhibited before and greatly ncreas-
 es shs lmpFopriety of relying on the banks in the
 large and highly spectabIe portion of our bank
 ing institutions are, it affords unfeigned pleasure
 to state exempted from aIl blame on account of this
 second dsllnquency They have, to their great cred.
 have even repudlaed the grounds of suspension now
 resorted to- It is only by such course that the con
 ddence and good will of the community can be pre-
 served, and in the sequel the best interests of the m
 sututions themselves promoted
 Eew dangers to the banks are also daily disclosed
 from the extension of thatsysiem of exsravagant cred
 1t of which they are the pillars Formerly our for.
 elgn commerce was principally founded on an ex-
 change of commodities, including the precious et.
 els and leaving in its transactions but little foreign
 debt. Such is not nowthe case. Aided blythe facii-
 ties afforded by the banks mere credit has become
 too commonly the basis of trade. Many of the banks
 themselves not content with largely stimulating this
 while they impair the stability ofthe mercantile com
 lunity; they have become borrowers instead of lem ders; they establish their agencies abroad they deal
 largely in stocks and merchandise; they encourage
 the issue of State securities until the foreign market
 IS glutted with them; and unsatsfed with the legit
 mate use of their own capital exercise of their
 means for every variety of speculation The disas-
 tefs auendant on this deviation from the former
 course of business in this country are now shared
 alke oy banks and individuals, to an extent of which
 tnere pernaps no previous example in the annals of
 our country Soong as willingness the foreign en- der and sufficient export of our productions to meet any necessary partial payments leave the flow of d to be prosperous but as soon as It ls checked by any hesitation abroad, or by any napiity to make payment there in productions, the evils of the sys,e" are disclosed. The paper currency which might serve for domestic purposes, is useless to pay the debt due in Europe. Gold and silver are therefore drawn, in exchanam for their notes, from the banks. To keep up their supply of coin these institutions are obliged to call upon their own debtors, who pay them principally in their own notes, which are as unavailable to them as they are to the merchants to meet the foreign demand The necessity exceed that demand, and produce corres. bonding curtailment of their accommodations and of the currency, at the very moment when the state of trade renders it most inconvenien: to be borne The intensity of this pressure on the community is in pro- portion to the previous heraty of credit and conse. quent expansion of the currency forced sales of Dyo perty are made ae the tune when the means of pur- chasing are most reduced, and the calaities to individuals are only at ast arrested by an open yio. laton of their obligations by the banksa Tetusl to pay specie tor thslr notes, and an imposition upon the community ota fiuctuatiTg and deprecated currency
 These consequences are inherent in the present system. They are not influenced by the banks being large or small, created bv National or State Governments. They are the results ofthe irresistible laws ot trade and credit. In the recent events which have so sfrikingly illustrated the certain effects of these jaws, VIC have seen the bank of the lar gest capital inihe Union, established under a National charter, and lately strengthened, as we were authoritatively informed, by ex- that for State charter, with new and unusual privilcges-in condition too,as it was said, of entire soundness and great merely unable to resist these effects, but the first to yield to them.
 Nor is it to be overlooked that there exists q chain of necessary dependence among these institutions which obliges them, 10 Q great extent, 10 follow, the course of others, it's injustice to their own im- mediate creditors, or injury to the particular community in which they are placed. This dependence of bank, which is in proportion 10 the extent of its debts for circulation and 1cposites, is not merely on others in it's own vicinity, but on all those which connect 1t with the centre of trade. Distant banks may fail, without seriously affecting those in our principal commercial cities; but the failure of the latter is felt at the extremities of the Union. The suspension at New York in 1887 was every where, with very few excep- ions. followed, as soon as it was known ;- hat recently at Philadelphia immediately affected the banks of the South and West in | similar manner. This dependence of our whole banking system on the institutions in ! few large cities, is not found in the laws of heir organization, but in those of trade and exchange. The banks at that centre to which currency fiows,and where it is requir- ed in payments for merchandise, hold the power of ofcontroiling those in regions whence t comes, while the latter possess no means of restraining them; so that the value of in- lividual property ,and the prosperity of trade, through the whole interior of the country, are made to depend on the good or bad man. agemcnt of the banking institutions in the great seats of trade on the seabOard.
 But this chain of dependence does not stop here. It does not terminate at Philadelphia pr New York. It reaches across the ocean, and ends in London, the centre of the credit system. The same laws oftradc which gave he banks in our principal cities power over Inc whole banking system of the United States, subjects the former, in their turn, to he money power of Great Britain. It is not denied that the suspension of the New York banks in 1887, which was followed in quick throughout the Union, was pro- duced by an application of that power; and it is now alleged in ex:enuation of the pres ent condition of so large D portion of our banks, that their endorsements have aris- en from the same cause.
 From this influence they cannot now en- tirely escape, for it has it's origin in the cre- dit currencies of the two countries; 1t is by the current of trade and ex- change, which centres in London, and is ren- dered almost irresistible by the large debts contracted there by our merchants, our banks, and our States. It is thus that an in troduction of new bank into the most dis tant of our villages, places the business of that village within the influence of the mon- ey power in England. I is thus that every new debt which we contract in that country, affects our own currency, and ex- tends over the pursuits of our country its