The western Democrat. [volume] (Charlotte, N.C.) 1852-1870, 1857-12-15

depos:tors and note-holders might demand
from such a bank a sufficient amount in
specie to compel it TO suspend, even although
10 had coin in itsvauits equal to one-third
of its immediate liabilities. And yet 4 am
not aware. with the exception of the banks
of Leuisiana, that any State bank throughout
the Union has been required by its charter
to keep this or any other proportion Of
gold and silver compared with the amount
of its combined circulation and deposites.
What has been the consequence In
recent report made by the Treasury Depart
ment on the condition of the banks through
the different States, according to returns
dated nearest to January, 1857, the aggre
gate amount Of actual specie in their vaults
is Sos, s49, 1913, Of their circulation 1914
779.S22, and of their deposites $780,
35l,352. Thus it appears that these banks
in the aggregate have considerably less than
one dollar iu. seven of gold and silver
compared with their circulation and de-
posites. 1t was palpable, therefore, that the
very first pressure must drive them to
suspension, and deprive the people ola
convertible currency with all its disastrous
consequences. 1t is truly wonderful that
they should have so long continued to
preserve their credit, when demand for
the payment Of. oue-seyenth of their liabili-
ties would have driven them into insolvency.
And this is the condition Of the banks,
notwithstanding that four hundred millions
of gold from California have flowed in upon
us within the last eight years, and the tide
still! continues to flow. Indeed, such has
Al, g ,,o L.
the banks now hold considerably less
amount Of specie, either In proportion to
their capital or to their circulation and
deposites, combined, than they did before
the discovery of gold in California. Whilst
in the year l84S their specie in proportion
to their capital was more than equal to one
dollar for four and a half, in 1857 it does
not amount to one dollar for every six
dollars and tlirty-three cents of their
capital. In the year l84S the specie was
equal within very small fraction TO one
dollar in five Of their circulation and de-
posites; in 1857 it is not equal to one dollar
in seven aud a half Of their circulation and
dcpo>ite5
From this statement it is easy to account
for our financial history for the last forty
years. 1t has been history of extrava
CANT expansion in the business of the coun-
try, followed by ruinous contractons. AT
successive intervals the best and most en-
terpri>ing men have been tempted to their
ruin by successive bank loans or mere
paper credit, exciting them to extravagant
importations of foreign goods, wild specu
lations, aud ruinous and demoralizing stock
gambling. When the crisis arrives, Us ar
rive it must, the banks can extend no relief
to the people. In a vain struggle TO redeem
their liabilities in specie they are compelled
to contract their loans and their issues land
at last, in the hour of distress, when their
assistance is most needed, they and their
debtors together sink into insolvency.
1t is this paper system of extravagant
expansion, raising the nominal price of eve
ry article far beyond its real value. when
compared with"the cost of similar articles in
countries whose circulation is wisely regu
lated which has prevented us from COM
peting la our own markets with foreign man
ufacturers, has produced extravagant i'm
of the large incidental protection afforded
to our domestic manufactures BY the pres
emit revenue tariff. But for this the branch
es of our manufactures composed of raw
materials. the production of our own coun
try-Such as cotton, iron, and wollen fabrics
would not only have acquired almost ex-
elusive possession of the home market, but
would have created for themselves foreign
market throughout the world.
Dcplorable, however, as may be our
present financial condition. we may vet in
dulge in bright hopes for the future. No
other nation has ever existed which could
have endured such violent expansions and
contractions of paper credits without last
ing injury; yet the buoyancy of youth. the
energies of cur population and the spirit
which never quails before difficulties, will
enable US soon to recover from our present
financial embarrassment. and may even
occasion us speedily to forget the lesson
which they have taught. .'-
In the mean time it is the duty of the
government, by all proper means within its
power, to aid in alleviating the sutferngs
of the people occasioned by the suspension
of the banks, and to provide against re-
currence of the same calamity. Unfortun-
ately, in either aspect eff the case, it can do
but little. Thanks to the Independent
treasury, the government has not suspend
ed payment as it was compelled to do by
the failure of the banks in 1887. 1t will
continue to discharge its liabilities to the
people in gold aud silver. Its disburse-
ments in coin will pass into circulation, and
materially assist in restoring sound cur
rency. From its high credit, should we be
compelled to make a temporary loan, it can
be- effected on advantageous terms. This,
however, shall, if possible, be avoided; but,
if not, then the amount shall be limited to
the lowest practicable sum.
| have, therefore, determined that whilst
no useful government works already in pro-
gress shall be suspended, new works, not
already commenced, will be postponed, if
this eau be done without injury to the coun-
try. Those necessary for its defence shall
proceed as though there had been no crisis
in our monetary affairs.
But the federal government cannot do
much to provide against a recurrence of
existing evils. Even if insurmountable con-
stitutional objections did not exist against
the creation of National Bank, this would
furnish no adequate preventive security
The history of the last Bank of the United
States abundantly proves the truth of this
assertion. Sach bank could not, if it
would, regulate the issues and credits of
fourteen hundred State banks in such