The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-10-19

ties in the way of discounts, developed the rotten
and over-iniated system of credit, and that their
hssty and ill-timed contraction, when they saw
the bubble ready to burst, precipitated the catas
tIophe. But they did not take the back track
in time to save themselves. The storm
reached them, and placed them where the
merchants had preceded them, in the condition of
suspension merely another word fof insolvency.
Had they not withdrawn too suddenly aud too
generally the facilities which they we're in the
habit Of extending to the merchants, the crash
might have been STAYED of for a time and then
its fife cs might not have been 80 disastrous aud
universal Merchants saw the storm cloud just
as soon as the banks did; and if the latter had
not deserted the ship, the sails might have been
taken in and but little damage have resulted
from the gale. As it is, the banks have gained
nothing by their cowa,dce, for they are at this
momeLt liable to the penalties provided against
suspension of specie payment
The Bank OF France invariably acts on the OPP
posite principle when commercial and financial
affairs are in strait in that couotry. Iosead of
contracting suddenly, as our banks have just
cone, it expands. 1t buys specie wherever it can
get it, and on the basis Of this extends its loans.
The increased discount which it derives
from these loars enables it to pay a
PIT MUM on the gold, and the aid thus oppor-
tunely given to commerce enables it to ride out
the storm. Now, is not that much more sensi-
BILE plan than for the banks to contract suddenly,
&c they do here and in England, and leave the
merchants to their fate? Certainly it is If our
banks had initiated the example of the Bank of
France our merchants would have been able to
get sa.eiy through the dangers that were imme.
datey impending, and then, by curtailing their ex-
penses Looping off their extravaganza and gra-
eua.ly getting in their debts things would have
6ualy come round into their regular channel
Even now, the best shing that our banks can do
il 10 expand to the amount of some twenty or
thirty millions Of dollars. There is but little
risk in it, for they are in just as bad condition
a. they can well be. The banks of Boston,
Philadelphia, and other large cities, will follow
suit, and the immediate consequence will be to
impart ease to commercial operations, to
.estore confidence to some extent, and to al
low matters to resume their usual course. The
lesson that we have received will not be without
its salutary effects. The merchant will not
henceforth be 60 incauious as to whom he per-
mits to be his creditors; the man of capital will
not embark in all sorts Of stockjobbing specula-
tcns, and the community generally will not be
so extayagant in their tastes and habits. It
must not be supposed that, because there is an
improvement in the stock market for the last few
days, the financial pressure has been ightened
The improvement is illusory-it is the last
founderipg of the drowning man. The same
phenomenon was observed in the revulsion of
1857. The pressure bears as hard now on COM
mercial men as it has yet done; and unless the
banks pursue the course we have indicated the
whole credit system of the country will be shat
tered to pieces
Much as that system has been perverted aud
abused, its total extinction would be, at this
time, serious loss to the country. 1t should be
allowed to be gradually and imperceptibly alb
sorbed by the cash system. That absorption Is
this moment going on; and in proportion as it
progresses will the country itself progress in the
establishment OF trade and commerce on sound
and enduring basic