Wilmington journal. [volume] (Wilmington, N.C.) 1844-1895, 1857-12-18

is made upon the banks for of their credit and yield
their notes and by enargg their discounts The extent to
which the banks have enlarged their credit beyond its prop
limits is not to be measured alone by the amount OF their
At the time New York city banks suspended specie
payments in October they reported larger amount OF spe
Gle in their vaults than their notes in circulation and not
outstanding this fact they unable to meet the demands
of their creditors promptly with Specie owing to their credit
their credit and enabled their customers to do the
same they unprepared for the revulsion which came
upon them. If it be true that embarrassmen have been
by the here assigned must look beyond
the action banks the operations of other corpora
tons well individuals to athom the entire cause OF our
difficulties The limits OF this report VIII not admit OF de-
tailed examination of this subject but solitary illustration
circular letter addressed the railroad corporations
the country appears that the capital OF these
The annual interest upon the latter is s2 093 2O3 their
annual income was S48, 4O6, ASS.
1t is proper here to remark that whilst this statement
be considered perfectly apprOXimates it
sufficiently for the illustration of my argument 1t
hbts the extent which this class of corporations has
contributed to that expansion OF credit which is properly
chargeabe with the recent revulsion. is due to large
class of railroad companies to state that this excessive
Indebtedness not equally distributed among Them Some
have conducted their business with the utmost propret
and success whilst others have far exceeded these limits
the foregoing result Of railroad
ratons in the United States
The undue expansion of credit, which stimulated in
an undue desire to borrow and in others willing dispos
ton to lend which engenders schemes of provdent
uatOn leading to rapid fluctuations in prices and habits Of
extravgance regard as the principal cause for the en-
barrassment existing in the of the The
only efficient remedy for such evils is to be found in
turn to the prudent and steady habits which, for
time nhappy laid aside. This government could do
but little towards eXtricatng individuals, corporations
communities from the perncious consequences of their
travigant expenditures or cOnceved enterprises When
credit has been extended far beyond the bounds of eg
innate confidence to create revnsion in trade occasion
ing fall OF prices, and destruction of private credit,
speedy adjustment of the relations between creditor and
debtor by liquidation and settlement is the surest mode for
the restoration of the equilibrium.
Wild and chmercal specuations will thus have their ter
minaton industry will be better enabled to realize its sober
expectations and the substantial interests of society being
relieved from the noXlous influence OF excitement Overac
ton and disorder will their energy
communicating heathfu and vigorous activity to the bu-
sness of the country The proper agency of the
such is to whatever impeachment exist
to the exeron of the native force OF society and to extract
from the experience they have gained lessons to be embodied
i'll wholesome and weconsdered laws prevent the
renee of the evil.
1t evident that the great mOneyed corporations created
under the laws of the States have had controlling influence
in the undue expansion of private credit In many of the
States the legislation in respect to these is stringent and
cmbodcs many of the safeguards that experience has
gested for their regulation.
But will not be denied that this legislation has been nu-
gatory The State authorities have already manifested
eager disposition to relieve them from the penalties they
nave incurred ana to dispense as far as they were able
from them when they organized This has been done
III some cases, without inquiry into their condition
management or their capacity to their position
solvent institutions or even to protect the community from
deprecated paper currency.
employ the powers conferred by the constitution upon to
mitigate the present evil and to prevent catastrophe of
bankrupt law to include two classes of corporations and
companies necessary 1t should be law for the protec
ton OF creditors not the relief of debtors to prevent i'm
proper credit not to pay improper debts compulsory not
voluntary.
The two which it is proposed bring under the
operation of compulsory bankrupt law banks and rail
road corporations The immense capital employed by these
companies their controlling power and influence in the
mercla and business operations of the country their dSpO-
snn to expand and enlarge their credit and the ruino
effects produced by their operations when carried beyond
legitimate bounds impose upon the government the duty of
providing by constitutional means in their power for
the safe proper and legitimate conduct of such
The facts which presented in other portions of this
port developing the condition and operations Of these
classes corporations will fully justify the policy
commended The object to niure them but to pro
tect the community. The effect will be restrain OPP
eratons within proper limits and thereby insure to the
try all the benefits they are capable of conerng without
the accompanying hazards of wild speculaos and rinous
During this financial crisis and general arrangement of the
currency the collection and disbursement of the public
enue have proceeded without loss embarrassment. The
operations Of the independent treasury system, iii ordinary
The danger of loss from ufahfu and inefficient officers,
the expense of conducting its operations without the
venon of bank agencies its deeerous effects upon
merca progress and general business of the all
of which apprehended by the opponents of the
at the time OF its adOptOnhave been demonstrated
be untOunded 1t only remained to Ounter
ca crisis like the present vndcate the justice
dom OF the policy against all cause Of complaint appehc
ion brief comparison of the operations of the Treasu-
ry Department during the suspension of 1887 and the
in the most satisfactory manner,
the beneficial effects of the Independent treasury sys-
have not been estimated and is confidently expected
and is confidently believed that they have not it
specttuy submitted to public consideration whether the
adoption of the principle by the respective State
ernments would not complete the work of reform pre-
and successfully practced by the general government The
various State governments collect annually about $50
100000 This amount is collected mainly in bank
and when not Immediately dsbursed is either kept in the
form of bank notes in the vaults of the State
deposited directly with the banks Let the several States
collect their in Specie and thence withdraw
of hiaciltes afforded them by the use their notes
The remarks already made in connection with the indie
pendent treasury of the general government are here appl
cable to the effect that would be produced by such policy
The collection and disbursement in snece of the revenues
both the general and State governments and not speak
the various city, town and country corporations would
stitue such demand for specie, at all times to require
its retention in the country The banks knowing that they
liable to furnish their note holders with this specie
would regulate their issues accordingly and would
der suspension OF specie payments by them inevitable whe
crisis which requires them to do what they ough
always to be ready to dopay their debts The apprehe
sion that such requirement by the State governments wou
operate oppressyely upon the people would prove
State taxes paid, most generally, in bank
These notes profess to be representatives of specie the
they are not then they ought not to be received
either by the State government the people The
ooec OF the law Is to guard against the latter contingency
and thus to secure to the country sound paper currency
always convertible into specie.
Under the operation of an Independent treasury system
adopted by each of the States, there would be difficult
in retaining in the country sufficient amount of spcie,
only for the purposes of the government but also to
sound paper currency As long, however the presen
system lasts, this result cannot be looked for, One wou
suppose that the large increase of gold in the last few
would have enabled the banks have protected theseve
against the necessity of suspendng specie payments Sue
should have been the case but has not been and will
be until policy such is here recommended adol
ted which will compel them to keep sufficient specie in the
vaults to meet their issues. Since the discovery of gold
California i'll S49, there has been coined the
United States the 800 OOO and even large amour
has been added from that to the gold of the world
At that time estimated that there was in the I'm
the hank
held $40 O00O 00 upon which they issued circulation
$l4435. Their deposits that time amounted to