The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-11-27

guas national character, and ruled by nationally i'm
shape OF bank which have metallic representa-
tives such proceeding however, must be understood
to be an extraordinary proceeding III when the commu
py for its own good allows certain establishment TO
coed the limits of safe and Legitimate dealing In fact the
country be considered as becoming security FOR tho
of the extended issue, or IN other words a.
Itself issuing quantity Of paper money by ttagent tho
bank order that the business OF the country may be
conducted during the temporary abstraction OF the usna
currency.
is therefore no proof OF the failure of the Bank act
that certain times its restrictions should be suspended
In fact extension OF should be considered
something superadded to the ordinary conditions OF the
banks existence The act of 1874 was passed 70 contro
the bank not to control the nation Parliament decided
and we think wisely, that would not IN ordinary tunes
trust one great corporation with the power Of issuing an
unlimited number of notes This proceeding is strictly in
accordance with the regulations which control the issue
country banks and which restrain London banks from
having any issue all. Whether the amount of
plus allowed to the bank be sufficient for the
ordinary purposes OF commerce Is, of course,
question for discussion, but the principle which
by the nation ~ its general course OF legislation still
however, may be competent TO the country to remedy
any abnormal deficiency of the currency by extra
ordinary issue, which the bank may be empowered 70
make, not as were on its account
dispose Of whatever profits may by the
This to be the defence such interference
sion Of the Bank act nothing akin 10 the system so,cA
dIoacs american establishments to food the country sUi
rsgp pr sap S on s Is Se .s Fl sy:s
rendered necessary by an extraordinary conuncture and
when the necessity ceases the relaxation may cease toe
Still the suspension Of positive law is grave matter and
may well necessitate speedy appeal to Parliament.
THE BANK FAILURES IN SCOTLAND.
from the North British Daily Mail, Nov. IL
The block-up in money is extending wider and
wider. The suspension of the City of Glasgow Bank
aggravates immensely the embarrassment and dis
trust arising from tie stoppage of the Western, and
shows in what amentable results want OF confidence,
when once it breaks loose, may involve this commu-
nifty and the whole kingdom. The same cause which
haSc alladfb a ity RanEt IN ITO NOV
force similar course upon any bank in Scotland or
the world; and one of the first duties we have to
perform in abiding to this matter is to point out
clearly for the information Of the public in what the
suspension Of the City of Glasgow Bank consists.
1t is not because the bank unable to convert its
notes into gold that it closed its doors. Every pound
note which the bank has in circulation could have
been exchanged at the counter for gold. The City
of Glasgow Bank indeed, is one OF the few banks
in this country which could convert its whole paper
circulation into gold on demand Immediately from
Banking act of ls45, which requires a deposit in
gold equal to every note above the average issue Of
that year II is not because the bank did not afford
in the liability means of its proprietary an ample
security to its creditors that driven to shut its
doors because its shareholders are very numerous,
many of them very wealthy and all of them are liable
to the last penny of their fortune for the obligations
of the bank. Nor is the suspension to be attributed
to bad debts in the books OF the bank for the assur
ance Of the directors body OF highly honorable
men-has been published that this is not the cause,
and losses sustained by the bank have been named
that could make any impression on the large paidIp
capital Gel 900 900 stering) and the reserve of the
bank. The City of Glasgow Bank in short has
suspended because there was run upon 1t for pay
ment of its deposits in gold-a demand which il
clearly impossible to any bank that pays an interest
its deposits, and the inability to implement which
at moments notice does not in any degree affect
per the perfect sovency and solidty of the bank
1t seems to us important to point out these cir
cumstances, for, in addition to the misconception
which they may remove in country towns where
there branches. they will show to the admirers
of the present banking law on the other side OF the
border that there is security whatever in the issue
of notes upon equivalent basis of gold against the
most serious catastrophe which can befal CONNER
cial community. No could illustrate this better
than the City of Glasgow Bank. because. we have
said its notes, under the act OF 1885, based al
most wholly on sovereigns.
The present is hardly the time for blame or recri
mnation to the causes of this additional catastro
phe. An opportunity will come when the whole his
tory of these banking difficulties will have to be
opened up with unsparng honesty The City OF
Glasgow Bank has been forced temporarily to sus-
pend in consequence Of the disrust created by the
fall Of the Western, and the fall Of the Western
might have been averted by the timely cooperation
and assistance of the leading Scotch banks The
whole community is Disguised at the pride selfish.
ness, isolation, and utter want Of head displayed by
the directors of monetary institutions, and the
callousness and stupidity with which they sacrifice
the honor and interests Of this immense city, day
after day, to miserable vanity and egotsm The
minds of the citizens Of Glasgow to the trust to
be reposed in certain banks but the of the
moment Is simply what is to be done to lift affairs
ont Of this dead lock. Two Of our banks with the
largest circulation are stopped. Every day until
they resume notes to the amount OF 900 will
gradually disappear from the currency of Scot
landau evil in itself Of no ordinary magnitude,
and that will be felt Immediately in
the daily transactions of the country. But
this is only segment Of the mischief. A large
number of our merchants and manufacturers
are shut out from their deposit accounts and from
the ordinary facilities of discount. Large establish
ments are being closed every day: hosts of unem.
poyed workmen are already gathering in the streets.
II is no longer the American trade or any branch OF
foreign commerce that is embarrassed, but whole
inland business is INSTRUCTED and imperilled. The
bills of Glasgow merchants on country towns with
suspended branches must be returned upon them dis
honored, and, unable 10 operate on their funds
credits in the banks their solvency will be at
end. Let no man think that because the doors OF
his bank still open that nc il therefore safe.
may probably benefit by the embarrassment of his
neighbor. Let no bank imagine in ostrich stupidity
that because IL burrows its head in the mud il II
secure from danger. There II not firm or bank
in Glasgow that l. safe while the present state OF
things continues. The case is one. therefore, for q
public and general effort at restoration As regards
the vacuum suddenly made in the supply OF circu-
latiDg medium for our retail transactions the evil
may be greatly alleviated by demand upon the
chartered banks for gold in exchange Of their
notes. When a few hundred thousands Of
soveregns have thus been liberated from imprison-
ment, the want Of the withdrawn one pound
notes viii have been supplied. The old banks
can very well do this much for the com
munity, and the only inconvenience arising from it,
indeed, viii fall upon London and the Bank OF Eng
land: but, little compassion has been felt for in
that direction, we need not lie ri all tender hearted
to their accommodation. The second measure
which we would rely for complete recovery of our
position Is general movement OF the citizens for
the resusctaton Of the suspended banks There can
he no doubt of the perfect solvency and trusworth
ness of the directors and shareholders of the West
ern, and of the possibility of placing it, business on
q sound and profitable basis. Let our merchants and
bank depostors therefore put their shoulders to the
wheel and resolve in public meeting by sub
scrpton paper that the doors of the two banks must
either be opened in fourandtwenty hours with the
aid Of the other banks, or they will do the work