The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1842-09-10
CuRRkNr RATES OF BANK Norris AND Dom,
Boston''' par ~
South Carolina. 2lsa

These rates for bills are, with the execution of Mobile
more moderate and uniform than any time for long
period Of years. They uniform than at any
time under the administration of Nasional Bank not
wthstandng that such institution has been and il NV
persons, considered indispensable to uniformity of
rates. That illusion is however fast passing from the
public mind fall rise in exchange either real or ar
tlhc'a is real when of purchases at any one
point have exhausted the produce fits industry means
OF and becomes necessary have resort to its
stock OF specie to discharge the balance In that case the
exchange rises sufficiently the cost OF transport
irg the SPECIE which forward until the debt il
paid The exshange then falls back generally below par
Exchanges artificial when excess of purchases hav
ing caused demand for specie any point the banks
there located instead of paying specie suspend their
payments The irresistible law of trade then requires
their bills to be sold to brokers others who have specie
IN order mat may be RENTED The bills thus sold ~
mediatey depreciae according to the quantity of them
that the bank has put aoa the extent of the demsnd
orspece for shipment. This Of depreciation which
Is apsurdy called the rate OF exchange, may reach any
price, At Mobile it has been as low 40 per cent dis
count The whole difficulty arises first from buying too
much, and secondly, from the defacaton of the banks
Nowa National Bank, to remedy this matter efecually
must either the purchases those
being made it must pay the balance itself
1t has been alleged that the National Bank by control
ing the local banks through its branches checks their
proneness to over action and thereby to induce pur
chases The operations Of the bank may be illustrated
by the action of well known house in Wall street prior
10 1885, Merchants from all sections of the country in
years came to New York. and bought goods an
amount regulated less by the sales that they could
make than by the extent of the credit that they obtained
from their local banks These merchants bought of the
Pearl street houses goods for which they gave heir long
dated bills payable at their banks These notes were
discounted by the house in question for cash if no longer
than 90 days to rum for their at go DAYS il four
These notes to the extent of $500 per
month, were RENTED say to Richmond Va for collec-
ton; as they matured at the Branch Bank there they
were all paid in the bills the local banks
throwing large balance against them into the hands
OF the branch This balance drawn in specie constantly
kept them in check and in the power of the branch bank
The branch then RENTED to the branch here which
came the governing power, and itself subject to no
control but that orng from the foreign demand for spe
cie The local banks being kept control by the branch
obgedto be cautious in their loans Dealers they
being restricted in credits bought less and in
the Pearl street houses imported less which again dimin
ished the foreign demand for CON- This was appa-
rently healthy operation, but the regulator itself
subject to control but its will and pleasure
and the foreign exchange The high tariff of 1928 first
stopped that demand by prohibiting imports The United
States Bank being thus relieved of all control doubled s
discounts in two years. raised them from 81 10
$6ioo0,oJo. This in the degree relaxed its con-
troll all the local banks which increased their
loans 600 in the time. This raised pricea
to such degree to nuy the high duties and inc
imports reproducing demand for CON- and leading to
the revuon of 1896 At that period credits were obtained
abroad from London houses which postponed the specie
demand until 1887 when its accumulation was 40 great AZ
to break down everything After that State stocks be-
came the medium of foreign credit which becoming dis
honored have now left the country without foreign crc
dit in any shape Now, however, new prohibition tariff
has been created and the banks now in the same DO
hion as formerly, would bring about the effect
But the banking system has been crushed. The
expansive power has been crippled that IL is beyond
power oil the tariff again to put in acton and the dis
astrous effects of prohbitive tariff will weigh upon
commerce with it's full force destroying trtde and de-
priving the government of its revenue.