The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1857-10-20
TUESDAY MORNING, ..........oCfoBER 20. iss7.
! -. ~
Hon. Nathan Appleton on New York
Ruukx

Hon. Nathan Appleton on New York
Ranks.
The Roston Advertiser contains the following
interesting letter from the lion. Nathan Aesle,ap
in relation TO the coninct of the New York bank,
in producing the financial panic:
Massrs Editors--i have for many wears has,
withdrawn from active business. have been
merely locker on, bat not anohservent of the
course of trade aud especially of our banking one
Tafious.
Oar system of currency Isl delicate one 7. 4.
founded on bank credits. resting on a very mode.
rate basis of cola. When perfectly halancrd 1,
works very we'll, but slight deraugemcnt ma y
produce great deal Of mischief. The grest dis.
;nrhing cause is a demand for specie for exrort
which can only be checked by contraction OF th !.
hank credits. Daring the present year we bays
been going on very smoothly, under full sail when
shout the middle Of August sudden sauall strikes
Us. which continues to increase TO a terrific hur.
ricAne, threatening even to swamp the ship itself
The question arises, How comesali this about
what IL the causes
New York is the great central banking .powor.- .-
She sets the keynote to the whole country. II
she expand the whole copRtry expands. Ii she
contract it Is felt TO the remotest extremities II
is tremendous power, thal of Increasing or di,nin
ishlng the circulating medNm of the whole conn.
try. 1t is a deep responsibility aud demands sound
discretion and much wisdom in its regulation I'm
fortunately there appears to be unity of action
no controlling principle In the management of tbI,
pOwur. Ii is divided between fifty five banks eac
setting its own separate part under the influence
cf different Opinions and different interests Banks
are public institutions. they are founded for the
public good. and the duty Of consulting the good
Of the commU nifty in the Use Of their great newer
is sacred as that Of providing for their own safe
-. There iSsppar ntly ne n lisidual of suflicen,
influence to bring this h, trugsncous mass 10 upity
Of sCiioa crisis like the present as was !lber,
tiailatin. whilst he lived.
The circulating medium of the city of New York
consists the liabilities of her banks In the form
of deposits and circulation. Their daily loans and
discounts increase or diminish these liabilities
As these liabilities are greater or less is money
plenty or scarce They constitute the fund out OF
which all operations must be performed
Hunts Merchants Magazine contains tables OF
the weekly returns of the banks of the CITY OF
New York for the years le56 and 1857, which fnrn.
ish complete view Of their operations They
throw food OF light on the present state of things
The return for January g. ls55, shows 5104 oO9 00C
Of liabilities, with Si1.l72O00 in specie
This varied very little from the returns of the
preceding six months, and this state Of things con
iiuued with Ii tie ohange but with slight tcnden
cy 10 increased expansion mp 20 the 18th of August
The greatest expansion was on the I'd of Nav when
the liabilities were Sl0S. GOO ,oOO with I2001O0O OF
specie. The return OF 18th of August shows sIOl
01ovO0 of liabilities and $ll 10000 of specie,
From this rapid contraction commenced, the
liabilities being reduced on the 9Th If September
- $s,01J09o, with $l0,2-1,o Of specie. Here the
contraction ought. TO have ceased The object was
70 stop the expor, of specie That had been done
Exchange on toadoa had f,llel below the point at
which specie could be shipped without less
Can any mortal man give me a reason or apolog v
why contraction should CONTINUES day after this
point had been reachedg The banks were then
stronger than they had been for two years But
contraction did co9tinue until, on the Sd of 0eto
her, the liabilities lad been reduced to 10000 OOQ
thus reducing the circulating medium of New
York city, from July S}2 900 900, or upwards of 80
per cent. Tremendousl Was the like ever known
in the history OF bankingI have no hesitation in
saying IT is the continued contraction Of the New
York banks since the 5th of September withou;
the slightest necessity, which has brought about
the present disastrous crisis.
There was no decided oYer.trade. There was nc
speculation, except by Il few houses ia sugar
There was, no donbt, an excess of imports, but No
greater than for several years, and the effect OF
these " oily cured the 5th September by the
rate Of exchange on London. Why continue con.
traction further Was not eighty-eight millions.
with ten aud quarter millions of specie being
lll2 per cent. rs safe proportion one hundred
aud four millions III January, with eleven millions
Of specie or Ii per cent on their liabilities
There is but one answer. The New York banks
have been acting under panic, and that panic
they have communicated to others. until there is
almost total loss Of confidence. The conse
quences before us in the paralys sis Of all trade
from Bangor to New Orleans, the 5tOppage of banks
through great part of the United states; the
stoppage of factories; the discharge of thousands
Of laborcrs; thc inability to bring our large crops
of produce to market; the ruinous rate of two or
three per cent. n month on the strongest paper a
runous depreciation in the price of all stocks and
even on exchange on London. In my whole ex-
perience L have never known a crisis US severe as
the present, aud, must say, so wholly uncaled
for.
was bank director in 1914, when New York
and all the States South and West suspended spe-
ie payments Boston had ample means y stood
frm while many croakers thought it n.guuess for
Boston To hold when all the rest of the country
suspeuded She did 50, however, and all New Lug
land with her, and thus saved them the losses
which accompanied the resumption in other States
in the terrible Eesulsun Of 1919.
In 1884, Mr.. Biddle hagitiousy endeavorine
10 force Congress to grant hin charter. through
the distress hc bad il in his power to inct on the
country. In March OF that year a committee of the
merchants aud bankers Of New York informed him
that unless he changed his course, and would agree
TO their terms, which that the United States
Bank should cease to call on the other banks for
thirty days, his course would be denounced AT the
adjourned meeting of the Exchange.
Mr.. Bidde, at the last moment, agreed to their
terms, IN consequence of which tl.e country wse
immediately relieved. But Mr.. BiIdle reck
less enough when the thirty days xpired, without
the slightest necessity, TO call for those balances
and give the screw another turn.
This produced an intense and unexpected pres
sure for it was the New York understanding that
Mir. Bdtiie should not again press them without
show Of necessity THIS pressure he contn.
ued until the adjournment of Congress in July.
when he gave UH the chase. and spCu alter extend
cd the loans Of the bank from Il to 63 millions
There WAS nothing in that pressure To be COM
pared in severity to the present. 1t was wholly
owing 10 the unprincipied action Of Dir. Bddle
The pressure OF 1887 was wholly unlike the pre-
sent. During period OF great overtrade, a few
London houses imprudeDtly created an American
debt OF Efty sixty millions of dollars by giving
out their accePtaBces. to be met by other equally
fictitious bills they fell due. These houses fell
into dscredit, and informed their correspond deuts
in America that the whole debt must be liQui-
dated at once, nr they must become bankrupt
This was in March, when no remittaBces could be
made except in specie, which the banks were
called upon to furnish. The New York banks
went on Tor something over IA month, when they
found 1t impossible 10 continue They then sus-
pended. and with them the whole country. There
Is nothing like il now, there is no foreign de-
mand for specie.
The question now arises, what is the remedy .
New York bauks must retrace their steps, and
speedily, or it will be too late. They sbonid at
Once increase the circulating medium by expanding
their discounts some ten fifteen millions of dol
lars. No other course will set the wheels in mo-
tion. NATHAN APPLETON
BasToS, October l., 1857.
P.S.-Sluce the above was written, We have the
returns Of the banks of New York for another week,
showing further contraction of four millions.
The further persistence Ia a wrong course has pro-
dueed its natural result 1t has frightened the
community until the banks are driven TO the dee
porate remedy Of suspension.
-
EFFECTS OF rHE PANIC on EMIGRASrs.-The pros
pect OF hard times for the coming winter has large
ly increased the number of passengers going to In
a