Wilmington journal. [volume] (Wilmington, N.C.) 1844-1895, 1857-10-23
Hon. Nathan Appleton ON New York Banks.


financial panic: +
Messrs Edfors-I have for many years been with
drawn from active business. have been merely look
er on but not unobervent Of the of trade and
especially of our banking operations.
Our system of currency is delicate one. 1t is found
ed on bank credits, resting on very moderate basis of
coin When perfectly balanced it works very WE'LL but
a slight arrangement may produce great deal of mis-
chief The great disturbing is demand for spe
Gle for export which only be checked by contrac
ton of the bank credits. During the present year we
have been going very smoothly under full SAIL when
about the middle of August sudden squat strikes u.s.
which continues to increase to terrific hurricane,
threatening even to swamp the ship itself The question
arises, How comes this about ?-what is the cause?
New York is the great central banking power She
sets the keynote to the whole country. If she expand
the whole country expands If she contract it is felt
the remotest extremes. 1t is tremendous power that
of increasing diminishing the circulating medium of
the whole country. 1t is deep responsibility and de-
mands sound discretion and much wisdom in its regua
ton Unfortunately there appears to be unity of
tion no controlling principle in the management of this
power. 1t is divided between fftyve banks, each act
ing its separate part, under the influence of differ
EN- opinions and different interests Banks public
institutions they founded for the public good, and
the duty Of consulting the good of the community in the
use of their great power sacred that of providing
for their own safety. There is apparently individual
of sufficient influence to bring this heterogeneous
to unity of action in crisis like the present as was AL
bert Gallatin, whilst he lived.
ssts in the liabilities her banks in the form of deposits
and circulation. Their daily loans and discounts in
crease diminish these liabilities. AS those liabilities
greater less is money plenty They con-
stitute the fund out of which all operations must be per-
formed.
Hunts Merchants Magazine contains tables of the
weekly returns of the banks city of New York for
the years 1856 and 1857, which furnishes complete
view of their operations. They throw food of light
the present state of things The return for January
"A Of 1iahi
$4,000 in specie.
This varied very little from the returns of the preced
ing six months and this state of things continued with
little change, but with slight tendency to increased eX
panson up to the 9th of August The greatest expan
sion the I'd of May, when the liabilities were
Sl08,000000 with $l2 100000 of specie. The return
of 18th of August shows SOL 100000 of liabilities and
81 100000 of specie. From this rapid contraction
commenced the liabilities being reduced the 9Th of
. September to SSO00O00, with $10227 900 of specie.
Here the contraction ought to have ceased The object
to stop the export of specie That had been DONE
Exchange London had fallen below the point at which
specie could be shipped without loss Can any mortal
man give reason or apology why contraction should
continue day after this point had been reached? The
banks then stronger than they had been for two
years. But contraction did continue until on the Sd of
October the liabilities had been reduced to $76OOOOOO
u thus reducing the circulating medium of New York
city, from July, $32000000 upwards Of 80 per Ct
Tremendous! Was the like ever known in the history
of banking? have hesitation in saying it is the
continued contraction of the New ork banks since 5th
of September without the slightest necessity which has
1 brought about the present disastrous crisis.
There was no decided overtrade There was no spec
ulation except by few houses in sugar There was,
doubt, of imports but greater than for
several years. and the effect of these wholly cured
the 9Th of September by the rate of exchange Lon
don. Why continue contraction further? Was not
lightweight millions, with ten and quarter millions of
specie, being IL per cent as safe proportion one
hundred and four millions in January with eleven mil
lions of specie, II per cent on their liabilities.
There is but one answer. The New York banks have
been acting under panic and that panic they have
communicated to Others until there almost total loss
of confidence The consequences before u.s. the
paralysis of all trade from Bangor to New Orleans, the
stoppage of banks through great part of the United
States; the stOppage of factories the discharge of
thousands of aborers the inability to bring our large
crops of produce to market the runous rate of two
three per cent month the strongest paper; ruin
GUS depreciation in the price of all stocks and
exchange on London. In my whole experience | have
never known crisis the present and, must
say, so wholly uncalled for.
>. [ was bank director in ISL when New Y ork and
~ all the States South and West suspended specie pay
ments, Boston had ample means and stood firm while
many CrOakerS thought 1t madness for Boston to hold
when all the rest of the country suspended She did
4 so, however and all New England with her. and thus
saved them the losses which accompanied the resump
ton in other States in the terrible revuson of 1919.
:. In 1884 MIR. Biddle was hagitiOuslv endeavOrine
70 to force Congress to grant him charter through the
distress he had it in his power to nct the country
70 In Marchtof that year committee of the merchants
and bankers of New York informed him that unless he
10 changed his course and would agree to their terms
which that the United States Bank should cease
IL to call the other banks for thirty days his course
would be denouounced at the ouned meeting of the
- Exchange.
Mr. Biddle at the last moment agreed to their terms
in consequence of which the country was mmedatel,
relieved But Mr. Biddle reckless enough, wher
the thirty days expired without the slightest necessity
to call for these balances and give the anothe
X turn.
This produced an intense and unexpected pressure
for it was the New FORK understanding that Mr. Bid
die should not again press them without some show Q
necessity This pressure he continued until the adjourn
ment of Congress in July when he gave up the chase
and soon after extended the loans of the bank from
I'd to 63 millions.
There was nothing in that pressure to be compared
tn severity to the present 1t wholly owing to the
st principed action of Mr. Biddle.
as The pressure of 1887 wholly unlike the present.
During period of great overtrade few London house
millions OF dollars by giving out their acceptances,
r be met by other equally fictitious bills they fell due
These houses fell into dscredt and informed their COZ
Z respondents in America that the whole debt must
Il quidated at once, they must become bankrupt Th
was in March, when no remittances could be made e1
cept in specie which the banks called upon to flu
lit nlSh The New Ork Banks went on for sOnethin
over month, when they found it impossible to continue
ny They then suspended and with them the whole contr,
S There is nothing like it there is no foreign d
We mand for specie.
The question now arises, what is the remedy ?-whs
LII is to be done? Nothing be palmer The New Yor
bankers must retrace their steps, and speedily or it wi
be too late They should at once increase the circuf
I'll ting medium by expanding their discounts some ten
of nllon