The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-12-27


credit institutions In each State each corporation
has its bank here the grocers establish one there
the shoemakers another; third ia founded by the
butchers. Each OF these associations issues its own
notes What are the of these paper issues
The question is more easily asked than answered.
In the majority Of cases these issues represent only
confidence they are but another name for the pri-
mitye truck system. The security of the shoe
makers bank is shoes that of the grocers' bank,
colonial commodities. As long as confidence reigns,
this system holds good. In fact there is no reason
why pair OF boots should not be exchanged for
quarter Of beef or quantity of grocery articles for
moment that the financial atmosphere begins to be
troubed, and the least doubt u awakened as to the
solvency Of the banks, then q general disruption
commences. The bills which the day before served
the circulating medium for all kinds OF exchanges
cease to have any currency, and with a fortune in
his pocket. one runs the chance Of being unable to
pay his baker.
The merchants have a bank reporter which fur
each of these institutions. You offer them bill they
examine it, and their first question betray the uncer-
tanty under which they labor. Have you not another
b they inquire their customer who answers in the
negative. The merchant then consults his reporter,
and according to the evidence there furnished he &C
cepts or refuses the bill. Of course his decision is
entirely arbitrary, being based on Information OF
more Or less doubtful origin.
In accordance with the current rumos, one part
of the city refuses bills which are accepted by an
other The appreciation Of value variesin different
localities. traveller who during crisis proceeds
from State into another is never sure Of being
able TO pay his hotel expenses Rich on one side OF
the territorial DIVISION he is without cent on the
other; and he must carefully watch hi time to re-
turn to his starting point for the caprice Of the
panic may in the meanwhile invalidats the bills it at
first accepted.
II is superfuous to observe that in stormy times
the cashiers of the banks close their doors Those
establishments do literally nothing towards the
maintenance of credit.
With common although tact accord, they cross
their arms and await the termination Of the storm
and by paying nobody they clear the market. This
time the railroad directors simply decided not to
give farthing to their shareholders As usual, the
banks suspended specie payments.
Those who did not close their doors took measures
not to be mportuned by too many demands for REIN
bursements. In certain city there occurred
characteristic fact.
1t transpired that party had gone into neigh
boring State in order to bring back large amount
Of the bills OF city bank which it his intention
to exchange at that bank for cash. His proceedings
were watched, and when he was about to return
with carpet bag stuffed with the bills he had col
ected, his departure was announced by Geographic
despatch in the city in question. On arriving at the
station he found the whole corporation which
had established the bank assembled to receive him.
Kisses hootings and threats were avished upon him.
He was showed about mslNeated and thrust back
into the depot where he took the first train that
started for the place from whence he had come,
esteeming himself fortunate at having got of with
few blows, and having escaped taITng and feather
ing.
Thus excess in everything engenders the opposite
oxcsss Where the action of the government does
not make itself felt lynch law supplies its place.
Unlimited liberty proyokes the irregular control and
brutal repression of the mob. When people abolish
the police as an obstacle to individual liberty they
can only go abroad armed with revolyers, and they
consequently present to the world the spectacle Of
scandalous and bloody quarres in the streets Of
crowded cities.
The Americans-we speak of the enlightened
casses-are well of those vices Of their social
system, but no people are more willingly blind.
They continually boast Of their youth and in fact
resemble those fiery and undseiplined spirits who
mistake heat Of the blood for true strength and treat
senile all those who do not exhibit like them the
tierceIess Of untamod colts.
The fundamental vice Of their institutions-the
absence of all authority and control-tLey are some
times conscious Of. but do not avow it frankly.
They prefer to lay these excuses to the account Of
chance. OF destiny. or OF any other foreign cause
than to acknowledge their true wrong, which is the
abuse Of liberty The expedients they employ to
conceal this fault are sometimes puerie to an ex.
IRENE. The proof Of this lies in the ridiculous de-
carnations in which the newspapers Of the country
indulge in their efforts TO explain the financial crisis
by the amplitude of crinolnes and thee xtravagance
OF the hornets Of the American ladies,
II viii be thought that we jestng. Nothing
of the sort II Is serious piece Of bu1oonery, en-.
economical considerations. which the travest and
most accredited newspapers Of New Yort have exc
cuted before Europe To deceived creditors they al.
ege the reason Of their insolvency that the COM
merce Of the American Union had ruined itself in
silks and aces for the ladies' but that all this would
soon be reformed.
4 fine guarantee for the future, truly. An exag-
gerated issue Of bank notes. enormous expenditure
IN the construction of railroads foolish speculation
IA all kinds Of values adventurous and interruptions
trading. involve the United States in discs whose
reyulson j. felt everywhere; and we arecoolly told
that the cause Of all the disasters andosses that
follow is-crinoline
II is quite right for people not to allow them.
selves to be depressed and discouraged more espe-
cally by panic when they possess, likethe United
States, immense resources and all the clements Of
solid prosperity; but neither must they allow them
selves to appear If they trifling With thing
40 sacred as the security Of commercial relations for
by such course they not only lose al dignity Of
character, but all chance Of further confidence.
Prom tho Paris Constitutional, Dec.Ll
The information that we have collected enables us
TO determine more correctly the causes Of be Ameri.
can crisis, which nothing seemed to predicate. and
which has burst upon the world 50 suddenly. It.
furnishes III with instructive facts. These show the
consequences Of unlimited liberty in matters of
credit. industry and public works. Theyteach Us at
tho same time how to appreciate the advantages Of
the economical system which has been Instituted In
our own country, and which is based upon the expe-
renee and the progress OF the last lxty years.
This system is moderate; it Is founded upon
common right and upon liberty Of labor,
but ii takes general interests into consideration aud
admits the intervention oil The goXefnlnen whenever
public utility Is IN question. One can hdgc Of the
relative value Of the two systems by thcirresult.
There two principal causes OF the Amcrican
crisis: l. 10 be found in the organization Of
credit itself: the other in the rashness AID in the
excess OF speculation favored by that organization.
multitude u banks have been established; with
the help Of these banks enterprises upon Enterprises
have been accumulated: multitude OF railways have
been created; but ~ no concern wa manifested a.
10 what returns these enterprises might mike. and
as no heed was taken as 10 whether theexpcnsc
Of many works did not exceed the
dbposablc strength and capital Of the country,
has happened that the edlice thus reared nd sup
ported by artificial means has suddenly broken down
the railroads carrying away the banks, and the
banks carrying away in their turn in the general
ruin the trade and industry Of the entire Union.
We have already had occasion 90 explain how the
credit system has been organized in the United
States, If indeed can apply the name Of organi-
cation 20 thing which is totally lacking in that
quality of the banks Some are establish.
81 al H.