Columbus Democrat., 1840-01-18
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Formerly our commerce was principally founded
On an exchange Of commod,ties, including he
precious metals, sod leaving Ia as lransaciiop-
bal little foreign debt. Such is not now f1s ease.
Aided by the facilities afforded by the bank.
lae.e credit has become too commonly the basis
of trade. Many Of the Banks themselves, nos
conlenl With largely stimulating this system n
n,ong others, have usurped the busiaess, Shle
they impair the stability Of the mercantile som.
launy they have become borrowers instead of
lenders they establish agencies abroad ,bev
deal largely IN stocks and merchandise ,hrv ,o.
courage The issue OF Slsle securities until the
iorrigH market Is gIulled with them and, unsat-
issied with the legitimate use Of their own capital
aad the exercise oi their lawful privileges, they
Iasc, BY large loans, additional means f,n ever,
variety OF speculation. The disasters attendant
on this deviation from The former course Of busI.
ness in this country, are now shared alike by
banks and individuals, 10 an extent OF which
here Is perhaps no previous example in the au-
nails Of our country. So long as Willingness Of
fofsIgn lender, and sufficient export of cur
productions TO meet any necessary partial pay
msnls, leave the flow Of credit undislurbed, oil
appears to be prosporousi ba as 5000 as it is
checked by any hesitation abroad, or by an ina
5ilily 10 make payment Ihe,o IN our productions,
the evils Of The system are disclosed The pa
per currency, which might serve for domestic
purposes, is useless to pay The debt 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 Obliged
10 call upon their own debtors. who ply them
principally in their own notes, which ara as Una
vailablo TO them Us they are To the merchants ,a
meet the foreign demand. The calls Of ,he
banks, therefore, in such emergencies, Of neces.
siiy, exceed that demand, and produce CORES.
pondIng curtament Of their Accommodations and
of the currency, al the very moment whom the
state Of trade renders il most inconvenient 10 be
borne. The intensity of this pressure on The
community is IN proportion 10 the previous lber.
aly Of credit aud consequent expansion Of the
currency; forced sales OF property are made at
the time when the means OF purchasing arc most
reduced, and the worst calamilies to individuals
are only at last arrested, by an open violation oI
their obligations by The banks, refusal 10 pay
specie Tor their notes, and an imposition upon the
community OF fiuetualing and deprecated cur.
reney.
These consequences ore Inherent in the pres.
EFT systom. They are not Influenced by n,
banks being large OF small, created by national o.
State Governments. They are the results Of III,
irresistible laws Of trade and credit. IN the re.
cen. events which have so s,rikingly illustrated
the certain effects Of these laws, we have see n
the bank Of tho largest capital in the Union, cs
iablished under National charter, and lnlel,
strengthened, as we were authoriiively informed
hy exchanging that for State charter, with nov
and unusual privileges-ln condition too, as /
was SAID, OF entire soundDess and grea, prosper
~ --rol merely unable to resist these effects, bu
The first 10 yield 10 them. Nor is il to be over
looked iha, there exists a chain Of necessary do
pendenee among these institutions which oblge,
them, 10 great extent, to follow The course o
others notwithstanding IFS injustice 10 their owl
immediate creditors, OF injury TO the parlicuIa
community in which ,hSy arc placed This de
pendence OF bank, which is in proportion 10 III,
extent Of lis debts for circulation aud deposltes
IS not merely on others in its own vicinity but o,
oil those which connect il with the centre Of trade
Distant banks may fail, without seriously affect
Ing those in our principal commercial cities, bu
the failure Of the latter is teila The ex,remnes O
the Union. The suspension at New York, j,
1887, was every where, With very few exceptions
followed, as soon as II was known that recent,
at Philadelphia immediately affected The banks o
the South and West ia similar manner. / hi,
dependence Of our whole banking system on III,
institutions in few large cities, Is not found il
the laws Of their organization, but in those o.
trade and exchange. The banks, at lha, ccuir,
to which currency flows. and where il 10 REQUIRE,
IN anti Far rkas. l. Al
controlling those IN regions whence IL comes
while the later possess no means Of conlron,
them so thai the value Of individual property
and the prosperity Of trade, through The whole IN
terror Of the country, IRE made to depead OF
the good OF bad management Of the BANKING in
stliullons IN the great seats Of trade on the SCI
board.
But this cham Of dependence does not sto
here. Il does not terminate at Philadelphia q
New York. II reaches across the ocean, an
encs ia London, the ceniie Of he credi! system
The same laws Of Irade, which give TO The bank
"a our principal cities power over tho whole banl
ing system Of the United States, subject the 70
lner, in their turn, to the money power in Gre,
Britain II is no, deried thai the suspension
the New York banks in 1897, which was lpilo,
I'd in quick succession throughout the Union, ",
produced by an application Of that power; NJ
il is now alleged, IN eStenuaon Of the prese
condition Of so large a portion Of our bank
that their enlbanassnents have arisen from il
tame cause.
From this influence they cannot now entire
escape, for il has origin in tho credit curreucj
oi the Two countries; II is strengthened by
current Of trcde and exchange, WhIrh centres
Loudon, and is rendered almost irresistible
the large debts cont acted there by our n'rrchur
our banks, and our Staies.-li is thus that sii
Production of Aew bank lato the most distant
our villages, places tie business OF that vill'
within the influence Of the money power IN Il
land II is thus that every new dehI which
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