Western Reserve chronicle. [volume] (Warren, Ohio) 1855-1921, 1857-12-16

pressure, as our exg erlence teaches. II
sufficient time to prevent bank suspen
sions and the depreciation of bank notes
In England, which is TO a considrrabl,
extent a paper money country, thougt
vastly behind our own in this respect. i
was deemed advisable. anterior to the
act of Parliament of 1874. which wisely
separated the issue of notes from the
banking department. for the Bank Of
England always to keep on hand gold
and silver equal 10 one-'hird of its com
bined circulation and deposits. Ii this
proportion was no more Than sufficient to
secure the convrrtibility of its notes,
with the whole of Great Britain, and tu
some extent The continent of Europe, as a
field for its circulation, rendering il al
most impossible that sudden and imrae
diate run to a dangerous amount should
be made npon it. the same proportion
would certainly be insufficient under our
banking system. Each of our fourteen
hundred banks has but limited circum
ference for its circulation, and in The
course of very few days the depositors
and note holders might demand from
such bank sufficient amount in specie
TO compel it to suspend. even although it
had coin in its vaults equal 10 one Third
of lis immediate liabiliiles. And yet |
am not aware. with the exception Of The
banks of Louisiana, that any State bank
throughout the Union has been required
by It's charter 10 keep this or any proper
ton of gold and silver compared with the
amount of lis combined circulation and
deposits. What has been the consequence?
In recent report made by the Treasury
Department on the condition Of the banks
throughout the different States, accord
ing 10 returns dated nearest TO January.
1857. the aggregate amount of actual
specie in their vaults is S58. $40 S38, Of
their circulation S9l4 778 822. and of
their deposits 1886 351 ,342. Thus it
appears that these banks IN the aggre-
gate. have considerably less than one
dollar in seven of gold and silver com
pared with their circulation and deroSits
Ii was palpable therefore. that the very
FIRST pressure must drive them TO suspen
sion, and deprive the people of con
vertIble currency with ali lis disastrous
const quences. Ii is lrulv wonderful that
they should have SO long continued to
preserve their credit, when demand for
the payment Of one seventh of their i'm
mediate liabilities would have driven
Them into insolvency And this is the
CONDITION of The banks, Notwithstanding
that four hundred millions of gold from
G lifornia have flowed in upon US within
The last eight years, and the tide sIill
continues 10 dow. Inleed. such has been
the txravaganee OF bank credit that the
banks now hold considerably less
amount of specie, either in proportion to
their capital. or their circulation and
deposits combined, than they did befure
the discovery of gold in Cal 'nrnia -
Whilst In the year 1849 their specie, in
TO their capital. was more than
equal 10 one dcllar for four and hall,
in 1857 II does not amount 10 one dollar
for every six dollars and rhirty.three
cents of th-ir capital In the year 1849
The specie was equal within q very small
fraction 10 one dollar in ive of their CIR
culalion and deposits; in 1857 ii is not
equal 10 one dollai in seven and half of
their circulation and deposits.
From this statement it is easy to &C
count for our financial history for the
last forty years. Ii has been history
Of extravagant expan ions in the buSi
ness of The country, followed by ruiuous
AT successive intervals the /
best and most enterprising men have
been tempted to their ruin by excessive
bank loans Of mere paper credit, exciting
hem TO extravagant importstions of for /
eign goods, wild speculations, and rain
ous and demOraiizing stock gambling
When The crisis arrives, as arrive il must,
he banks can extend no relief 10 the /
people ln vain struggle to redeem
their liabiiines l. specie. they are COM
PEELED 10 contract their loans and their
ssues; and. at last. in the hour OF dis
.ress, when their assistance is most need
I'd. they and their debtors together, sink
nto Insolvency.
1t Is this paper system of extravagant
expansion. raising the nominal price of
every article far beyond its real value,
when compared with the cost of similar
articles in countries whose circulation is
wisely regulated, which has prevented us
rom competing iu our own markets with
oreign manufacturers. has produced ex-
rsyagant importations. and has counter
acted the effect of The large incidental
protection afforded TO our domestic man
lfactures By the present revenue tariff.
But for this the branches of our manu-
actures composed oil raw materials, the
production OF our own country-such as
.otton, iron, and wooden fabrics-woulG
Iot only have acquired almost exclusive
of the home market. but would
ave created for themselves a foreign
market throughout the world.
Deplorable. however. as may be our
'reScnt financial condition, we may yet
indulge in bright hopes for the future
'o other nation has ever existed, which
ould have endured such violent expan-
ions and contractions Of paper credits
Fithout lasting injury; yet the bouyancy
{ youth. the energies Of our population
nd the spirit which never 9uails before
ifficuliies, viii enable US soon to recov
r from our present financial embarrass
lent, may even occasion US speedily to
orget the lesson which they have taught
In the meantime it is the duty of the
government, by all proper means within
$ power, to aid in aIleviating the suffer
,gs of the people occasioned by the sus-
ension of the banks, aud 10 provide
gainst recurrence Of the same calam-
y. Unfortunately, in either aspect of
he case, it can do but little. Thanks to
,e Independent treasury, the Govern.
lent has not suspended payment. as it I