The Union and eastern journal. [volume] (Biddeford [Me.]) 1854-1858, 1857-12-18

From TINS statement IL II easy W nc
count for our financial history for tn
last forty years. 1t has been a history o
extravagant expansions in the business o
the country, followed by ruinous eontrac
tions. At successive intervals the bes
and most cnterprising men have beer
tempted to their ruin to excessive banl
loans of nero credit, exciting them tc
extravagant importations offoreign goods
Wild speculations, and ruinous and demon
,lizing stock gambling. When the crisis
arrives as arrive it must, the banks car
extend no relief to the people. In vair
struggle to redeem their liabilities in spc
Gle they are compelled to contract Their
loans and their issues, and at last, in the
hour Of distress, when their assistance il
most needed, they and their debtors to.
gether sink into insolvency.
1t is this paper system Of extravagant
expansion, raising the nominal price oi
every article far beyond its real value
when compared with the cost of similar
articles in countries whose circulation is
wisely regulated, which has prevented us
from competing in our own markets with
foreign manufacturers, has produced ex.
travagant importations, and has counter.
acted the effect Of the large incidental
protection afforded to our domestic man
ufactures by the present revenue tariff
But for this, the branches of our manu-.
facturcs composed Of raw materials, the
production Of our own country-such as
cotton, iron, and wooden fabrics-would
not only have acquired almost exclusive
possession ofthe home market, but would
have created for themselves a foreign mar.
ket throughout the world.
Deplorable, however, as may be our pre-.
sent financial condition,wc may yctindulge
in bright hopes for the future. No 9th.
or nation has ever existed which could
have endured such violent expansions and
contractions Of paper credits without
lasting injury; yet the buoyancy of youth,
the energies Of our population, and the
spirit that never quails before difficulties,
will enable us soon to recover from our
present financial embarass and may
even occasion us speedily to forget the
lesson which they have taught.
In tho meantime it is the duty of the
government, by all proper means within
its power, to aid in allcviating the suffer.
ings of the people occasioned by the sus.
pension of the banks, and to provide
against the recurrence Of the same calam.
ity. Unfortunately, in either aspect Of
the case, it can do but little. Thanks to
the Independent Treasury, the govern.
ment has not suspended payment as il
was compelled to do by the failure Of the
banks in 1887. 1t will continue to dis
charge its liabilities to the people in gold
and silver. Its disbursements in coin
will pass into circulation, and materially
aSsist in restoring sound currency
From its high credit, should we be com
pclled TO make a temporary loan, it car
be be effected on advantageous terms
This, however, shall ifpossiblc be avoided
but if not then the amount shall be limit
ed to the lowest practicable sum.
lhavc, therefore, determined that willis
no useful government works already il
progress shall be suspended, new works
not already commenced will be postponed
if this can be done without injury to tn,
country. Those necessary for its defcns,
shall proceed as though there had beer
no crisis in our monetary affairs.
But the federal government cannot dc
much to provide against recurrence o
existing evils. Even if insurmountabl'
constitutional objections did not cxis
against the creation of national bank
this would furnish no adequate preventive
security. The history Of the last Banl
of the United States abundantly provc
the truth of this assertion. Such a banl
could not, if it would, regulate the issue
and credits of fourteen hundred Stat,
Banks in such manner as to protect th
ruinous expansions and contractions il
our currency which afflicted the countr,
throughout the existence Of the late bank
or secure us against future suspensions
In 1926 an effort was made by the Banl
of England to curtail the issues of tn
country banks under the most favorabl
circumstances. The paper currency ha'
been expanded to ruinous extent, an
the bank put forth all its power to con
tract it in order to reduce prices and re
store the equilibrium Of the foreign es
changes. 1t accordingly commenced
system Of curtailmcnt OF its loans and j,
sues, in the vain hope that the joint stoc
and private banks of the kingdom woul
be compelled to follow its example. ]
found, however, that as it contracted the
expanded, and at the end OF the process
to employ the language of very hig
official authority, whatever reduction {
the paper currency was effected by tn
Bank of England In 1929 was more tha
made up BY the issues Of the countr
banks"
But bank of the United States woul
not, il it could restrain the issues and loan
of the State banks, because its duty as
regulator Of the currency must often b
in direct conflict with the immediate il
tercsts Of its stockholders. If we expeC
one agent to restrain or control anothc
their interests must, at least in some d,
gree, be antagonistic. But the Director
. Of bank OF the United States would fe,
the same interest ard the same inclini
tions with the Directors ofthe State Bank
to expand the currency, to accommodat
their favoritcs and friends with loans, an
to declare large dividends. Such ha
been our experience in regard to the Ia.
bank.
After all, We must mainly rely upo
the patriotism and wisdom Of the State
for the prevention and redress Of the cvi
II they will afford us a real specie basi
for our paper circulation, by increasing
the denomination of bank notes, first {
twenty and afterwards TO fifty dollars
they will require that the banks shall q
| al times lecn nm kanJ M lo,s, ,,,, J,li.