Daily Nashville patriot. [volume] (Nashville, Tenn.) 1857-1858, 1857-12-14

very small traction TO one OOHaf I'D HN6 OI IneiI
! circulation and deposites; in 1857 it is not
! equal to one dollar in seven and half Of their
! circulation and deposites.
/ From this statement it is easy to account for
! our financial history for the last forty years
/ II has been history of extravagant eIpan-
siOns in the business of the country, followed
| by ruinous cOntractiOus. At successive inter
! walls the best and most enterPrising men have
been tempted to their ruin by excessive bank
! loans of mere paper credit, exciting them to
/ ex ravagant importatons, of foreign goods
| wild speculations, and ruiuous and demOraliz
ing stock gambling. W hen the crisis arrives, as
| II must, the banks can extend no relief to tile
| people. In vain struggle to redeem their
! abilities in specie, they are compelled to
! contract their loans and their issues, aud at
las', in the hour IF distress, when their assist
ance Is most needed, they and their debtors
! together sink into insolvency.
1t is this paper system Of extravsgant eI-
TansioD, raising the nominal price ofevery ar
tlcle far beyond It's real value, when coInpar-
"a with the cost Of similar articles in coun-
lrles whose circulation is wisely regulated,
which has prevented US from competing in our
own market with foreign manufacturers, has
produced e1travagant impOrtatiOns and has
counterac' Q the effect # tie large incidental
protection afforded 70 our domestic manufac-
lures by the present revenue tar #. But for
this the branches of our manufactures com
posed OF raw materials, the production OF our
own country-such as cotton, iron and wool
len tabrics-wOuld not only have acquired al
most exclusive possession OF the home mar
ket, but would have created for themselves, a
foreign market throughout the world.
Deplorable, however as may be orr presnnt
nnahcIaI cohdltlon we may yet indulge in BRIGHT
hopes lot the IutuFe. No other nation has ever
/ existed which could have endured such vioIaDt
! expansions and cOntractiCns of paper credit
without lasting injury, yet the buoyancy of youth
| the energies OF our population. and the spirit
which never quails before difficulties will enable
US soon to recover from our present financial
| embaTra ssment, and NAV even occasion US spee-
Oily to forget the lesson which they have taught
In tn meantime it is the duty of the govern
ment by all proper means thin it, power to aid
in alternating the sufferncs OF tie peopIe occs-
stoned by the suspension OF the banks and TO pro-
vile against recurrence of the same calamity
Unfortunately, in either aspect of the case il can
do but little. Thanks to the inc" pc cnt treasury
the government has not suspended payments as il
was compiled to do by the failure of the banks in
1887. 1t viii continue to discharge is liabilities
TO the people in gold and silver It's disburser
merits in coin will pass into circulation and mate
rally assist in restoring a sound currency. From
Its high credit, should we be compelled to make
temporary loan, il be eff cted on advantageous
terms. This, however. shall, if possible be avoid
e.; but if not then the amount shall be limited TO
the lowest practica lie sum.
l have, therefore, determined that whilst no
useful government works already in progress
shall be suspended, new works not already com
menced, will be postponed if this can he done
without injury to the country. Those necessary
for its defence shall proceed as though there had
been no crisis in our monetary affairs
But the Federal Government cannot do much
TO provide against a recurrence of existing evils
Even if insuTmOuntabe constitutional objections
did not exist against the creation of a National
Bank, this would furnish no adequate preventive
security. The history Of the last Bank of the
United States abundantIv proves the truth
of this assertion. Such Bank could not if it
would regulate the issues and credits of four
teen hundred State Banks in such a manner as
to prevent the ruinOus expansions and cOntrac-
tiOns in our currency which afflicted US through
out the existence of the late Bank. or secure us
against future suspensions. In 1925 an effort
was made by the Bank of England to curtail the
issues Of the country Banks under the most ia
vorabe circumstances.
TIE pap'r currency had been expand d to a
ruinous extent, and tn Bank put forth al its pow
contract il in order to rcduC, prices and res
tore the equilibrium of foreign exchanged l. ac-
cordingly commenced a system Of enrichment of
its loans and issues in the vain hope that the Joint
stock and private banks of the kingdom, would be
compelled to follow its example. 1t found, how"v-
er that as Il contracted thrv expanded and at the
end OF the process, to employ the language Of
very high official authority, ''whateVsr reduction
of he paper circulation effected by the Bank
Of ENGLAND in 1925 WAS more than made up by
the issuns ~ the country hank"
But the Bank of the United States would not
II it could, restrain the issues and loans of the
State banks, because its duty, as a regulator of
the currency must often be in direct conflict with
the immediate interests of its stockholders If
we expect one agent to restrain or control an
other, their interest must, at least in some de-
gree, be antagonistic. Buff the directors of a
Bank of the United States would feel the same
interest and the same inclination with the direc-
tors Of the State banks to expand the currency
to accommodate their tavOrites and friends with
loans and to declare large dividends. Such has
been our experience in regard to the last bank.
After all we must mainly rely upon the patriot
ism and wisdom of the States for the prevention
and redress of the evil. If they will afford us a
specie basis for our paper circulation by increas-
ing the denomination of bank notes, first to
twenty, and afterwards TO fifty dollars if they
will require that the banks shall at all times
keep on hand at least one dollar of gold and sill
for ever three dollars of their circulation
and deposites and if they will provide by a self
executing enactment, which nothing can arrest
that the moment they suspend they shall go into
liquidation, believe that such provisions with
"a weekly publication by each bank of a state
ment OF its condition, would go far to secure us
against future suspensions OF specie payments.
Congress-, In my opinion, possesses the pow
er to pass a uniform bankrupt law applica-
be to all banking institutions throughout the
United States, and strongly recommend its
exercise. This would make 1t the reversible
organic law Of each banks existence. that a
suspension of specie payments shall produce its
civil death. The instinct of self-preservation
would then compel it to perform its duties in
such a manner as to escape the penalty and
preserve its life.
The existence Of banks and the circulation
of bank paper are so identified with the habits
of our people, that they cannot at this day be
suddenly abolished without much immediate
injury TO the country. If we could confine
them to their appropriate sphere, and prevent
them from administering to.the spirit of wild
and reckless speculation by extravagant loans
and issues, they might be continued with ad-
vantage to the public.
Bur this l say, after long and much reflection:
If experience shall prove il impossible to enjoy che
facilities which well regulated banks might afford,
without at the time suf ring the calamti-s
which the excuses Of the banks have hitherto in
hictrd upon the country, il would then b. far the
lesser evil TO deprive them altogether OF III power
10 i4sue a pHp. irrcncv, an c0u6u. them TO the
fur ctions of banks Of d poste aud discount
Our relations With for ign governments are, up
on the whole, in a Satisfactory condition.
The diplomatic difficult which existed be-
tsern the government OF the United States and
that Of Great Britain at the adjournmeut of the
last Congress hav" been happily rlninsted by
the spp3'utm. Mt Of Briu minister to this eoun-
try, who has been cordially received.
Whilst il is greatly to the interest, as | am
convinced it is the sincere desire, of the gov
ernmeuts and people of the two countries to
be on terms of intimate friendship with each
other II has been our misfortune almost al
ways 10 have had some irritating. it not dan
F-ruus outstanding question with Great Brit
ain.
Since the origin ofthe government we have