Raftsman's journal. [volume] (Clearfield, Pa.) 1854-1948, 1855-03-21
For the Reffsman's Journa
BANKS AND BANKING.

not know how many, their name is Legion
The work is begun-some of the charters have
been granted by the Senate, whether many or
all of these will pass we cannot at present say
but it is much to be feared that, by the appli-
cation of the s<log rolling'' system, all, or
nearly all, Of the charters asked for may be
granted. II becomes us therefore, to Ieason
calmly and seriously, and taking past expert
ence and the late report of the Banks made
to the Auditor General, in some measure for
our guide, asks the queStions--dre more banks
needed Have we not too many already p
Can banks afford relief to the business commu-
nifty in time of difficulty and general scarcity
of money? Is not the stighfness' in the mon
ey market made more stight' at such times by
the banks =?
l have the bank returns before me, and
from them l take the following facts or rather
figures: there are in the City and County of
Philadelphia sixteen banks with an aggregate
capital of S10,S1S, 500, circulation in May
Sc ,399 ,09S, in Nov. S5,16S, 1856. Bills and
notes discounted in May S25,27S, 1924, and in
Nov. bills and notes discounted S22, ,657 ,230.
These figures show reduction in the circula-
tion of these banks in six months of 81 ,231,-
6l2 and in bills discounted s., ,601 ,09f. Why
this great reduction? What could have cauS-
ed this sudden contraction? The answer is
simple and plain. Bank directors and stockhol-
ders are as greedy, and will venture as much
to make money as any body else, and when
times are good, when exchange with foreign
countries is in our favor, when there is no de-
mand for coin for shipment to pay debts
abroad, then all is scoafidence.' Then was 1.-the
good time coming, "-then the banks loaned
moRey. No they didn't; they loaned bank
notes; they loaned their promises to pay, and
in abundance. Everybody who could furnish
good or supposed to be good endorser, could
get these loans, the more notes discounted the
larger the dividends to the Stockholders
Need ii be asked what is to be the consequence
Of this sudden expansion, this making of mon
ey plenty! Prices Of all kinds of property go
up p;-eXtravagance is encouraged people
seek to grow rich without labor; and every
conceivable and inconceivable project Of spec
ulation is entered into,-the importation of
foreign goods is eXcessive,-we build and live
in palaces, and dress in the most costly fabrics
that the world can furnish.
But in a few short months, spresto' all is
changed. We are called on to pay our debts
abroad. Exchange is against us. Heavy
drafts are made on the banks which cannot be
paid with bank notes, but must be paid in
specie. They become alarmed and must take
care of themselves,-must trim the vessel to
meet the storm. They call in their loans,-
they refuse to discount, they contract, they
put on the screws, and they are obliged to take
this conrse TO save themselves from suspen-
sion or failure. In short, they must do as any
prudent individual would, under like circum-
stances, collect their debts and refuse to make
new loans.
Let the man of business who may be in diff
ficulty go to 4 bank now for assistance, he is
told nc can't here tits impossible, we have
to day refused to .sdo'' the best paper in the
city. They arc poSerless to aid, when aid is
needed, and with bankruptcy and ruin staring
the man in the face he can't get dollar He is
obliged to go elsewhere to procure the money
he mast have, and here again he is prevented
~.
trouble coming. They have bcea calling in
their loans, contracting; and have been the
cause of the 'stringency' in the money market.
Finally after running about until he is
worn and weary. he is obliged to resort to the
Bill Broker, and stand a shave Of two or three
per cent. month, to save a protest on his note,
held by one of these banks. (For let it be re-
membered, and TO our shame and disgrace be
it said, that our beautiful .iSury ltvs' prevent
him from making direct loan at less rate
of interest.)
But to resume the bitter fruits Of this ex-
ccssve banking are seen in the wide spread
failures, bankruptcy and ruin which ensue,
only more or less general in proportion to the
number of banks. ana their expansion and con-
traction.
But it is said more bank capital is needed in
Philadelphia, because they cannot discount
all the good paper that is offered.
Let US suppose for moment that that City
had its bank capital doubled, that the labili-
ties in the shape Of circulation and deposits
in place of being $50, ia, $50 in November
last was twice as much, or $40, ,229 1854 and
double the amount of loans which at the same
date was So, ,617 ,230, we have S45, ,33i AGO.
What then, L ask, would have been the conse-
quence OF this increase Things would have
been imm easurably worse-thescontfdeace man
much wanted. coincidence could not be
protests and failures would follow
tlsn nFaH f,ct
bankruptcy, and suspension of specie payment
by the banks. This is no fancy picture, it has
happened before. Let experience then teach
wisdom.
The bank returns show that in November
last there was on deposit in the Philadelphia
banks the enormous sum of Sl4 ,946 1896 being
S4 ,127, ,796 more than their whole capital
stock. Banks 1 believe very seldom pay in
terest to depositorS. Now why this amount
should lie idle when money was worth from
one to two per cent. per month, cannot pre-
tend TO know, and leave for some one else to
explain. There was specie and ssspecie funds
in the banks aforesaid as returned in Novem-
Der, to the amount of S5,046, 1875 and the cir
culation and deposits as already stated were
$40, ia ,6S2. Here is a considerable difference,
but 'Sconffdence' may keep this all right What
sEspecfe funds consist of, we are not informed;
it means something other however than gold
and silver. In making up the above amount
L didn't add in the odd cents, though it would
seem the banks have been very particular, for
example, one of them returns S34S, ,057 and
eight cents in specie, this shows the eractness
of their returns.
Let us now look at the County banks. There
are thirty-three banks of issue in the State
(besides those in Philadelphia) with an aggre
gate capital stock of SS, 1855, ISL. Their cir
culation in May was $14, gil. In Nov.
S1l $780, ,094, deposits S5,145, ,301. Total de-
81, ,227 $40 Of specie. Here sscontidence" is
certainly very necessary. If run was made on