The Middlebury register. [volume] (Middlebury, Vt.) 1850-1882, 1857-12-16

them
However valuable ,bese securities ma,
be iu themselves they cannot be oonver,
cd into gold aud silver at the moment o
pressure, as our experience teaches, il
sufficient time to prevent bank suspen
sioDs and the depreciation of bank notes
In England, which is to a cousidera II
extent paper money country, though
vastly behind cur own 10 this respect. il
was deemed advisable anterior to the acl
of Parlie ment of 1914 which wisely sep.
nrated the issue Of notes from the bank
ing department, for the bank Of England
always to keep on hand gold aud silver
equat to cue.tbird Uf its combined oirou.
lation aud deposits. Ii this proportion
was no more than sufficient to secure the
convertibility of its notes, which the
whole of Great Britain and to some ex.
tent the continent Of Europe us field
for it's eircula tion, rendering il almost
impossible that sudden and immedis 10
run to dangerous amount should be
mode upon 1t, the same proportion would
certainly be insufficient under our bank
ipg system. Each of our fourteen hundred
It's circulation, and 10 the course of
very few days the depositors aud note.
holders might demaud from such bank
sufficient amount of specie to compel
1t to suspend even although II had coin
in its vaults equal to one third Of its i'm.
mediate liabilities And yet I am not
aware. with tho exception Of tho banks
Of Louisiana that any State bank through
ont the Uuion has been required by its
charter TO keep this or any other proper.
ton Of gold and silver, compared with
the amount Of its combined circulation
and deposits. What has beob the conso
queDce9 In receot report made by
the Treasury Department on the condi.
tion Of the bank throughout the different
States, according to returns dated neai-
est to Juuuary, 1854, the aggregate a.
mount Of ac'ual spscie in hoir vaults is
e5e,349. .s3S. Of their circulation S2I4..
77s e22, aud Of their deposites $3.50.
354352.
Thus it appears that these banks in
the aggregate have considerably less than
ono dollar in seven Of gold and silver
compared with their circulation aud de.
posits. 1t was palpabl-, therefore that
the very trst pressure must drive them
to suspension, and deprive the people Of
q convertible currency with all us dcsas.
truus consequences. 1t is truly wonder.
iui that they should have 40 long cortin.
ned 10 preserve credit whcn a demand
for the payment Of ono.sevehth # their
Immediate liabilities would have driven
them into Insolvency. And this the con.
dition Of the. bauks, twithstsnding shat
four hundred millions Of gold f,om Cal.
ifornia have flowed 10 upon Us within the
last eight ,ears, aud the tide still
continues to aow. Indeed such has been
the extravaganza of tho bank credits that
the banks now hold q considerable less
amount Of specie. either in proportion to
their capital or to their circulation or
deposits nom biued, than they did bef're
the discovery gold in Califoruis. Whilst
in the year ls4s their speoie in proper.
iion 80 their capital was more than equal
to one dollar for four and half, IN 1857
it does not amount to one dollar for ev.
cry six dollars and thirty three cents Of
their capital In the year I84s the spe.
Gle was eqoal within very small frac.
tion to one dollar in Eve of their crcu
la,ioD and deposits IN 1857 it is not
equal to one dollar in seven and half
Of their circulation aud deposits.
From this statement it is easy 10 ac-
count for our financial history for tho
last forty years 1t has been history
of extravneaDt expansions in the business
of the country, followed by ruiuous con.
fractions. At successive intervals the
best and most euterprislng men have
been tempted to their ruin by excessive
bank loans Of mere credit, exciting them
to exiravagant importstions Of foreign
goods, wild sp@culations, and runous and
demoralising stock ga mbliag W hen the
crisis arrives, as arrive it must. the banks
can extend no relief to the people. Ina
vain struggle to redeem their liabilities
10 specie they are compelled to contract
their loans and their issues, and at last
in the hour Of distress, when their sssis.
tauce is most needed, they and their debt
ors together sink into insolvency.
l, is this paper system Of extravsgaut
expansion. raising the nominal price of
every article far beyond its real value,
when compsred with The cost Of similar
articles in countries whose circulation is
wisely regulated, which bas prevented US
from competing in our own market with
foreign manufacturers, has produced ex.
travagsnt importa'ions, and has counter
acted the effect of the large inclden,al
protection afforded to our domestic man.
ufsctures by the present revenue tariff
But for tbis the branches of our manu-.
facturss composed Of raw materials, the
produotion OF our own country such as
cotton. iron and wooden fabrics would
not oDly havc acquired almost exclusive
possession of the bOWe market, but would
have created far themselves a foreign
market throughout the world.
Deplorsble. however, rs may be our
present financial condition, We may yet
indulge in bright hopes for the future
No other nation has ever existed which
could have endured such violent expsn.
sions and eontraotions Of paper credits
without lasting injury yet the buoyan.
cy of youth the energies Of our population
1 L -. l. a. 4