The daily Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1841-1845, 1842-01-01


show how far great moneyed institution connect
ed with the Government has had the effect Of limit,
ing the number, or regulating the issues OF local
and private banks"
He gives us now the beauties of banking:
4" Country banks began to spring up in every part
of England Immediately after the war of the Reyolu-
ton, and continued to increase till the year lI92,
when redundant currency and general spirit oil
speculation and oyerrading, produced violent re-
action and consequently an extent Of misery and
bankruptcy which until then had never been known
in that country" Three hundred and fifty banks had
been in full operation and Of this number, hun
dred stopped payment, and upward Of fifty were en-
tirely destroyed"
Brother Jonathan has beat John Bull, we be-
eve, in the particular of bank failures, or at
least bank suspensons-and what are they but
bank failures? Our bank suspensions or fail
ures amount TO about 500 in the IS States,
with capital of about $50 millions. But let
US hasten to the bank history-let us come TO a
crisis:
''In 1897 another crisis occurred In the latter part
of the previous year, heavy demands were made on
the country banks and some of these falling all con-
hdence at an end and the Bank of England was
reduced to great an extremity as to be compelled
to suspend specie payments, which not resumed
till the year 1919"
SO after ALL the great regulator OF England
didn't regulate the banks, but the banks regula-
lated the Regulator. And yet his Excelency
has referred us to this English Regulator, as a
model for an American Regulator. But let us
20 ahead:
''In 1916, and the two previous years, two hundred
and forty country banks stopped payment, OF which
number cghty-nine entirely failed One pound notes
then circulation, and TO use the words OF the
writer from whom these statements are taken, the
failures that then occurred affected the industrious
classes swallowing up in an instant the fruits OF a
long life of laborious exeron.' y
This picture looks truly natterng But letus
pass to revival Of confidence, speculation, and
extravaganza:
sin 1893 confidence had revived, and the banks
began as usual to enlarge their issues and IN the
two following years. the amount OF their paper III CIR
culation was increased nearly fifty per cent Specu-
aton, overtradng and extravaganza immediately en-
sued, which, i'll the year 1925 terminated ~ announcer
scene of distress, bankruptcy and rum
And now follows morsel oftruth and philos-
ophy and we hope the public will profit by the
admontion
Nothing is more common than to ascrlbe public
embarrassments to some other cause than the real
one and consequently to provide remedies when Ire
gently aggrayae the evil
The following is too instructive to be omit
ted:
.sPrior to the explosion in 1925, bank partner
shp could not consist of more than six persons; and
il was supposed that the mschets of the banking sys-
TEN were caused in great measure 10y mat regu-
lation. Accordingly, joint stock companies were
established without any limitation as to the NUMBER
of partners Three of these companies commence
operations in the year 1896; in 1888, the number
had increased to iiy-siN; 1886, forty-lye new com
panes were formed; and many of these having hl-
meros branches 1t was computed that two hundred
Joint stock banks established In thal year. lhes
Immediately commenced the work of adding to pa
per currency already redundant, and continued TO m
crease their issues till late in December, 1886 "heh
the credit system having been strained TO us utmost
limits, suddenly gave way, and change from artl-
fetal prosperity to real Distress such as lnvariapy
attends the excessive use OF paper money lhl'leui
ately took place in every part oil England
We are thus instructed in the wisdom OF the
homeopathic remedy of increasing the disease 10
cure the eyil-to add new issues to redundant
currency, and change artificial prosperity INTO
real distress.
But TO proceed. Letus now see what change
has come DER the spirit OF his Excellencys
dream ola grand Regulator:
"This sketch of the English banking system shows,
that the Bank Of England, for halt century pasl,
whether in time of peace or war; or during the coh''
nuance OF specie payments OF general eusPeei
has been unable to control joint stock or private banks
or 10 regulate their issues even TO protect itself
from the effect of their mlsmanagement, IL is, theie
fore difficult to conceive how the banking system OF
the United Stats pushed as u generaiy !, " W,
verge Of bankruptcy can be regulated ny 1,a''ona'
ID - al
little doubt however, that the banks OF every otate
may be controlled by the authority from which they
derive their charters.
We are rcjoiced to see that his Excelency
has
Convinced himself against his will
And is not of the same opnlen stlll,
that he appeared to entertain in the early part
Of his Message, where he says 1.-The opinion
NAV still be entertained, that the State Banks
can never be properly regulated without the aid
Of a National Bank, and that as their present
condition is attributable to the want OF such an
institution, no remedy can be provided by State
legislation"
Two more quotations. and we shall close
our Bank account The Governor now comes
manfully to the charge against these lncorpora-
ted 'raggamuthns; and is very sound upon
their rotten condition:
Whether the banks of this State ever intend To
redeem their notes is altogether uncertain; though
there has been occasionally rumor that they were
ready to resume, whenever similar movement was
made by the banks OF PennsJ wanna, Virginia and
he West. But to make resumption in Maryland de-
pendent on the course pursued elsewhere is to post
pone to an indefinite period If the banks of each
State permitted to act they pleased, I'LL those
Of other States chose 10 comply with their obligations,
the consequence might be- that instead OF encourag-
ing each other to resume they would enter into gene
raj combination to prevent it.
We think nobody can object to such argu-
ments, or deny their conclusiveness, but the
banks themselves: they may have no opinion
of them; aud it is natural they should,