Fremont journal. [volume] (Fremont, Sandusky County [Ohio]) 1853-1866, 1857-12-18


England always to keep on hand gold 1
nd silver equal to one-thiTd of its com j
lined circulation and deposites. q
II this proportion was no more then suf- e
cient to secure the convertibility of its t
otes; which the whole of Great Britain, q
nd to some extent the continent of Europe,
8 field for its circulation, rendering it al
most impossible that a sudden and immedi- {
tie run to dangerous amount should be |
made upon it, the same proportion would
certainly be insufficient under our banking {
'ystem. Each of our fourteen hundred
banks has but limited circumference for
is circulation, and in the course of very
iew days the depositors and note-bolders
might demand from such bank sufficient
amount in specie to compel it to suspend,
even although it had coiu in its vaults equal
10 one-third Of its immediate liabilities.
And yet am not aware, with the excep-
ton Of the banks Of Louisiana, that any
State bank throughout the Union has been
required by its charter to keep this or any
other proportion of gold or silver, compared
with the amount of its combined circulation
and deposits. What has been the consc
quencel In recent report made by the
Treasury Department on the condition of
the banks throughout the different States,
according to returns dated nearest to Janu-
ary, 1857, the aggregate amount of actual
specie in teeir vaults is $5s,349,sS8 of
their circulation $2l4,67e,s22, and of their
deposits S2SO,36l, 1852. Thus it appears
that these banks in the aggregate have con-
siderably less than one dollar in seven of
gold and silver compared their circulation
and deposits.
1t was palpablo therefore, that the very
| first pressure must drive them to suspension,
and deprive the people of a convertible cur
rency, with all its disastrous consequences.
1t is truly wonderful that they should have
so long continued to preserve their credit,
when demand for the payment of one
seventh of their immediate liabilities would
have driven them into insolvency. And
this is the condition of the banks, notwith-
standing that four hundred millions of gold
from California have flowed in upon us with
in the last eight years, and the tide still
continues to flow. Indeed, such has been
the extravaganza of bank credits that the
banks now hold considerably less amount
of specie, either in proportion to their capi-
tai or to their circulation and depositcs
combined, than they did before the discovo-
ry of gold in California.
Whilst in the year 1S4s their specie in
proportion to their capital was more than
equal to one dollar for four and halt, in
1857 it does not amount to one dollar for
every six dollars and thirty-three cents Of
their capital. In the year ls4s the specie
was equal within very small fraction to
one dollar in five of their circulation and
deposits; in 1857 it is not equal to one dol
lar in seven and half of their circulation
and deposits.
From this statement it is easy 10 account
for our financial history for the last forty
| years. 1t has been history of extrava
] giant expansions in the business of the coun
try, followed by ruinous contractions. Al
: successive intervals the best and most en-
, terprisiug business men have been tempted
r to their ruin by excessive bank loans oil
nero paper credit, exciting them to extrava
! giant importations of foreign goods, wild
: speculations, and ruinous and demoralizinl
: stock gambling. When the crisis arrives
: as arrive it must, the banks can extend NJ
: relief to the people. In a vain struggle tC
, redeem their liabilities in specie they arr
S compelled to contract their loans and thei
G issues; and at last, in the hour of distress
4 when their assistance is most needed, the,
and their debtors together sink into insol
l. vency.
e 1t is this paper system Of extravagant e1
e pansou, raising the nominal price of ever
d article far beyond its real value when CON
II pared with the cost of similar articles i
n countries whose circulation is wisely reguls
o ted, which has prevented us from compc
/, ting in our own markets with foreign man
s ufacturers, has produced extravagant impoI
e tations, and has counteracted tho effect c
IS the large incidental protection afforded t
y our domestic manufactures by the presen
revenue tariff. But for this the branches q
# our manufactures composed Of raw mater
y ais, the production of our own country, sue
It as cotton, iron and woolen fabrics-woul
n not only have acquired almost exclusiv
s. possession of the homo market but woul
d have created for themselves foreign maj
h ket throughout the world.
l. Deplorable, however, as may be our pre-
1t ent financial condition, We may yet indulg
g in bright hopes for the future. No othc
,r nation has ever existed which could hay
y, endured such violent expansions and contra'
Ie tions of paper credits without lasting injury
at yet the buoyancy of youth, the energies {
n our population, and the spirit which new
III quails before difficulties, will enable US soc
to recover from our present financial emba
h. rassment, and may even occasion us speed
to to forget the lesson, which they have taugh
re In the mean time it is tho duty OF the GO
le ernment, by all proper means within its po,
a er, to aid in alleviating the suffarings of Il
IN people occasioned by the suspension of Il
I'd banks and to provide against a recurren'
I'd of the same calamity. Unfortunately,
I'd either aspect of the case, it can do but Ii
at tie. Thanks to the independent treasur
I'd the government has not suspended pa
es ment, as it was compelled to do by Il
p failure of the banks in 1887. It will co
te tinne TO discharge its liabilities to the pc
D. pie in gold and silver. Its disbursement
10 in coin will pass into circulation, and mat
lis rally assist in restoring sound currcnc
IL From its high credit should we be compe
to ed to make a temporary loan, it can be e
lie ected on advantageous terms. This ho'
ever, shall if possible, be avoided; but
"a not then the amount shall be limited To II