Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1857-12-20


pated with almost as much interest as the Presi-
dents Message. He attributes present none
tary arrangement and :" hard times" to what is
undoubtedly the true cause. viz the great expansion
Of the great credit system which was fostered and
encouraged by the banks Of the country, and the
unsKampled arrangements of the railroad interests
The banks have expanded their circulation and
loans to an immense extent and their accommoda-
tons in the way Of credit have caused individuals
to embark N all kindsof mooushine and hazardous
operations, and to live with luxury and extrava-
ganee utterly unEau anted by their means. The
pay day has at last come-the paper bubble has
burst, causing ruin and disaster throughout the
land This is the old cause of Americas financial
troubles, bat asyet, nothing has been done to re-
move it As long the land OverfOws with banks
aud paper money. driving out all the coin, which
has room to circulate, We must expect, every few
years, just such revusions as have ely occurred
l. A compulsory bankrupt law for banks and
corporations, making their suspension of specie
payments the signal for winding up their affairs
This would operate a check upon their extrava-
giant expansions Of credit because their suspensions
would at once be their death, and would make them
more careful in their operations. Mr.. CoBB thus
defnesit:
- II should be laO for the protection Of creditors,
net the relief Of d6tOrS; 10 prevent improper credit
not 10 pay iRPToUideHt debts; compulsory, not UOluH
tGry. The eset Of such LGW mould Be stt us
gesraaiRg influence than IN as practical execution"
2 BE recommends the extirpAtiOn of bank notes
under twenty dollars to the State authorities.
g. He recommends to each State the establish
ment of Sub treasury, and the collection and dis.
bursemeut of their revenues in specie The amount
collected by the State Governments annually, is
about $4,000 600. The Secretary says:
This amount is collected mainly in bank notes.
and when not Immediately discussed, is either
kept in the form Of bank in the vaults of the
State Treasures, or deposited directly with the
banks Let the several States collect their revenues
in specie and thence is withdrawn from the banks
siimulant to over banking TO the extent Of the fac
tiles now afforded them by this of their notes"
1t would augment the amount and keep greater
supply Of specie in the country. The Secretary
well remarks:
q TIE collection and disbursements in specie Of
the revenues If both the General and State Govern
ments, not 10 speak of the various city, town and
country corporations, would constitute such a dc
mand for specie, at all times require its
tiOn in the country. The banks, knowing that they
were liable to furnish their note holders whh this
specie, would regulate their issues accordingly, and
would, consequently, be restrained from excessive
issues, which render suspension af specie pay
msnts by them Inevitable when a crisis comes,
which requires hem 10 do what they ought always
TO be ready TO do-pay their debts. The apprehen
sion that such Requirement by the State Govern
ment would OperatS progressively upon the people,
would prove untOunded it did in the base Of
the General Government State taxes now paid
most generally in bank notes. These notes profess
TO be the representatives of specie If they are |
the payer could easily convert them into specie
Trnv N..r hi Ra Cd
as such, eilber by the State Governments The |
people. The very object Of the law is to guard |
against the latter contingency, and thus 70 to
the country sound paper currency, always con |
Yertibte into specie"
These recommendations are all excellent, and if |
carried into execution would greatly reform the |
currency Of the country, and put it upon a sounder
basis.
" Since the discovery Of gold in California, in
1919 there has been coined n the minis Of the /
United States, the sum OF $500 0OO 600, and even
a larger amount has been added from that source 10
the g1ld Of the world Az that time il was estma
ted that there in the United States Sl2O 600 0DO
Of specie. OF Jhat amount the banks held Si3
100000; upon which they issued circulation Of
STA Ia3 40 Their deposits nj that time amounted
to Sgl,l7S,G23. Il is estimated that there is now
in he United States $3.50 UO 600 Of specie, aud Of
this sum the banks have SJO0JJ 0OG, upon which
they have isssed circulation of 81 HIS 80, anu
their deposits have increased 10 $3.50 50 ,352 Il
viii be seen from this statement that with the in
creased quantity ct specie in the country the banks
have only increased The specie from S43 100000 TO
$4,000 coo, while they have increased their cir /
cultti0n from Sll4I43, as to S2lL15S So. Nc
one supposes that such would have been me case
if during this period, the financial operations OF
the various State Governments had been conduc cd
upon The principles OF the independent treasury
system. IL Is confidently believed that such
policy would have saved the country from the
present bank suspension. If, at abe time the
General Government was makingits disbursement
in specie, at the commencement of the present
crisis the same operation had been going on from
different State Treasures, the effect necessarily
would have been 10 have supplied every demand
In the country for specie. and the banks, already
restrained wuhiu Legitimate bounds, would have
been enabled TO haze pursued their usual business
wi lout serious interruption"
The Secretary pays a deserved and just tribute
to the admirable workings of the Sub treasury sys
TEN Of the General Government.
'sOn the 30lh June, 1851 Immediately after the
general suspension, the deposit banks held 10 the
credit Of the Treasurer of the United States. and
sub sci TO his draft, the sum of S24g94 ljS 37-a
larger amount IN proportion TO the receipts and
pen lures Of the Government, than there was in
the treasury NJ the time of the suspension by the
banks the present year. The funds Of the Govern |
ment being then under the control Of the banks, q
and they either unwilling unable to pay, the "A
Government placed in the anomalous condition 6
of having OVERLOOKING Treasury, which il was {
10 dsplere by islribution or deposits with the Il
State, and yet unable 10 meet its ordinary obgq- o
tons. IL had either 20 make its payments and 5
deposits in The deprecated currency which toe Il
suspended banks forced upon the country, post
Ione their payment until, from lis credit or other
ordinary resources IL could command the means for
that purpose. Il Is unnecessary to detail the ex- h
peliOuts TO which the Government was forced TO ! I'd
resort al that time The emharrassme conseque o
upon This state Of th.ngs will be remembered ny Il
those participated in the of that day. II will a
be realized by every from This brief presentation
OF IT, The effort of the Govern nent 10 withdraw u
lis deposits and get control of its funds was felt as
an additional blow aimed az the banks. Every dol 81
lar winch could thus be drawn from the vaults o. e.
the baIks diminished TO that extent their ability to
afford relief 90 their customers. Their loans had e
be contracted and the demand made ny them upon C,
their debtors for settlement increased he pressure
already iel i tac money market, and thereby add "a
ed 20 the gy.,ltl panic and want Of confidence. Il
which are he usual attendants Of monetary crisis ia
The Government was not only embarrassed for the fix
want Of It's money buiu the effort 10 obtain it be- d.
came obnoxious 10 the charge of adding TO the II
general distress, which many persons though it in
was It's duty 10 rel eve. tn
So much for the old system in 1857. Now turn in
% the new system in 1857: ~
'.The banks. as in 1857. have suspended specie "
payments, but The analogy ceases there. 50 far as
10 I Oh
hsbur scmsnis are concerned Tine Government ! y,
lss Us money in the hands of its own officers and
o. the only currency known TO the Constitution. Il Ia
lls N every hthIu without embarrassment. Il | -
a- rgsOried 10 no eXVcleut TO meet ,be claims O. -
ere hors, hut, Wltl prOmptucss. paws each uron =
preset ;atiOu IL the contrast between tue u
b. sr.t.uus OF 1897 aud the present time stopped -
leT. would be enough 20 yiad,cate The policy Of u
he dependent treasury system; but 10 does not -
The mos. remarkable feature Distinguishing the -
We r,rrl- has reference 20 The effect upon the "a
'nmme-cla. nd gen raj business interest Uf the ~
lie country, produced by the present operations Of
be iudepouuoE' treasury. 10 is the relief which
las been al ru the money market by the dis vO
,ursements in specie Of the General Government be
Ia So the demand Of he Government Tor ITS Dc
Unds with which 20 NEE, its obligations weakened 's
be hanks, crippled tlgr sources. and added 20 '
he general panic pEessure. ia 1897 the dlsbrse ia
ucnts by the Government 0i It's funds, which IL | u
sep, ia its own vaults, suf piled Tie banks with d
a.ea.e strengthened their hands an5 would thus WI