Raftsman's journal. [volume] (Clearfield, Pa.) 1854-1948, 1857-12-16

very few days the depositors and note hold
ers 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 liabilities.
And yet am not aware, with the exception
| of the banks of Louisiana. that any State bank
| throughout the Union has been required bv its
! charter TO keep this any other proportion of
! gold and silver compared with the amount of
| lis combined circulation and depoSites. What
| has been the consequence In a recent re-
/ port made by the Treasury Department on the
/ condition of the banks throughout the differ
eHt States, according to returns dated nearest
| January, 1887, the aggregate amount of spc-
Gle IN their vaults is &5S 349 S3S OF their cir
/ culation $2l4,1TS, ,S22, and of their deposites
| $3.50 35l ,352. THUS it appears that these
banks in the aggregate have considerably less
than one dollar in seven of gold and silver
compared with their circulation and deposits.
1t WAS palpable, therefore, that the very first
pressure must drive them to suspension, aud
deprive the people of a convertible currency,
with all its disastrous consequences. 1t is
truly wonderful that they should have so long
continued to preserve their credit, when 4 de-
mand 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 years, and the
I IL
been the extravaganza of bank credits, that
the banks now hold a considerable less amount
Of specie, either in proportion to the amount
of their capital or to their circulation and de-
pcsites combined, than they did before the
discovery of gold in California. Whilst in
! the year l8iS their specie in proportion to
their capital was more than equal TO one dol
laa for four and half, in 1857 it does not a.
mount to one dollar for every six dollars and
thIrty-thrcc cents of their capital. In the
year 1913 the specie was equal within very
small fraction to one dollar i'll five of their cir
culation and deposites; in 1857 it is not equal
to one dollar in seven and I half Of their cir
cuiation and deposites.
From this statement il is easy to account for
our financial history for the last forty years.
1t has been history of extravagant expansions
in the business of the country, followed 10y ru
inous contractionS. At successive intervals
the best and most euterprising men have been
tempted to their ruin by excessive bank loans
of more paper credit, exciting them to extrav-
agant importations of foreign goods wild spec
ulatonS, and ruinOus and demoralizing stock
gambling. When the crisis arrives, arrive
il must, the banks can extend no relief to the
people. In vain struggle to redeem their Ii
abilities in specie, they are compelled to con-
tract their loans and their issues; and at last,
in the hour of distress, when their assistance
is most needed, they and their debtors togeth-
er sink into insolvency. Ii is this paper syS-
TEN of eXtravagant expansion, raising the nom
inal price of every article far beyond its real
value, when compared with the cost of similar
articles in countries whose circulation Is wise
Iy regulated, which has prevented us from
c injecting in oar own markets with foreign
manufacturers, has produced eNtravagant I'M
portations. and has cOuuteracted the effect of
the large Incidental protection afforded to our
domestic manufactures by the present revenue
tariff. But for this the branches of our manu-
nF rayH llS
ductions Of our own country-such as cotton,
iron. and woOlen flbricS-wOuld not only have
acquired almost exclusive possession Ot the
home marlsc but would have created for them
selves foreign market throughout the world.
Deplorable, however, may be our present
financial condition, we may yet indulge IN
bright hopes for the future. 20 other nation
has ever existed which could have endured
such violent expansions and contTactIonS OF
paper credits without lasting Injury yet the
tuOyancy of youth, the energies OF our popu-
lation. and the spirit which never quaIiS be-
fore difficulties will enable US soon to recover
from our present financial embarrassment, and
NAV even occasion us speedily to forget the
lesson which they have taught.
In the mean time it is the duty OF the gov
crnmcnt, by all proper means within It's power,
to aid in al!eviating the sufferings OF the peo-
pie occasoned by the suspension OF the banks,
and to provide against Il recurrence OF the same
calamity. Unfortunately, in either aspect of
! the case it can do tut little. Thanks to the
independent treasury, the government has not
| suspended payment, as it was compelled TO 40
/ by the failure of the banks in 1885, 1t VIII
/ continue to discharge its Liabilities to the peo-
| pie iii gold and silver. It's disbursements In
/ coin Will pass into circulation. and materially
/ assist in restoring a sound currency. From
! its high credit, should we be compelled to
make a temporary loan, it can be affected on
! advantageous terms. This, however, shall, If
possible, be avoided; but, if not, then the a.
| mount shall be limited to the lowest practical
| bic sum.
have. therefore, determined that whilst no
useful government works already in progress
| shall be suspended, new works, not already
/ commenced, viii be postponed, II TINS can DC
/ done without injury to the country IhoSe
| necessary for its defence shall proceed as tho
there had been no crisis in our monetary al
+! fairs.
| But the federal government cannot do much
to provide against a recurrence of existing
| evils. Even if nsurmountablc constitutional
objections did not exist against the creation OF
a National Bank, this would furnish no ade-
quate preventive security. The history OF sne
| last Bank of the United States abuudanfly
proves the truth of this assertion. Such a
bank could not if it would, regulate the issues
and credits of fourteen hundred State Dahhs
in such a manner as TO prevent the ruiHous
expausions and contractions in our currency
which afflicted the country throughout tue eA-
istcnce of the late bank, or secure US agalns'
f,trra susnensions In 1925 an effort was
made bv the Bank of England to curtaii the
issnes Of the country banks under the most
favorable circumstances. The paper currency
had been expanded to rulnous extent aho
the the Bank put forth all its power to contract IN
order to reduce prices and restore the IN equlil- 1
brum of the foreign exchanges, ai,n,ant II %'o, q,
ineIv commenced a system OF cur'ainheh. ol
-. and issues. in the vain hope that the