Smyrna times., 1857-09-02
The Panic in the Money Market.

yearly ouVe'ttSCS'
The Panic in the Money Market.
The recent developments in Wall street
New York, and the failure of number of Bro
kers, Banking Establishments and Trust Com
p4nies, both there and elsewhere, has greatly
unsettled monetary affairs throughout the coun-
try The Boston Journal has the following
pertinent remarks upon the bulls" and
Bears" that control cur financial concerns:
Wall street is the greatest place for gambling
in the world, unless it may be outdone just now
by the Bourse of Paris. All the gambling
technically so called--which is done in the
United States, is thrown into the shade by the
operations of Wall street brokers. They are
an organized band, numbering many hundreds.
whose daily business, and almost only eccupa-
tion, is betting immense sums of money on the
rise or fall of stocks, and then setting their ma
chinery to work to produce within given time
the rise or fall on which their bets are pending.
Whether the stocks on which they make these
bets have any intrinsic value in them or not is
a secondary consideration. In many cases the
more doubtful this point is the better it suits
the parties, because there is more margin for
huctua aton-room for 4 greater swing of the
penJuum--a better opportunity for putting up
and breaking down, and broader chances for
profit and loss. Hence the popularity with |
them of whqt are called " fancy stocks,' i. G.
STOCKS which may or may not have any ntrn-
SIC value.
The same gsme. however, is PLAYED with
stocks of real value and it is the operations
performed with these which at times afftct the
money market; because, to a certain extent.
money caa be raised on them from the banks.
And these institutions are by ne means blame
less. The balance of daily deposits in the New
York banks is very large, far beyond anything
of the kind here. They cannot be used 10
great ext4nt in the ordinary way OF discountng
business Pnper, because they are too unrelia-
bic; but in order to make them profitable, they ,
are luansd on demand, and very large portion
Of them to brokers, with stocks as security ,
This facility enables brokers to hold stocas for ,
a rise, and to buy with that view SO Longas {
tHcl CdH Auu IOhC1 GhOu@H W PuJ AuE ulhEI- Il
cnce between what the snare cost and the t
amount the banks are willing to advance on :
them. The system is ilIsgitimate. No bank :,
hass right thus TO use money deposited merely Il
for safe keeping; and the result is often dlsas-
truus, not only to the borrowers, but to The
whole mercantile community for whenever
these deposits are drawn upon. the banks call y
in these demand loans, aud the money to pay l
them r,ust be raised in the street, either by b
hypothecation TO individuals, or sales of the a
stocks pledged and thus all the loose money a
is raped up the rates interest advanced, and II
merchants driven to pay enormous prices or
fail This feature in New York banking is not "
only illegimate--it is vicious it encourages b
speculations to an enormous extent, sets people Il
ts gambling, and is instrumental in producing
those spasms and contractions which are the
bane of all legitimate business. b
The existing state of affairs in New York is I
the result OF one of those combined operations c
Of brokers and banks. The spectators for $
rise have been defeated. In spite of all their u
skill and power, aided as they have been by the Z
banks, STOCKS nave 1allen. oettlIng uay cOuld ;
not be kept off, and holders failed. The banks d
became alarmed because their debtors could "
not pay, sent off their securities to be sold tor
what they would command and so the panic.-
If there had been no " loans on demand secured =
by pledge of stocks the thing could not have -
happeaed. Brokers light have failed and their =
friends might have suffered perhaps, but there
would have been no disturbance in the money +
market, and the announcement Of failures at "
the brokers' board would have been read with ;
ss much indifference as if the subjects had lived
10 Calcutta. They are always failing. One of
the names announced we remember to have -,
seen in the same predcament three times in :
about as many years, and always for enormous
sums, but we never heard of any one losing by !
him except lis gambling friends, and they only ;
lost so much of the bet as he was unable 10 pay.
There was no money in the case.
We have no faith in any law to prevent this q
gambling from going on, but we think that a
law 10 prevent banks making loans on demand,
or pledge of stocks of any kind, would 60 far d
towards rendering il harmless to the public.
THE CoAcHMAKERs' Excursion, from Will {
.uo. O00 rorsons - th | 4