The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-10-15

w
restore confidence completely; and, slowly, gre
dually. from the New York banks - NJ
cleus, and the beginning of November q q
time, recovery would have set In, and in the
course Of few months, all the solid trades of
the country would have been restored to their
former condition. This was not done and-tAe
result is before us.
This lie the third occasion on which the banks
Of the United States have failed in their pro.
mise to pay specie. In 1914 all the banks
OF the country, except few in New England,
suspended specie payments In 1887 all the
banks throughout the country suspended specie
payments. In 1857, we may say already that all
the banks, with a possible exception in favor
of some banks in the South, have suspended
specie payments. This, then, is the third occs-
sion on which the NEST responsible institutions in
the country have admitted to the world that their
word was not to be relied on +; that they were not
to be implicitly trusted that time might come
when they would fail to perform their obliga-
tions; and that prudent persons had best take
care Of themselves For the leading financial in
stitutions of the most rising commercial nation in
the world to make such fatal admission once
seems appalling; but to make it thrice-thrice in
fifty yeaIs-it is absolutely overwhelming If
anybody trusts US hereafter, the act will Illus
trate the unquenchable sanguineness and uncon-
querable buoyancy Of the commercial mind
When we attempt to draw a parallel between
the three eras we have indicated-l6ld, 1887
and lS57-we meet with no success till we aban-
don matters Of detail, and take general view.
The direct cause of the failure Of 1914 was the
British blockade Of the American ports, prevent
ing the expectation of produce, and the conse.
quent necessity of paying in specie for foreign
supplies. In 1887, it was overtrading and the
failure of number of unsound banks, based
on an unsound principle, and led off by the
great United States Bank. In the present
year, the cause of the crisis appears to have
been the general expansion Of credit, and the
occasion, the discovery Of the intrinsic rotten
ness and worthlessness of the railways Between
these three agencies there is nothing seemingly in
common; it is not till we pass over the outward
cause and look at its workings, that we perceive
that the moving agent in 1914, 1887 and 1857
led to the came result-plentifulness Of money,
and prcdigality of expenditure and this is the
feature common to all revulsions.
Still, why did the banks break? One can
| readily understand that, when merchants live
| beyond their means, and do business on credit
to an extent not justified by their capital and
when extravaganza takes the place of economy,
and money Is used not in lucrative but in perish
able and frivolous investments there must from
time to time, be periodical convulsions when
all are compelled to iquidate, and the in
wardly rotten, however outwardly prosperous
forced to confess their rottenness and decamp
But bank-aA institution chartered by the State
working under State and federal laws, endowed
with super mercantile power, and invested with
extraordinary privileges and immunities -the in
stitution above all others which is supposed to
typify commercial stability and financial sound
ness: for this to break, and to break, not in an
isolated instance, but universally; not once, but
three times within the memory of the same men.
such state of things certainly argues q very la
mentable degree either Of carelessness or of mis-
management, or Of dishonesty somewhere
We are for our part inclined to deeply regret
that strenuous effort has not been heretofore
made by Congress to regain sovereign control
over the finance, currency and commerce of the
country at large. We see spasmodic and irregu-
lar regulations Of these matters by the State Le-
gslatures which create a state Of things under
which no two States have like currency, and
the circulating medium is comprised Of scores Of
differently priced and various bills. And we also
see that in spite Of the utmost forethought and
caution, the State Legislatures are unable to pre-
vent either the expansion or the failure Of the
banks The first Is wholly beyond their control;
the last is in many States attempted to
be mastered by ridiculous clause in
the constitution prohibiting the legalization
of suspensions Of specie payments-which is as
sensible as If the constitution were to decree that
| IL was not lawful for man to die when be was
shot through the head. Altogether, we think the
experience Of the last forty years tells severely
against the scheme Of commercial and financial
system under State control; and nothing seems
to be now left to do but to transfer the whole
matter to the hands OF Congress.
OF course il is hardly possible in these limits
and at this time even to shape the outline Of a
scheme of relief. But If, as we believe to be the
case, the constitution confers upon Congress
sovereign control over the commerce and bank.
ing system Of the country, we could well imagine
a set Of banks organized either under board OF
control, or under the controlling influence of some
such leading institution as the first United States
Bank or the Bank of England-so as 70 prevent
such expansions as we have lately witnessed the
mercantile community kept in check by Bank
rupt law; ard the general commerce Of the coun-
try assimilated, ard the exchanges facilitated by
the acceptance Of one general fundamental and
universal law. And under such system disasters
of this overwhelming character might be less
frequent.