Green-Mountain freeman. [volume] (Montpelier, Vt.) 1844-1884, 1857-12-17

made by the Treasury Department on the con-
dition of the banks throughout the different
States, according to returns dated nearest to
January, 1857, the aggregate amount OF actual
specie in their vaults is $58 ,349 1888 Of their
circulation $2l4,77S, 1922, and of their depos-
its $3.50, ,35l 1862.
Thus it appears that these banks in the ag-
gregate have considerably less than one dollar
in seven of gold and silver compared with
their circulation and deposits. 1t was palpa.
bic, therefore that the very first pressure must
drive them to suspension, and deprive the peo.
pie Of a convertible currency with all its disas.
trous consequences. 1t is truly wonderful that
they should have so long continued to preserve
their credit when 4 demand for the payment of
one-seventh of their immediate liabilities would
have driven them into insolvency. And this
is the condition of the banks Notwithstanding
that four hundred millions of gold from Cal
ifornia have flowed in upon US within the last
eight years, and the tide still continues to flow
Indeed such has been the extravaganza of
bank credits that the banks now held consid-
cradle less amount of specie, either in propor-
ton to their capital or totheir circulation or
deposits combined than they did before the dis
covery of gold in California. Whilst in the
year l848 their specie in proportion to their
capital was more than equal to one dollar for
four and half, in 1857 it does not amount to
one dollar for every six dollars and thrty-three
cents Of their capital In the year lS48 the
specie was equal within very small fraction
within one dollar in FIVE of their cirou Iation
and deposits In 1857 it is not equal to one
dollar in seven and half of the their circu-
latien and deposits.
From this statement it is easy to account or
our financial history for the last forty years.
1t has been history of extravagant expansions
in the business of the country, followed by ru
inous contractions. AT successiv intervals the
best and most enterprising men have been tempt
cd to their ruin by excessives bank loans of mere
credit, exciting them to extravagant importa'
tions of foreign goods, wild speculations, and
ruinous and demoralizing stock gambling
When the crisis arrives, as arrive it must, the
banks can extend no relief to the people. In
vain struggle to redeem their Liabilities in
specie they are compelled to contract their loans
and their issues, and at last in the hour of
distress, when their assistance is most needed,
they and their debtors together sink into insol-
vency.
1t is this paper system Of extravagant expan
sion, raising the nominal price of every artic lie
far beyond it's real value, when compared with
the cost of similar articles in countries whose
circulation is wisely regulated, which has pre-
vented us from competing in our own markets
with foreign manufactures, has produced ex-
travegant importations and has counteracted
the effect of the large incidental protection af-
ferded to our domestic manufactures by the pre-
sent revenue tariff. But for this the branches
OF our manufactures composed of raw materi-
ais, the production of our own country-such
as cotton iron, and woosn tabrics--would not
only have acquired almost exclusive possession
of the home market, but would have created foi
themselves foreign market throughout tn,
world
Deplorable, however, as may be eur present
financial condition, we may yet indulge il
bright hopes for the future. No other nation
has ever existed which could have endured sucl
violent expansions and contractions of pape
credits without lasting injury; yet the buoy
ancy of youth, the energies of our population
I and the spirit which never quails before Difficult
ties, will enable US soon to recover from ou
3 present fnancia embarrassment, and may evel
e occasion Us speedily to forget the losson whic
8 they have taught.
In the meantime it is the duty of the govern
e ment, by all proper means within its power, t
9 aid in aleviatlng the sufferings of the peopl
II occasionec by the suspension of the banks, an
" to provide against the recurrence of the sam
J. calamity Unfortunately, in either aspect o
is the case, it can do but little. Thanks to tn
o Independent Treasury, the government has no
y suspended payment as it was compelled to
q by the failure of the banks in 1887 1t wi
l. continue to discharge its liabilities to the pee
l. pie in gold and silver. Its disbursements
coin will pass into circulation and material
G assist in restoring sound currency. From il
d high credit, should we be compelled to make
ID temporary loan. it can be effected on advantt
e geous terms. This, however. shall, if possible
% be avoided but if not, then the amount sha
t be limited to the lowest practicable sum.
l. have, therefore, determined that whilst n
" useful government works already in progres
If shall be suspended, new works, moi already con
sr menced will be postponed, if this can be don
a, without injury to the country. Those nscessar
,e for its defense shall proceed as though thel
ir had been no crisis in our monetary affairs.
or But the federal government cannot do muc
to to provide against recurrence OF existing evil
IS. Even if insurmonntable constitutional objection
ut did not exist against the creation of nation
re al bank, this would furnish no adequatd pr'
n yentive security. The history of the last Bar
h. of the United States abundantly proves tn
ar truth of this assertion. Such bank could n
he if it would, regulate the issues and credits
n fourteen hundred State banks in such a mar
it ner as to portect the ruinous expansion an
be contractons in our currency which afflicted tt
of country throughout the existence OF the la
,ir bank, or secure US sgainst future suspension
re- In 1925 an effort was made by the Bank
10. England to curtail the issues of the count
m banks under the most favorable circumstance
,r The paper currency had been expanded to rui
TO ons extent, and the bank put forth all its pow
nd to contract il in order to reduce prices and
,ut store the equilibrium of the foreign exchange
em 1t is accordingly commenced system OF cu
tailment of its loans and issues, in the va
in hope that the joint stock and private banks
I'D the kingdom would be compelled to follow
,ur example. 1t found, hewever that as it contra
mt ed they expanded, and ut the end of the r
nix cess, to employ the language of very hi!
bic official authority, whatever reduction OF
lly paper currency was effected by the Bank
led England lin lS25) was more than made up
of the issues of the country banks,
les But u bank of the United States wor
of not if it could, restrain the issues and loans
i'll the State banks, because its duty as u regulal
la of the currency must often be in direct conf
no with the immediate interest of the stockho
ity ers. If we expect one agent to restrain or Ct
an troll another their interest must, at least
DC, some degree, be antagonstic. But the Dir
ost tors of bank of the United States would I
, to the same interest and the same inclination W
il the Directors OF the State Banks to expand
,fi- currency, to accommodate their favorits q
nnr friends with loans, and TO declare large d
cir, dends. Such has been our experience in reg
the to the last bank.
md After all we must rely mainly upon the v
k a dom and patriotism of the States for the I
to vention and redress of the evil. If they '
us afford us real specie basis for eur paper
les. culation, by increasing the denomination
ion bank notes, first to twenty and afterwards
INK fifty dollars if they will require that
L.r,L. aha n ~ n II timaa kaon IN ha nd at Ia