Columbia Democrat and Bloomsburg general advertiser. [volume] (Bloomsburg, Pa.) 1850-1866, 1857-12-19

ces. No bank ought ever to be chartered ,
without such restrictions on its business as |
to secure this result. All other restrictions I,
are comparatively vain. This is the only !,
true touchstonc, the only efficient regulator
of paper currency-the only one which !,
can guard the public against over issues |
and bank suspensions. AS q collateral |
and eventual security it is doubtless wise,
and in all cases ought to be required, that
banks shall hold an amount Of United States
or State securities equal to their notes 10
circulation and pledged for their redcmp
ton. This, however, furnishes no adequate
security against over issues. On the con-
trary, 1t may be perverted to initiate the
currency. Indeed, it is possible by this
means to convert all the debts of the United
States and State governments in'o bank
notes, without reference to the specie re-
quired to redeem them. However valuable
these securities may be in themselves, they
canuot be converted into gold and silver
at the moment of pressure, as our experience
teaches, 10 sufficient time to prevent bank
suspensions and the depreciation of bank
notes. In England, which is to a consd-
cradle extent paper money country,
! though vastly behind our ownin this respect,
| it was deemed advisable, anterior to the
act of Parliament of 1874, which wisely
separated the issue of notes from he b mixing
| department, for the Bank of England
always to keep on hand gold and silver
equal to one third Of its combined circula.
ton and deposits. If this proportion was
no more thun cufioient 80 secure the con-
vcrtibility of its notes, with the whole Of
Great Britain, and to some extent the
continent Of Europe, as IA field for its cir
culation, rendering it almost impossible
that a sudden and immediate run to a
dangerous amount should be made upon it,
the same proportion would certainly be
insufficient under our banking sys cm,-
Each of our fourteen hundred banks has
but limited circumference for its crcula-
ton, and in the cours, of a very few days
the dcposiiors 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 to one third of its immediate liabili-
ties. And yet | am not aware, with the
exception of the banks of Louisiana, that
any State bank throughout the Union has
been required by its charter to keep this
or AM proportion of gold and silver CON.
pared with the amount of its combined
circulation and depo,ts. What has been
: the consequence! In recont report madC
by the Treasury Department on the con-
citiou of the banks throughout the dilicrcn
States, according to returns dated neares
, to January, 1857, the aggregate amoun
t of actual specie in their vaults is S5s,3lD,
63S, of their circulation S2l3 77S ,S22, and
, of their deposits $780, ,3i2. Thus i
I appeers that these banks in the aggregate
: have considerably less than one dollar il
seven Of gold and silver compared witt
their circulation and deposits 1t wa
= palpablc, therefore, that the very iirs
! pressure must drive them to suspension
G and deprive the people of conycrtic
currency with all its disastrous Conscqucn
@ ccs. 1t is truly wonderful that they shoult
r have so long continued to preserve thoi
y credit, when a demand Tor the payment o
n one seventh of their immediate liabilitie
j. would have driven them into solveDcy.-
d And this is the condition of the banks
It notw, thstanding that four hundred million
% Of gold from California have flowed i
y upon us within the last eight years, an
" the tide still continues to flow. Indeed
n such has been the extravaganza CT ban
: credits that the banks now hid a consid
&c cradle less amount of specie, either i
l. proportion to their capital or 10 their cir
culation and deposits combined, than the
~ did before the discovery of gold in G lifol
n mia. Whilst in the year ls45 their spcci
y in proportion to their capital was more tia
- equal to one dollar for four and a halt, i
% 1857 it does not amount to one dollar fe
% every six dollars and thirty-thrcc cents
d their capital. In the year lSlS the spec
N was equal within very small fraction
W v, one dollar in five of their circulation an
:, deposites; in 1857 it is not equal to OF
4 dollar in seven and half oil their circul
W. Nv ton and dcposites.
ID From this statement it is easy to accou
m for our financial history for the last for
I'd years. 1t has been a history of extrav
tn CANT expansion in the business of Il
Id country, followed by ruinous contraction
At successive intervals the best and me
II. euterprising men have been tempted
he their ruin by excessive bank loans of me
lo paper credit exciting them to eXtravaga
til importations of foreign goods, wild spec
he lations, and ruinouS and demoralizing sto'
Z gambling, When the crisis arrives,
ye arrive it must, the banks can extend !
he relief to the people. In a vain struggle
ty redeem their liabilities in specie they a
ne compelled to contract their loans and the
as isspos and at last, in the hour Of distre'
ty when their assistance is mcst needed, th
and their debtors together sink iuto insc
of yency.
wv 1t is this paper system of extravaga
H. expansion, raising the nominal price
" every article far beyond its real value, Wit
Ily compared with the cost of similar articl
ed in countries whose circulation is wise
ch regulated, which has prevented us fro
les competing in our own markets with lorei,
&C. manufacturers, has produced cxtravaga
II. importations, and has counteracted the {
a feet of the larpe incidental protcction (