Fayetteville observer. [volume] (Fayetteville, Tenn.) 1850-1966, 1857-12-24
NO. ThFTRllE FHtRMlT, DECEMBER a. WHOLE no.

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I of Great Britain, and to some exte
s5ssthe continent Of Europe. as a fie
for its circulation, rendering it almo
) impossible that a sudden and immed
e ATE run to dangerous amount shon
= be made upon it, the same propo
b ton would certainiy be- insufficiel
e under our banking system. Fac
: of our fourteen. hundred banks hs
: but limited circumference for its eli
culation, and in the course Of a yer
few days the depositors and note no
:. ders might demand from such ban
, a sufficient amonnt in specie to com
pelit to suspend, even although
] had coin in its vaults equal to one
third of its immediate liabilities.
And yet / Iam not aware. with th'
exception Of the banks Of Louisiana
that any State Bank throughout the
Union has been required by its char
ter to keep this or any other proper
tionof gold and silver compared with
+ its amount of combined circulation
and deposits. What has been the
consequences? In a recent report
made by the Treasury department on
the condition Of banks throughout
the different States, according to re-
turns dated january. 1857, the ag.
gregate amount .ef actual specie in
their vaults is S5S.349,S3S, of their
circulation S2l4.778, ,S22, and of their
deposits $230,S5l.352. Thus it ap-
pears that these banks in the aggre-
gate have considerable less than one
dollar in seven of gold and silver
compared with their circulation and
deposits. ~
II was probable, therefore, that the
very first pressure must drive them to
susp ensiob, and deprive the people of
a convertible currency With all its dis
astrous conse equences. 1t is trdly
wonderful that they should have so
continued to preserve their credit,
when the dtmand for the payment of
one-seyenth Of their Immediate liabil-
tiles would have driven them into In
solvency. And that is the condi.
tion of the; banks, Notwithstanding
that four ''undred millions of gold from
California have flown in upon us with
in the last eight years, and The tide
still continues to flow. Indeed, such
has been the extravagance Of the
bank credits that the banks now hold
a considerable less amount Of specie,
either in proportion to THEN capital
or to their circulation and deposits
combined. than they did before the
discovery of gold in California.
Whilst in the year lS4S their spe-
Gle in proportion to their capital was
more than equal to one dollar for four.
and halt, in 1857 itdoes not amount
to one dollar for every six dollars and
thirty-three cents of their capital
In the year l848 the specie was
equal within a very small fractien
to one dollar in five of their circula-
ton and deposits; in 1857 tits not
equal tosone dollar in seven and q
half of their circulation and deposits.
.8t From this statement. it is easy to
account for our financial history for
the last forty years! 1t has been a
history of extravagantl expansions
in the business of the country, fol-
lowed by ruinous contractions. At
successive intervals. the best and most
enterprising men have been tempted
to their ruin b. excessive bank loans
Of mere paper credit, exciting them
to extravagsht imp6rtations Of foreign
goods. wild speculations, and ruinous
demoralizing stock gambling. When
the crisis arrives, as arrive it must,
the banks can extend no relief TO
the people. In vain struggle to re,
deem their liabilities in specie, they
are compelled to contract their loans
and their issues; and & last in the
hour Of distress, when their assistance
is more needed, they and their debt,
ors together sink into insolvency.
It's this paper system ofextravagant
expansion, raising the nominal price
Of 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 market with foreign
manufacturers, has produced ex.
fravagant importations. and has,
lcopnteracted the effect Of the large
incidental protection afforded to our
domestic manufactures BY the pre-
sent revenue tariff. But for this
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