New-York daily tribune., 1857-09-26

What Is the exPanatlOn OF tDe suuueh schrcity
of money, which drives even our beet and strong
est commercial houses to the necessity of paying
the most usurious rates of interest! II sa short
ard easy and customary method Of explaining all
sorts of financial disasters by reference to the
banks. The banks, it is said, have contracted and
are contracting, and that is the cause of the diff
Guilty. They expanded ereedily and unwisely, they
have contracted in panic, and that it is that has
upset the money market. Now We are by no
means very enthusiastic believers in the infalble
ski and Judgment of our banks and bank directors.
All that can ever reasonably be asked of our banks,
snd certainly all that we are ever likely to get is,
that they shcald be managed with the average skill
and foresight displayed by our mercantile com.
munity; and as our merchants individually, and by
masses, with all their acknowledged shrewdness,
ard their success as body, do occasionally, not to
.ay frequently fall into serious mistakes, and even
egregious bIunders, in the management Of their ewn
private affairs, how can it be expected that the
same thing should not happen to them when act
ing even more for others than for themselves in the
capacity Of bank officers aud directorsl Then
again, as to the regard to the public interest
to be expected of the banks. They, like
all our other mercantile establishments,
exist for the primary object of making money
for those who own the stock. 1t is their dividends
Il at the directors look TO- and it is 10 vain to ex
pect of banks any more than of private merchants
that SO far as their private interest is or appears to
be in conflict with that of the public, it will not be
tteir private interest that will carry the day. But
while we are perfectly willing to recognize mis-
management On the part Of our banks, in common
with mismanssement on the part of the mercantile
body generally, as one leading cause of financial dis.
order and commercial pressure, an importance s, we
think ordinarily ascribed to the action of the banks
10 which it is not by any means entitled. Take the
present crisis for instance. Is it not wholly un-
reasonable to suppose that the mere contraction on
the part of our banks to the extent of thirteen or
fourteen millions Of loans can have caused all the
present difficulty The money has not remained
in the banks. Instead of being paid out to borrow
es it has been paid out to depOstors and can this
difference in the appropriation make all the differ
ence in the result
We spprehend the cause of the present difficulty
to be much more extensive and much more serious.
The medium Of traffic in these modern times, what
may be called currency, is not merely coin, bullion,
bank-notes, and bank deposits. Shares in stock
companies, transferable from hand to hand answer
10 great extent the same purpose. If not actually
received and paid out az so much mcney, ss they
frequently are nevertheless they occupy, while 10
good credit very much the same relation to the
currency that gold bars do, or checks on a back
depo,it-that Of being capable of being converted
into money at any moment. Hence il has been
custt mary with our merchants, beside the reserve
usually KEEP. on Land in the banks, to keep another
reserve bearing interest IN the shape Of stocks, not
so much as permanent investment as a resource
upon which they rely as means Of rai.ing money
for any sudden emergency. This money is Ordi-
nariy Taised not by forcing the stocks on the mar
ket, and 80 overwhelming it aud breaking it down,
but by bypotheca ion. In the ordinsy state of our
money market, stocks employed in this way play
very conspicuous part in our daily business trans
sctions, and may thus be properly enough said to
form an important part of the currency. This has
been especially the with railroad stocks and rail
road bonds because those stocks and bonds have been
received to very large extent by the contractors
on tie roads in lieu Of cash. AID have been employed
BY them as means of raising money--thus holding
the pOsition, not Of Investments, but Of part Of
Tie circulating medium. Previous 10 the setting in
Of tie late crisis, say two months ago, be who
""t'd sticks stood in as good position as he who
hsd deposit in bank. He was 10 a position
TO raise norsy upon them either By ss,e or
sylo.ssca.!oR. Tia .ad!ea, azI Certainly, t. a