Daily Iowa State Democrat. [volume] (Davenport, Iowa) 1856-1859, 1857-12-12

ably less than ono dollar IN seven q gOld ana
silver compared with their circulation and
deposits.
II was palpabIe, therefore, that the very
first pressure must drive them to suspension,
vnd deprive the people Of . convertible cur
rency, with all its disastrous consequences.
Il is truly wonderful that they should have
so long continued to preserve their credit,
when q 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, notwithstand-
ing that four hundred million of gold from
California had flowed in upon us within the
last eight years, and the tide still continues
to flow. Indeed, such has been the extrav-
agance Of bank credits that the banks now
hold q considerably less amount Of specie,
either in proportion to their capital, or to
their circulation and deposits combined, than
they did before the discovery OF gold in Cal
ifornia. While in the year 1913 their spe-
Gle, in proportion to their capital, was more
than equal to one dollar four and "A half, in
1857 it does not amount to one dollar for
every six dollars and thirty-three cents OF
their capital. In the year 1913 the specie
was equal, within a very small fraction, to
| one dollar in five Of their circulation and de-
| posts in 1857 it was not equal to one dol
lar in seven and half Of their circulation
and deposits.
From thi, statement it is easy to account
for our financial history for the last forty
years 1t las been history Of extravagant
expansions in the business of the country,
| followed by ruinsus contractions. At sue
ccssive intervals the best and most entepri-
| sing men have been tempted so their ruin
by excessive bank loans Of mere paper cred
| it, exciting them to eytravagant inporta
tions OF foreign goods, wild specuations, and
| runou, and dcmoralizing stock gambling.
| w hen the crisis arrives, as airve 1t must,
| the banks can extend no relief to the people.
| In vain struggle to redeem the liabilities
| in specie they compelled to contract
| their loans and their issues and at last, in
| the hour Of distress, when their assistance
| is most needed, they and their debtors to-
gcthcr sink into insolvency.
CURRENCY AND THE TARIFF.
1t is this paper system Of extrayagant ex-
panson, raising the nominal price Of every
article far beyond its real value when com
| pared with the cost Of similar articles in
countries whose circulation is wisely regu-
lated which has prevented us from compe-
| ting in our own markets with foreign man
ufacturers, has produced extravagant impor-
tations and has counteracted the effect Of
the large incidental protection afforded to
our domestic manufacturers by the present
revenue tariff. But for this, the branches
Of our manufactures composed Of raw mate
rials, the production cf our own count y,
such as cotton, iron and woollen fabrics
would not only have acquired almost ex-
| oil al tho RI hnf
would have created for themselves a foreign
market throughout the world.
Deplorable, however, as may be our pres
ent financial condition, we may yet indulge
| in bright hopes for the future No other
nation has ever existed which could have
| endured such violent expansions and con-
fractions Of paper credits without lasting
injury yet the buoyancy of youth, the en-
ergies of our population, and the spirit
which never quals before difficulties, will
enable us soon to recover from our financial
embarrassments and may even occasion us
speedily to forget the lesson. which they
have taught.
In the meantime it is the duty of the
government, by all proper means in its pow
er, to aid in alternating the sufferings Of tho
people occasioned by the suspension Of the
banks, and to provide against recurrence
of the same calamity Unfortunately, in
either aspect of the case it can do but little
Thanks to the Independent treasury, the
government has not suspended payment, as
it was compelled to do by the failure Of the
banks in 1897. 1t will continue to dis
charge it, liabilities to the people in gold
| and silver. Its disbursements in coin will
pass into circulation, and materially assist
| in restoring sound currency. From its
high credit should we be compelled to make
a temporary loan, it can be effected on add
vantageous terms. This, however, shall, if
possible, be avoided but, il not, then the
amount shall be limited to the lowest prac-
ticable sum.
have therefore determined that whilst
no useful government works in progress
shall be suspended, new works not already
commenced, will be postponed, if this caa be
done without injury to the country. Those
necessary for its defence shall proceed as
though there had been no crisis in our mon
etary affairs.
NO Legislation On THE CURRENCY.
But the federal government cannot do
much to provide against a recurrence Of ex-
listing evils. Even if nsurnountable Con-
sttutioNal objections did not exist against
the creation Of National Bank, this would
furnish no adequate security. The history
OF the last Bank of the United States abund-
antly proves. thetruth Of this assertion. Such
Bank could not, if it would regulate the is
sues and credits Of fourteen hundred State
Banks in such a manner as to prevent the
rulnous expansions and contractions in our
currency which afflicted the country
throughout the existence Of the late bank.
or secure US against future suspensions
In 1898 an effort was made by the Bank
OF England to curtail the issues of the
country Banks under the most favorable
circumstances. The paper currency had
been expanded to a ruinous extent, and the
Bank put forth all its power to contract it
IN order to reduce prices and restore the
equilibrium OF the foreign exchanges 1t
according commended a system Of curtail-
ment OF its loans and issues, in the vain
hope that the joint stock aud private banks
Of the kingdom would be compelled to fol-
low its example. 1t found however, that
as it contracted they expanded, and at the
end OF the process, to employ the language
OF very high Official authority, whatever
reduction of the paper currency in circula-
ton was effected by thu Bank of England
lin 1929 was more than made up by the
issues OF the country banks.''
But Bank Of the United States would
not If IT could, restrain the issues and loans
Of the State Banks, because its duty a.
regulator of the currency must often be in
direct conflict with the interests Of its stock
holders VuoA a<.tc