Burlington free press. [volume] (Burlington, Vt.) 1827-1865, 1857-12-18

! 1nle Currencv with all IFS disastrous con-
sequences. Ii is truly wonderful that they
shonld have so long continued to preserve
their cred t. when the demand for the
payment of one seventh Of their Immediate
Liabilities would have driven them iuto in
solvency And this is the cond ton of
the banks. notwithstanding that four hun
dred millions of gold from California have
flowed IN upon us within the last four
years, and the tide still continues to flow.
Indeed, such have been the extravigance of
bank credits, that the banks now hold a
considerable less amount of specie, either
in proportion to their capital or to their
circulation or deposits combined than they
did before the discovery of 60 d in Cali or
MIA. Whilst in the year lSlS their spe.
Gle in proportion TO their capital was more
than equal tp one dollar for four ard a
| half, in 1857 it does not amount to one
dollar to every six dollars and thirty three
cents Of their capital. In the year lS4S
the specie was equal within very small
fr lctiJn to one dollar in five of their elrcu-
lation, and deposits; in 1857 is not equal
to one dollar in seven and hal.
of their circulation and deposits.
From this statement it is easy to account
for our financial history for the last forty
years. II has been u history of extrav,
giant expansions in the business OF the
country, followed by ruinous contractiOns
At successive intervals the best and most
interprising men have been tempted to
their ruin by excessive bank loans Of mere
credit, excl ing them to extravagant mpor.
tations OF foreign goods, wild speculations,
and ruinous and demoralizin1 stock gam
bling. When the crisis arrives, and ar.
rive it must, tie banks can extend no re
I;.,G ba .N,ln L., r.ln
redeem their liabilities in specie they are
compelled to contract their loans and their
Issue; and at last, IN the hour of distress,
when their assistance are not needed, they
and their debtors together sink into insol-
vency.
1t 10 this paper system of extravigant ex-
pansion ral'i ,g the nominal price Of every
article beyond it's real value, when com
pared with the cos. of similar articles in
countries whose circulation is wisely regu.
latel. which has prevented us from com.
peting in our own markets with fOraign
manufacturers, has produced ext-Ivagant
importatons. and has counteracted the
fleet of the large incidental protection al
forded to our domestic manufactures BY
the present revenue tariff But for this
the branches of our manufactures composed
OF raw materials, the productions OF our
own country such as cotton, iron and
woollcn iabrics-would not only have ac-
qnired almost exclusive possession Of the
nome market, but would have created br
themselves . foreign market throughout the
world.
Deplorable however. as may be our pre-
sent hnanci, 81 condition VIC may vet IN
dul.o in bright hopes tor the ru ure. No
other nation has ever existed which
could have endured such violent expan
sions and contractlons Of paper credits with
out lasting injury; yet the buoyancy OF
youth. the energies OF our popul 'rion, and
the spirit which never qusils before diff
culties, will enable rs soon to recover lr III
our present financial embarrassment, and
may even occasion US speedily to forget the
lesson they have taught.
In the meantime II Is the duty of the
government. by all proper means within
its power, to aid in alleviating the suf r
ings of the people occasioned by the suspen-
sion OF the banks. and to provide against
tn, concurrence of the same calamity
Unfortun ,tcly' in either aspect of the case
1t Can do but little. Thanks to the inie-
pendent treasury tbs government has not
suspended ptym mt. as 1t WAS cbmpslled to
do hy the failure Of the banks in 1857. It
will continue to discharge its liabilities to
the people in gold and silver. Its dis1ursa
ments in coin will pass into circulation, and
materially assist in restoring sound cur
rency. From its high credit, should we b4
compelled to make temporary loan, 1t can
be effected on advantageous terms. This
however, shall, if possible, he avoided but
II not, then the amount shall be limited to
the lowest practicable sum.
have. therefore, determined that whilst
no useful governneni works already in pro
gross shall be sus, ended, new works, not
! already commenced, will he plstpOnei, IT
i this can be done without injury to 'he
country. Those necessary for is defence
snail proceed as though there had been no
crisis in our own monetary af .irs.
But the federal governm ,nt cannot do
much TO provide against a recurrence OF ex-
isting evils. Even if insurmountable con
stitutional objections did not exist against
the creation Of national bank, this would
furnish no adequ te preventive security
Tn@ history of thi last Bank Of the United
States abundantly proves the truth Of this
assertion Such "a bank could no, if It
would, regulate the issues and credits Of
| fourteen hundred State banks, IN such u
manner as to prevent the ruinous expansions
and contractions IN ur currency " ich
afflicted the country throughout the exist
enoe Of the late bank, or secure us against
future suspensions. In 1928 An eff ,rt was
made BY the Bank Of England to curtAil the
issues of the country banks under the most
favorable circumstances.
The paper currency had been expanded to
a ruinous extent. and the bank put forth al
its power to contract it in order 10 reduce
prices and restore the equilibrium Of the
foreign exchanges. 1t accordingly com.
menced system of curtaiment oil its loans
and issues, in the vain hope that the jjint
stock and private banks of the kingdo II
would be compelled to follow its example
IL found, however, that as it contracted
they expanded and at the end of the pro-
cess, to employ the language of Il very high
uth;iai authority, whatever reduction
Oi the pap3r currency WAS eh ,cted ny the
Bank OF England, lin ls25) was more tn IN
made up by the issues OF the country
banks"
But bank o. the United States would
not, if it could, restrain the issues anC
loans Of the State banks, because its duty
as a regulator Of the currency must otter
be in direct conflict with the ilnmediIte in
terest of its stockholders. Ii We expect on
, agent to restrain or control another, their
interest must, at least in 70 ne degree,
antagonistic. But the directors OF n Btnl
of the United States wou'd feel the sam
, interest and the same inchn tion with tn
, directors of the State Banks to expand tn
, currency, to accommodate their fivoritt
3 and friends with loans, and TO declar. arg
r dividends, Such has been oar experienc
in regard TO the last bank.
. After all, We must mainly rely upon til
patriotism and the wisdom of the States 10
/ the prevention and redress of the evil
they will afford us real specie basis 70
our paper circulation by increasing I'll
denomination OF bank notes frs
= to twenty, and afterwards to fifty dollars
a IT they will require that the banks shall d
), all times keep on hand at least one doll.
l. Of gold and silver for every three dollars {
n tier circulation and deposits and IT the
n will provide by self executing enactment
"a which nothing can arrest, that the momer
- they suspend they shall 90 into liquid'
- tion, believe that such provisions, with