Weekly flag of the Union. (Jackson, Miss.) 185?-18??, 1857-12-23
vaults equal to one-third Of It's inmeliate LA.


/. State bank throughout the Union has bee
g required BY tic charter to keep this or an
! other proportion of gold and silver compare
b with the amount Of its combined circulatio
d and deposits What has been the cons
quence! In recent report made by th
q Treasury Department on the condition of th
IS banks throughout the different States. acco
A ding to the returns dated nearest to Januar,
n 1857, the aggregate amount of actual speci
: in their vaults is $59, ,349, 1888, Of their circt
n lation $2l4, It's, ,S22, and ef their deposit
4 $3.50, 1851 1852 Thus it appears that thes
n banks in the aggregate have considerably les
s than one dollar in seven of gold and silve
Z compared with their circulation and deposits
1t was palpable, therefore. that the yer,
!. first pressure must drive them to suspension
land deprive The people of convertible cur
rency with all its disastrous consequences. ]
is truly wonderful that they should have q
ssslu5a t. fIsElI eIs ,s..e:
Il dcfifaad for tie Iiaylieilt Of one-seventh o
their immediate liabilities would have driver
them into insolvency And this is the condi
!! ton Of the banks, notwithstanding that fou
hundred millions of gold from California have
| flowed in upon US within the last eight years
and the tide still continues to Aow Such hal
been the extravaganza of bank credits thai
the banks now hold q CONSIDERABLY les:
amount of specie. either in proportion to Their
circulation and deposits combined, than they
did before the discovery of gold in California
Whilst in the year 1848, their specie in
proportion to their capital, was more than
equal to one dollar for four and half, in 1857
it does net amount to one dollar for every six
aud thiFty-threo and third cents of their
capital. In the year 1913 the specie was
equal within ycrJ s,nall fraction to one dol
lar in five of their circulation and deposits
in 1857 it is not equal to one dollar in seven
and halF of their circulation and deposits.
From the statement it is easy to account
for our financial history for the last four years.
1t has been history of extavagant expan-
sions in tue business of the country, followed
! by ruinous contractions AT successive inter-
walls the best and most enterprsing men have
been tempted to their ruin by excessive bank
loans Of mere paper credit, exciting them to
extravagant importations of foreign goods,
wild speculations, and ruinous and demoral-
izing stock gambling. When the crisis ar
rlyes, as arrive it must, the hanks, extend no
relief to the people In vain struggle to
redeem their liabilities in specie they arc
compelled to contract their loans and their
issues; and at last, in the hour of distress,
when their assistance is most needed, they and
their debtors together sink into insolvency
1t is this paper system of extravagant ex-
pansion, raising the nominal price of every
article far beyond its real value, when COM
pared with the cost of similar articles in
countries where circulation is wisely regulated,
which has prevented us from competing in our
own markets with foreign manufacturers, has
prodaced extraVagant importations, and has
counteracted the effect of the large incidental
protection afforded to our domestic manufac-
,issss,s-A -srt TJlt fSs.
'tIlis the ffansEa$ our an17slctdres com
posed of raw materials, the production of our
own country-suoh as cotton, iron and Woolen
fabrics-would not only have acquired almost
exclusive possession of the home market, but
would create for themselves foreign market
throughout the world.
Deplorable, however, as may be our pres
ent financial condition, we may yet indulge in
bright hopes for the future. No other nation
has ever existed which could have endured |
such violent expansions and contractions of
paper credit without lasting injury; yet the
bouyancy of youth, energies four population,
and the spirit which never quails before diff
culties, will enable us soon to recover from
our present financial embarrassment, and may
even occasion US speedily to forget the lesson
which they have taught.
In the meantime it is the duty of the gov
by all proper means within its power
to aid in alleyiating the sufferings of the peo.
pie occasioned by the suspension of the banks,
and to provide against recurrence of the
same calamity. Unfortunately, in either as
pect of the case, it can do but little Thanks
TO the Independent treasury, the government
has not suspended payment, rs it was compell-
ed to do by the failure of the banks in 1887.
1t will continue to discharge it's liabilities to
the people in gold and silver. Its disburse
nents in coin will pass into circulation, and
assist in restoring sound curren-
,y. From its high credit, should we be COM
pelled to make temporary loan, it can be
effected on advantageous terms This, how
ever shall, if possible, be avoided but, if not,
hen the amount shall be limited to the lowest
practicable sum.
have therefore, determined that, whilst no
useful government works already in progress
shall be suspended, new works. not already
will be postponed, if this can be
lone without injury to the count y. Those
necessary for its defence shall proceed as
hough there had been no crisis IN our none
ary affairs
But the federal government cannot do much
% provide against a recurrence of existing
wills. Even if insurmountable constitutional
objects 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 abundantly proves
The truth af this assertion. Such bank
,ould not if it would, regulate the issues and
,redits of fourteen hundred State banks in
such manner as to prevent the ruinous ex-
pansions and contractions IN our currency
which afflicted us throughout the existence of
he late banks, or secure us against future
In 1926 an effort was made by
he Bank of England to curtail the issues of
he country banks under the most favorable
The paper currency had been expanded to
ruinous extent, and the bank put forth all
is powers to contract it in order to reduce
prices and restore the equilibrium Of foreign
exchanges. 1t accordingly commenced sys-
em of cultailment of its loans and issues, in
he vain hope that the joint stock and private
,anks of the kingdom would be compelled to 9
olloW its example. It found, however, that
IS it contracted they extended. and at the end 7
# the process, to employ the language Of . ]
cry high official authority, e whatever reduc- 9
ion of the paper circulation was effected BY
he Bank Of England lin 1925 was more than I
made up by the issues Of the country banks. = T
But the banks of the United States would 1
lot, if it could, restrain the issues and loans Q
{ the State banks, because its duty as reg o
latnr nf the n111rar,cu rnlst ffnr I,e n ;nont d