The Highland weekly news. [volume] (Hillsborough [Hillsboro], Highland County, Ohio) 1853-1886, 1857-12-17

/ nus 10 appears thi t these banks lh Lle hB
gregats have consi de ,rably less than one dollar
in scven Of gold and silver compared with
their circulation uld deposits. II was palpa-
BILE, thereto re, that q ie very first pressure must
drive them TO susp en- sioni and deprive the peo-
pie Of a convertibl currency with oil its dis
astrous consequences.
II is truly won, lerruI that they should have
so long continued 10 preserve their credit,
when demand ioi the payment Of one seventh
oil their immediate liabilities would have drv-
en- them into insOl1'enc y. And ills is the con-
dition of the banks, not withsiandmg that four
hundred millions Of gold. from California have
flowed in upon us with i'm the last eight years,
and the tide still cont nucs TO flow. Indeed,
such has been the eNtu tvag8nce Of bank credits
that the banks now sull hold a considerable
less amount Of specific, either iu prOpo rtiOu to
their capital or TO their circulation and depos-
its combined, than the did before tho discov-
cry Of gold I'm Calf oriiia. Whilst in the year
ls45, thor specie Il proportion TO theircapitnl
was more than equ7d 20 one dollar for bur and
a half, iu S57 it do ss not amount TO more than
one dollar forevsry six dollars and thrty-three
cents Of their capital I'm the year ls4S tho
specie was equal within IA very small fraction
TO one in five Of their cir Culation and deposits;
IN 1857 t Is not equal to one i'm seven aud
half Of their deposits.
From this staten ent &C is easy tobccount for
our financial history { or the last forty years
II has been history of extravaganl expansions
In the business of tlle country, followed by
ruinOus coulractions. At successive intervals
the best and most euierprisng mon have been
tempted to their ruin by excessive bank loans
Of mere paper credit. exciting them TO eEtrav-
agant importations Of foreign goods, wild spe-
Culations, and ruinoI Is and demomlizing stock
gambling. When tn o crisis arrives, as arrive
it must, the banks CT IN extend no relief to the
people. In vain str uggIe TO redeem their lia-
biIites IN specie theW are compelled to contract
their loans and their Bsues; and at last, ia the
hour Of distress, wb en- their assistance is most
needed, they and th cir debtors sink into insol-
venCy,
1t is this paper system Of eXtravagut expan-
sion, raising the no mi val price Of every article
far beyond its real vallIe, when compared with
the cost Of similar q arti Cles I'm countries whose
circulation Is wisely ] egulated, which has pre-
vented us from COm,pe ting I'm our markets with
foreign manufacturers, has produced extruva-
CANT importations, and has Counteracted the
effect Of the large protr CtiOn afforded TO our do
nestle manu- luCture by the present revenue
tariff But for this the branches Of our manu-
fac lures, composed Of ,aw material, the pro-
duction Of our own cou ntry-such as cotton,
iron, and WOODEN fabric, would not only havs
acquired almost eXClu siYe possession of the
home market but would have created for them
selves a foreign market throughout the entire
world.
Deplorabe, however, as may be our present
financial condition, we may yet indulge In
bright hopes for the + fiture. No other nation
has ever existed which could have endured such
violent expansions aud CoutGclons of paper
credits without lasting iniuryi yet the buoy
uncy Of youth, the en- srgies Of our popu alton,
and the spirit which 'lever quais before diff
culties, will enable us soon 10 recover from our
present financial cml arrassuent and may even
occasion us speedily to forget the lesson which
they have taught.
DUTY OF GOVERN TENT IS THE CRISIS.
In the meantime it is the duty Of the gov
erumeut, by all proper means within its pow
er, TO aid in aevia,iug the suf'erings Of the
people occasioued by Ghe suspension Of che
bauks, and to provide against recurrence Of
the same calamity. Unfortunately, i'm either
aspect Of the case, il can do but little. Thanks
TO the independent treasury, the government
has not suspended pc yment, as it was compelled
TO do by the failure of the muks in 1881 II
will continue to discharge lis liabilities to the
people I'M gold and silver. It's disbursements
in coin will pass iutO circulation, aud maie-
rally assist in restoring sound currency
From It's high credit, should we be compelle ed
TO make temporary loan, Il can be effected on
advantageous terms. This, however, shall if
possible, be uvoid,d but, il not, then the
amount shall DO limited TO tle lowest practical
BILE sum.
have, therefore, determined that whilst no
useful government works already I'm pro gress
shall be suspended, new works not already
commenced will be- postponed, IL this can be
done without injury to ths country. Those
necessary for its de fence shall proceed though
there had been no crisis in our monetary af
fairs.
NATIONAL BANK.
But the federal government cannot do much
TO provide against a recurrence Of eXisting|
evils. Even If iusurmouutable constitutional
objections did not exist against the creation OF
a National Bank, this would furnish no ade-
quate preventive security. The history of the
last Bank Of the United States abnndantly
proves the truth of this assertion. Such
bank could not, II IL would, regulate the issues
and credits Of fourteen hundred State banks in
such manner as to prevent the ruinous eX
pansions aud COntraCtOns In our currency
which afli,ted the country throughout the
existence Of the late bank, or secure as against
future suspensions, In 1925 an effort was
made by the Bank of England 10 curtail the
issues Of the country banks under the most
favorable circumstances,
The paper currency had been expanded to
ruinous extent. mud the Bank put forth all
It's power to contract it in ordeF to reduce pri-
ces and restore the equilibrium Of the foreign
exchanges. II accordingly commenced sys'
tenn of curtuilment Of It's loans and issues, In
the vain hope that the joint stock and private
banks of tho kingdom would be compelled to
follow It's example. IL found, however, that
as It contracted they expanded, aud at the end
OF the process, TO employ tho language OF a
very high official authority, "Whale YER reduce
ton Of the paper circulation was effected by
tho Bank Of England (in 1920 was more than
made up by the issues Of the country banks"
But a Bank Of tho United States would not,
If Il could, restrain the issues aud loans Of the
State banks, because its duty as a regulator
of the currency must often bo In direct COu.
hict with tho i'm mediate interest of It's stock
holders. If we pect one agent to restrain or
control another, their interests must, at least
I'm some degree be antugOnistic. But tho d.
rectors Of a Bank Of the United States would
feel tho sume interest aud the same inclination
with the directors Of the State banks TO expand
the currency, to accommodate their lavoritas
aud friends aud TO declare large dividends.
Such has been our experience ia regard to the
last bank,
After all, we must mainly rely upon
the patriotism and wisdom Of the States
for the prevention and redress of the
evil. III they will afford us a real spe-
Gle basis for our paper circulation by in
creasing the denomination Of bank
notes, first to twenty, and afterwards to
fifty dollars; if they will require that
the banks shall at times keep on hand
at least one dollar of gold and silver
for every three dollars Of their circula.
ton and deposits; and if they will pro.
vide by q solfoXecuting enactment
which nothing can arrest, that tho mo,