Arkansas true Democrat., 1857-11-03
Bank Balancing.

are within hairs bredth of destructlon yet, by the adroit management of a little pole they hold in their hands. they escape unhurt. That celebrated metaphysican, Dugald Stewart says, that such feats, as displaying extraordinary l powers of the human body and of the human mind, deserve more attention from philosophers than they have heretofore received.
 Wonderful, however, as are the balancing l powers of performers on the slack-rope and the 1 tght-rope, they are as nothing, when compared with the balancing powers of the managers ot | our paper money banks. The whole secret ot their business, consists in paying one debt by incuming another, and to carry this on success fully, t is necessary, first, to preserve the ba- l lance between each bank and its customers; se- condly, to preserve the balance between each bank, and all the other banks with which 1t has dealings and thirdly, to preserve the balance between all the banks taken collectively, and the bankers of Europe.
 The note of merchant is discounted, and he receives credit on the books of the bank, which credit is called deposit. Here the mef- | chant owes the bank, and the bank owes the merchant. The debt the merchant owes the bank, does indeed, exceed, in the amount ot the discount the debt the bank owes to him. but that difference serves to balance two other ac- counts, namely, the expense account of the bank, and the dividend account, or, till dv- dend be declared, the profit and loss account.
 The merchant draws check against his de- l post. and is paid in bank notes Here one debt is discharged by incurring another of equal amount.
 The merchant pays over the bank notes he has received, to a farmer or mechanic and the latter deposits them in bank. Here again, debt balances debt.
 The stock holder calls for his dividend, and is paid in the notes of the bank. Here debt which orignally existed in the form of sim pie inscription of credit on the books of the bank, is now changed for debt of equal amount ill the form of circulating paper.
 The stockhoder pays the merchant the notes he had received as his dividend. The merchant, with these, takes up the note that had been dis counted for him by the bank, and thus the cir ce is completed. It is, throughout, balancing of debt against debt. Not one dollar of gold or silver money enters into any of the transac- tions.
 This is not all. The banks have various dealings among themselves. But the balance between bank A and bank B, is preserved by transferring to bank B, a draft which bank owes to bank A, and bank B uses this draft i'll paying balance due bank D. This IS the great principle of the New York Clearing House, of which so much is said in modern days.
 Under this system, supposins it nicely car ried out in all its parts there IS 10 demand for specie, except for amounts less than the smal lest denomination of notes in circulation. And it is difficult to say how far this system of pay ing one debt by mourning another, might not be carried, were it rot for the necessity of pre- serving the balance with European bankers.- Tnis sometimes creates difficulty.
 As was justly said by the Hon. Campbell ?. White in a report to the House of Repreaen tatiyes in 1882, "The legal liability of the banks to redeem their notes with specie, is powerful restraint on issues during an adverse balance of payments with foreign nations; but at all other times, it is nominal. There is no example in history of currency similar to that of the United States. IL is baah notes issued ,0itJiom restrai,et, except when a high rate of foreign exchange prevails"
 As high rate of foreign exchange did not prevail, the banks issued their notes without restraint" and, as consequence, in the short period of two years, (from January 1st, 1855, January 1st, 1857 increased their current ere dits 80 millions, while they, in the same perol, increased the gold and silver in their vaults in the small amount of only four millions, four hundred thousands.
 This was the condition of things at the be- ginning of the present year. We had then an inverted pyramid of current credits, or of debts 1 owing by the banks to the people and to other banks, amounting in all to 5O2 millions. and all l payable on demand. This pyramid was made up of l, ,4l6 distinct pieces, Qor such is the pre- sent number of our banks and their branches ) l yet so nicely were they balanced one against the other, that the whole appeared too firm to be shaken, although the sail pyramid resJed' with its point downwards, on less than 60 mil lions of gold and silver.
 On this pyramid of 5O2 millions, turned bot 1 tom upwards, consisting of debts due ny the bank on demand rested column of 684 mil lions, consisting of debts due by merchants and specuatolS to the banks on tme Near this, was another column consisting of debts due by merchants, spectators and others to one anoth- CT, amounting to, say, one thousand mlllions.- Aside of this was a column of railroad debts amounting to about 800 millions. Then there was column of state, city and county debts, amounting to four hundred millions; and CO., lumn of town lot and wild land speculation debts, amounting to- say, one thousand millions.
 Here were debts amounting in the aggregate to upwards of four thousand millions, yet all so nicely balanced that the inverted pyramid and its five superacent columns, though con sisting of nothing but glded paper, looked as firm as if of solid gold.
 If the banks had been content to let things remain as they were at the beginning of the year, the pyramid and the liars might have stood to this day. But the perfection of bank ing consists in issuing the greatest amount of notes possible, on the smallest amount of spe- cie possible, compatible with the preservation of specie payments. The managers of these institutions were not satisfied with the profits derived from 5O2 millions of current credits resting on 60 millions of gold. They increas- ed their issues and diminished the amount of gold in their vaults. From one port alone that of New York, the exports of specie and bull lion amounted, in the nine months ending Sept. 3Oth last, to S33, ,288, 632, while, in the corresponding period of 1856, the amount was S27 ,487 ,O86, and in that of 1855, the amount Was only $24, ,439 l36.
 The reader knows that so Inn, ae tha can.ra