Edgefield advertiser. [volume] (Edgefield, S.C.) 1836-current, 1857-12-23
H*ssssGIs . ee's

coiia,rr. and eventual security it is doubtless
wise, and in all cases ought to he required, that
banks shall hold an amount OF United States or
State securities equal to their notes in circula-
ton and pledged for their redemption. This,
however, furnishes no adequate security against
over.issues On the contrary, ii may be pcrrar-
ted to initiate the currency Indeed 1t is possible
br this means to convert al the debts OF the
tnitel States and State governments into bank
notes. without reference 10 the specie required
TO redeem them However valuable these securl-
ties may be in themselves, they cannot nc CON.
verted into gold and silver ar the mnincnt oi
pressure, us Car experience tcarheS in sufficient
time to prevent bank suspensions and The derrc-
ciation of bank notes.
In England, which is to n considerable extent
paper money country, though vastly behind
our own in this respect, it was deemed advisable,
anterior to the act Of Parliament in lSl4, 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 to
onc-third of its combined circulation and depos
ties. If this proportion was no more than snit.
cicnt to secure the convert!bility OF its notes,
with the whole of Great Britain, and to some
extent the Continent Of Europe, as field Tor
its circulation, rendering it almost impossible
that sudden and Immediate run to Il dangerous
amount should be made upon It, the same pro-:
portion Would certainly be insufficient under our
banking system. Each Of our fourteen hundred
banks has but limited circumference for Its
circulation, and in the course OF avery few days
the depositurs and note holders might demand
from such Il bank sufficient amount III specie
to compel to suspend, even although it had coin
in its vaults equal to oncthird OF its Immediate
liabilities. Aud yet am not aware, with the
exception of the banks OF Louisiana, that any
State bank throughout the Union has been re.
uuired by its charter to keep this or any other
proportion of gold and silver compared with the
amount of its combined circulation and dcpos-
ties. What has been the consequence? In
recent report made by the Treasury Department
on the condition of the banks throughout the
different States, according to returns dated near.
est to January, 1851, the aggregate amount OF
actual specie in their vaults is S5S,a4?,S3s OF
their circulation S2l4,77S,S22, and OF their de-
posites, $230,35l,3 1852,
Thus it appears that these banks in the aggre'
gate have considerably less than one dollar in
Seven of gold and silver, compared with their
circulation and deposites. 1t was palpable,
therefore, that the very first pressure must drive
them to suspension, and deprive the people OF a
convertible currency with all its disastrous coll
sequences: 1t is truly wonderful that they
should have so long continued to preserve their
credit, when demand for the payment OF one
seventh of their immediate liabilities 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
wears, and the tide still continues to flow. In
deed such has been the eXtravagance Of bank
credits that the banks now hold Il considerable
less amount of specie, either i'll 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 lS+8
their specie, in proportion to their capital, was
more than equal to one dollar for four and q
half, in 1851 it does not amount to one dollar
and thir.ythree cents of their capital. In the
year lS4S the specie was equal within very
small fraction to one dollar in five of their cir
culaton and deposites; in 1851 it is not equal
to one dollar in seven and half of their circu-
lation and depostes.
From this statement it is easy to account for
our financial history for tho last forty years 1t
has been history Of extraragant expansions in
the business Of the country, followed BY ruinous
contractions. At successive intervals the best
and most enterprising men have been tempted
to their ruin by excessive bank loans of mere
paper credit exciting them to cxtravagant i'm
portations of foreign goods, wild speculations
and ruinous and demoralizlng stock gambling
When the crisis arrives, as arrive it must, The
banks can extend no relief to the people. In {
vain struggle to redeem their liabilities in specie