The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-12-06

The Revu!stnp In the United states aud GsIeA
Dsissin-Bsnk Policy IA Both Countries.
A striking contrast is presented by the Bant
of England and the banks of New York at tn.
present time When the banks of New Yom
were forced in spite of themselves, to suspe,d
specie payments, they resolved, notwithstaId-
ing their suspension, to adhere to the policy with
which they had inaugurated the panic, name
ly, to refuse accommodation to all but the mort
undoubtedly secure houses; and the consequent,
has been that they have been able since thei
suspension to contract gradually so as to reduc,
their loans under ninety-fve millions. Sever
millions Orleans have been curtailed since the
suspension. Hence the New York banks, doing
business on no specie basis, contracting theiI
loans, accommodating gold in their vaults, and
paying little or none of it out, are in a much
stronger position than they ever were before
Very different has been the policy, and vey
different is the position of the Bank of Englani.
That institution obtained promise of indemi-
ty in case it forfeited its charter-which, as We
have shown, was equivalent to suspension Of
specie payments-on the ground that it was 10
enlarge its line of discounts and carry the en-
barrassed merchants and bankers through
the panic. Suspension, in its case, has
been followed by expansion; expansion at
such rate that one firm alone has obtained
million sterling in day. Hence instead of
strengthening its position and facilitating it's
return to regular specie payments, the Bark of
England has been every day weakening tself
by the issue of paper unsecured by specie, and
rendering it more difficult for it to resume bust
ness on the old basis. The reasons which make
our banks strong make the Bank of England
weak.
One cannot help recalling in this connection
the leading features of the great financial strug
gle which eliminated in the ruin Of the United
States Bank, twenty years ago. When the panic
of that day broke out, the United States Bank
resolved to carry the merchants through their
embarrassments, and did not ever scruple, after
its usual resources had been exhausted, to issue
five millions of post notes in order to provide
itself with the means of accommodating the
mercantile community. After time, the tor
rent became too violent to stem; the bank could
neither save the merchants nor protect ITSELF
1t suspended specie payments. On the strength
of this move it attempted again to help the
merchants by expanding Though the agents
it had sent out to London and Liverpool to sell
American cotton and obtain aid from the bank
and capitalists to carry tie United States
through, had achieved nothing but failure,
and had been discountenanced by the Bank
of England, the United States Bank did not
despair. 1t kept on expanding. Even when
its own rOttenness was proverbial, it was ready
to lend money. Such efforts to enrich the
country and help commerce were never known
York (Which had soon recovered from their
early error, expansion after suspension, and had
retraced their steps, proceeded to resume; and
the United States Bank was forced to follow the
example. 1t was then that the consequences of
her career of expansion became evident. After
a short period of resumption, the rotten concern
suspended again. and gradually went out of
sight altogether.
1t cannot be denied that the Bank Of England
is pursuing the same course as the United
States Bank did in 1887. She is risking her
own stability in order to save Anglo-American
bankers, merchants and others, whose failure,
it is considered, would be injurious to the safey
and welfare Of the kingdom. The issue wll
turn on the greater or less degree Of skill with
which the bank is managed during this quasi
1t is possible that, as this county
revives-whch ii will do in all human protn-
bility in the course of the next six months
business may recover all over the world, and
the bank be able to retire its overissues with
out loss; but If sound financial principles sac,i
feed to political expediency or personal friend
ship the teaching of experience indicates that
the parallel between the two great banks, that
of England and that Of the United States, is
likely TO hold good TO the end