New-York daily tribune. [volume] (New-York [N.Y.]) 1842-1866, 1857-10-12
THOUGHTS on THE PRESENT FINAH.
CLAL CRISIS.
r.Ts. rx,,,, Of TA.S. ~. Tysx.e.

the present crisis Il without parallel. There seems 20
be an asply1io of the public mind.
Ihsve looked with daily disappointment for some
luminous exposition of the latent influences which
have brought about the devastation of commercial
credit under which we are suffering; and surely in
country like ours, where the minds of all men are bent
with an intensity never before known in any part Of
the world, upon the profits Of trade and money opera
lions Il might have been expected that the causes Of
a arrangement by which all private enterprise is
pualyzed would have been sifted with searching
a.,duity and practical skill. Judging from our own
selfestimste we are all, even to the lowest depart.
mept of trade wise in financial matters, and superior
tact in that branch Of affairs s honored above all
other requirements, and men VINO nave been success
full in the acquisition OF wealth are looked up to with
a consideration awarded to no other class of men,
Yet has a pressure come upon us involving wide.
snread disaster and ruin without having been foresesn
BY our self-cOmpsceLt fnsncers, aud the aspect of
things porten'Ous Of yet greater calamity to come;
hpt still We are favored With no comprehensive view
Of our actual condition ana Tar sghted calculation OF
The proper measures for renei.
The merchants Of this city, who should have taken
the lead IN concerted action, have mad no concert, bur
have struggled individually with the difficulties which
have pressed upon fhem-each leaving MS neighoor
bine movement. under wise counsel, and dsci
pline akirg effectual the aggregate OF indivdua
power for the accomplishment of some specified end,
our mercantile community have exhibited the appear.
aoce of panic stricken multitude, without plan and
without confidence in each other. should have sup
posed that there Of sufficient weight OF char
acter among the merchants to have prescribed course
of action that would have been honorable to them
selves, while it would have given mutual relief and
sustained public confidence. 1t can admit Of no doubt
that systematic plan would have forestaed, and in
me assure a)lsy co public alarm.
But instead of meeting of merchants and a refer.
eLce Of the whole SUBJECT to selected committee for
report Of some plan Of action, there has been, day
after day. the topplirg down of mercantile firms here
toore strong in public estimation while the rest have
looked on with fear only for their individual safety
In the mean time there have been complaints enough
OF the action Of the banks if the curtang Of dis
couns was alone the Of the pressure, and that
the expansion of bank accommodation was all that
was wanted for relief. greater mistake could not
have been made. II should have been understood
that bank capital is not an actual surplus OF wealth
but part of the capital belonging 10 trade and that
banking business lie done, not simply upon the nOm
nal capital but upon the funds OF the merchants circu
latpg II rough the banks.
What profit would be yielded if discounting was
done merely upon the original capital of bank
What dividend would it pay, after deductng the enor-
nous expenses of corporate organization, salaries OF
officers Nc.l man could better loan his own funds
az common interest than invest them in bank upon
sucb basis But the banks, in fact loan to their
customers upon the deposits which those customers
keep in the banksthat is to say upon the average of
such deposits. This s the secret of bank prohts Let
those deposits be Withdrawn, and any bank would be
shorn of il, power az the with the Bank of
Pennsylvania II had all it's own assets, but its Gus
tomers having withdrawn their deposits, the bank was
forced TO suspend
But let us look little more closely at the pur
sued by our banks in this emergency. have no idea
Ii az il was in their power to have complied with all
that was asked by the merchants, or that had they
attemp pied it. the relief sought would have been Oh.
ed; but We bad right to expect some financial
calculation-some action that would at least have IN
ocaed that the resources of the banks were wisely
ap6 fairly used for the aid of the mercantile interests
II would see that there is master mind among our
ba, officers Their action has been oscillstng, ca
PRECIOUS, and without any comprehensive plan. A
sudden contraction Of discounts to 81 amount tina,
woud have produced arrangement Of business even
In ord ary times was the sensitive state OF things
existing at the time that unwise measure was adopted
productive OF vast injury. II was not so much the
of the amount of funds thus curtailed from
TIE discounts il the indication OF want OF cou-
fdence by the bsnks in the ability of the merchants
The efe ct upon he merchants was still greater dis
-ulon the banks the OmiLutiOn Of deposits and
d gradual drain at specie.
II ore could be amused Mt such a time with any
thi1g il would be by such Grade ideas contaoed
in letter of the President OF the Bank OF Commerce,
MIR. Appleton OF Boston, published not many days
sire He thinks New-iork may be proud OF me
strength Of its banks-but what is that strength II
IL nothine more than the nbeciity Of locking up its
vsus ana looking upon the distress of the entire mer
camille community with indfereLce-but he los, eight
OF the fact that the banks had the custody OF funds
which did not belong TO them; and that they mustex
pect the withdrawal of those fund If the merchants
were not furnished with equivalent by discounts.
Another circumstance wac involved. The banks
were not asked to part with funds but simply to omit
calling in what they had already parted with. 1t
woula at any rate, have furnished considerable aid
to bank customers if the paper already discounted
could have beer renewed. This should have been
universally done upon proper security. Ample security
could have been furnished Tor the greater part OF the
indie bteduess; in fact the banks had, as general
thing alre ady collateral security. Immense loss has
been sustained by borrowing of private capitalists,
through the Intervention OF brokers, at enormous
usury for the payment of notes held by the banks
think the bank customers would have been Jushhed
in general to refuse taking up these notes.
or in other words 10 have prescribed to the banks
either renewal or non.payment.
But to this it might perhaps have been answered
that the banks unable to meet the demands upon
them without calling in the paper that was due:
should like to know what these demands werel What
egtn ate demands could there be except by depostors
for their money Bat these depositors were generally
those who were asking discounts. The rule is well
known that the amount of deposits is the basis OF
discounts BY discriminating therefore, the deposits
remain. There could, therefore, be no reasonable
apprehenoBof insecurity by renewing the discounted
paper upon that basis, If the business OF me oanAs
had been regularly conducted. But we are furnished
by the banks with significant suggestion that the
business had not been regularly conducted. We may
fairly suppose that bank accommodations had been
given upon made quate security.
The public are, perhaps, too ready to believe IN
bank favoritism; but enough has been developed OF
late to warrant the belief that the propretors OF the
capital put into the banks oener borrowers than
lenders What mean is, that those who have IN
vested money in bank stock borrowers to larger
amount than they have invested.
Then, again, look at the inproUdent management
of some Of the banks. The Mechanics Banking AS
sociaon is not the only one Is to be feared, whose
ficeIs have loaned its funds improperly for prvat
speculations.
Aside however, from any direct breach OF trust l,
seems TO me that there il az evident lack OF hnanca
ability in the management of our banks.
To return, however, from this partial digressicn-
my object being not go much to expose the lrnoeciy