Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1857-10-24
Ana.Asr I.tt.r fraa 81. Apnl.t.n-

expansion which be gives Of he origin of
The financial trJublfs which Cypress HE com
munity Is both profound and perspicuous. Il
likes the seat OF the mischief IN the true spot,
VIZ; the-banks Of the city Of New York and
points out the want Of an intelligent financial
head to control their movements a. the main
cause OF the policy which has been attended
by 50 many disasters.
THE NSSET CRISIS ASD THE EEE FoRk BANks
MEssEs. EBEToas: I have tor many years
been Withdrswo from active business. Thave
oeen merely a l0oker-on, but not unobservant
OF ne course OF trade, and especially Of our
banking operations.
odr system OF currency is a delicate one. L
y rounded on bank credits, resting on a very
moderate basis Of coin When perfectly bal
anced, Il works very well, buta slight derange.
ment mag produce a great deal Of mischief.
Tue great disturbing cause Is a demand FOR
specie fr export, which can only be checked
oy a contraction Of the bank credits. During
The present year, we have been going on yery
smoothly under full sail, when, about he
middle OF August, a sudden squat strikes Us.
which continues 10 Increase 10 a terrific hurri-
cane, threatening even 10 swamp The shin itself.
Inc question arises. how comes all this about ?
what is The cause?
New York IS the great central banking
power she sets the keynote 10 the whole
country II sac expands, the whole country
expands. II she contracts, It Is felt 70 ne
remotest extremities. Il is tremendous power.
mat or increasing or diminishing the ~eIrcuIa-
ting medium OF the whole country. II is a
deep responsibility, and demands sound dis
erection and much wisdom in its regulation.
Unfortunately, there appears 70 be no unity Of
action, no controlling principle, in the manage
ment OF this power. Il is divided between
htty-hve banks, each acting its own separate
part under the influence Of different opinions
and different interests. Banks are pubiic in
situations they are founded for the public
good and the duty OF consulting the good Of
he community in the use Of their great power
Is as sacred as that Of providing for their own
safety. There is apparently no individual Of
sufficient influence 10 bring his Heterogeneous
mass to unity Of action in a crisis like the
present, as was Albert Gallstin, whilst he
lived.
The circulating medium Of the city Of New
York consists In 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 a fund out Of which all opera
tions must be performed.
Hunts Merchants Magazine contains Ia
bies # the weekly returns Of the banks OF the
city OF New York for the year 1856 and 1851,
which furnish a complete view Of their Opera-
lions. They throw a food Of light on the pre-
sent state OF things. The return fo7 January
5, 1891, shows 1O4 millions Of liabilities, with
SII:172O00 in specie.
This varied very little from the returns Of
the preceding six months, ard this state Of
things continued with little change, but with a
slight tendency TO increased expansion, % to
the l5h August. The greatest expansion
was on the 81 Of Nav, wheR the liabilities
were les millions, with - millions Of specie.
lie return OF 18th August shows 101 millions
OF Liabilities, and Il, $4,000 o. specie. From
this a rapid contraction commencsd, the liabili-
ties being reduced on 5th September to IS mil
lions, with 1921, 900 Of specie. Here the con-
traction ought TO have ceased. The object was
10 stop the export Of specie. That had been
done. Exchange on London had fallen below
The point at which specie could be shipped
without loss. Can any mortal man give me a
reason or an apology why contraction should
continue a day after this point had been reach
edE The banks were then stronger than they
bad been for two years. But contraction did
continue until, on the 81 Of October, the liza
bilities bad been reduced 70 &c millions-thus
reducing the circulating medium Of New York
city, from Jaiy, % millions, or upwards of 30
per cent. Tremendousi Was the like ever
known in the history Of banking? Ihave no
hesitation in saying, It is this continued con
traction of the New York banks since the 5th
OF September, without the slightest necessity.
which has brought about the present disastrous
crisis.
There was no decided over-trade. There
WASH speculation, except BY a few houses in
sugar. There was no doubt an excess Of i'm
ports, but no greater than for several years.
aud The effect Of these was wholly cured on
The oh Of September, By the rate OF exchange
on London. Why continue contraction fur
uherF Was not eighty-eight millions, with ten
aud a quarter millions specie, being III per
cent, IS safe a proportion az one hundred and
fodr millions 10 January, with eleven millions
OF specie, Of II per cent on their liabilities2
There Is bug one answer. The New York
banks have been acting under a panic, and that
panic they have communicated to others. until
there Is almost a total loss OF cOnddeace. The
consequences are before Us. in the PARALYSIS Of
all trdde from Bangor TO New Orleans, the
stoPpsge Of banks through a great part OF the
United c.ates, The stoppags % factories, the
discharge of thousands Of laborers. the ina
oility 70 bring our large crops Of produce to
MARKET TIE TuiuOus Tale OF two OF three per
cent a month on the strongest paper, a ruinOus
depreclaucn IN the price Of all stocks, and even
on exchanges on London. In nv whole exps-
rIence | have neyeI known d crisis so severe as
for.
was A Bank Director la 1914, when New
YORK and all The States South aud West sus-
pended specie payments. Boston had ample
means and stood Ern, whilst many croakers
thought &C Madness for Boston 20 hold on, when
all the rest Of toe country suspended. She did
so, however, and all New England with her,
ana thus saved them the Losses which accom-
panied he resumption in other States in the
terrible revision OF 1919.
In 1884 Mr.. Biddle was f8gitiOusly endeav-
orig to force Congress to grant him a charter,
through the distress be had It 10 his poNer to
inlet on the country. 10 March Of that year
a eomlaittse OF the merchants and BANKERS OF
New FORK Informed him that unless he changed
DIS course, and would agree to their terms.
which were tina. The Uoitcd States Bank should
cease to call on the other banks for thirty DAYS,
ais course would be denounced az the adjourned
meeting az the Exchange.
Mr. Biddle, a. the last moment, agreed 10
their terms, n consequences Of which the coun-
Try was lmmediately relieved. But Mr.. Biddle
vas reckless enough, when the thirty DAYS ex-
piret, without the slightest necessity. 10 call
FOR these balances, and give the screw ano.he-
turn.
This produced an intense and unexpected
pressure, for it ives the New York understand
ing that Mr. Biddls should NOT again press
them without some shov Of necessity. This
pressure he continued until he adjournment Of
Congress- m July, when be gave up the chase.
ant econ after extended the loans OF The bank
from AZ to 90 millions.
There was nothing in that pressure to be
compared i in severity 10 the present. IL was
wholly owing to TIE uhpriscipled action Of Mr..
Bible.
The pressure OF 1887 was wholly unlike the
present During A period Of great over-,rade.
Z fe" London houses imPrudently created an
American debt o. hfty or sixty millions OF DOL
lars, By giving out their acceptances, to De met
BY other equally fictitious bills as they fell due.
These houses fell into discredit. and informed
their correspondents in America that the whole
debt mus ~ iquidstCd at once, or they must
become bankrupt. Tbis was in March, when
no remittsnees could be made except in specie,
which the banks were called on to furnish.
The New York banks went on for sometime
over a month, when they found it impossible to
Ibey then suspended, and with
them the whole country. There is nothing
like It now, as there is no foreign demand for
specie.
Tue QUESTION now arises, what is the remedy?
shat is to be done? Nothing can be palmer.
The New York banks must retrac e their stems.
and speedily, orit will be too late. They should
a. Oace increase the circulating medium by ex-
their discounts ten or fifteen millions
dollars. No other course viii set the wheels
u motion. NATHAN APPLETON.
BOsToN, October z, 1857.
P. S.-Sincs the above was written we have
rsscEns Of tho banks Of New York for an
other week, showing a further contraction Of
four millions. The further persistence in a.
ETong eOurse hes produced its natural result
It has frightened tie community until the banks
are driven to the despesate remedy Of s1spsn-
sioa.
The NIcIssITUDEs OF CosnNEpcE-A few
months since, the partner Of 4 commercial
in this city was taken to a lunatic asy-
.nm, utterly derangsd, az was said, BY his IN
'sr4lleled prosperity 10 business. During the
Iear previous his hrm had cleared 81, 300, 900. /
He died in the asylum, and his ovB estate wa
7alaed at S2,500,O00, all invested in the concern
which he was a partner. The firm itself
allied the other day, sHiis now said to be Ut
lerly insOlVent. One item Of the assets Of
ne deceased's estate was one thousand
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