Vermont telegraph. [volume] (Brandon [Vt.]) 1828-1843, 1840-01-08
MONT TELEGRAPH.

use OF their own capital and the exercise
of their lawful privileges. they raise, by
large loans, additional means for every
variety of speculation. The disasters at
tendant on this deviation from the former
course of business in this country, are
now shared alike by banks and individu
ais, TO an extent of which there is per-
haps no previous example ia the annals of
our country. So long as Willingness of
the foreign lender, and a sufficient export
of our productions to meet any necessary
partial payments, leave the flow of credit
undisturbed. all appears to be prosperous;
but as soon as it is checked by any hesita-
ton abroad, or by an inability to make
payment there in our productions, the ev-
lis OF the system are disclosed. The pa
per currency which might serve for do
mes;Ic purposes, is useless to nav the debt
due in Europe. Gold and silver are
therefore drawn, in exchange for their
notes. from the banks. To keep up their
supply OF coin, these institutions are obIir-
ed TO call upon their own debtors, who
pay them principally in their own notes,
which are as unavailable to them as lbev
are 10 the merchants to meet the roreirn
demand. The calls of the banks, there
lore, IN such emergencies, of necessity.
exceed that demand, and producea cores
pondlng curtailment Of their accommoda-
tons and OF the currency. at the very mo-
ment when the state of trade renders il
most announcement to be borne The in
tenslty of this pressure on the community
IS IN proportion TO the previous liberality
oil credit and consequent expansion of the
currency; forced sales of property are
made at the time when the means of pur-
chasing are most reduced, and the worst
calamltleS to individuals are only at last
arrested, by an open violation of their OBJ
legations by the banks, refusal to paw
specie tor their notes, and an imposition
upon the community Of a fuctuatinr and
deprecated currency.
these consequences are inherent in the
present system. They are not influenced
by the banks being large or small, Great
ed by National or State Governments.
They are the results of the irresistible
laws of trade and credit. In the recent
events which have so strikingly illustrat-
ed the certain effects of these laws. we
have seen the bank of the largest ca ptal
IN the Union, established under Nation
al charter, and lately strengthened, as we
were authoritativly informed, by exchare-
ing that for State charter, with new and
unusual privileges-in condition too. as
1t was said, of entire soundness and great
prosperlty-not merely unable to resist
these effects, but the first to yield to them.
Nor is It to be overlooked that there
exists a chain of necessary dependence
among these institutions which obliges
them, TO a great extent, to follow the
course OF others, Notwithstanding its in
justice to their own immediate creditors,
or injury TO the particular community in
which they are placed. This dependence
of bank, which is 10 proportion to the
extent of its debts for circulation and de-
posites, is not merely on others in its own
vicinity, but on all those which connect it
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 ex-
tremitles OF the Union. The suspension
at New York, in 1887, was every where,
with very few exceptions, followed, as
soon as it was known; that recently al
Philadelphia Immediate v affected the
banks of the South and West in a similar
manner. This dependence of our whole
banking system on the institutions in
few large cities, IS not founded in the laws
of their organization, but In those of
trade and exchange. The banks at that
centre to whichcurrency flows, and where
it Is required in payments for nerchan.
disc, hold the powered controlling those
IN regions whence it comes, while The lat
ter possess no means of restraining them
SO that the value of individual property,
and the prosperity of trade, through the
whole interior of the country, are made to
depend on the good or bad management
of the banking institutions in the great
seats OF trade on the seaboard.
But this chain of dependence does
not stop here Il does not terminate at
Philadelphia or New ork. 1t reaches
across the ocean, and ends in London, the
centre of the credit system. The same
laws of trade, which give TO the banks in
our prncipa cities power over.the whole
banking system of the United States, sub
Ject the former, in their turn, to the money
power1n Great Britain. 1t is not denied
that the suspension Of the New. York
banks in 1887, which was followed in
quick succession throughout the Union.
was produced by an application of that
power; and it is now alleged, in extenua- |
ton OF the present condition Of so large
portion of our banks, that their embar-
rassments have arisen from the same
cause.
From this influence they cannot now
anfirolv oso,oo - b,o