The Union and eastern journal. [volume] (Biddeford [Me.]) 1854-1858, 1857-12-18

institutions, which from the very law
their nature will consult the interest o
their stockholders rather than the public
welfare.
The trainers of the constitution, whcr
they gave to Congress the power ITO coiI
money and to regulate the value thereof
and prohibited the States from coming
money, emitting bills Of credit, or making
anything but gold and silver coin a ten
der in payment Of debts, supposed they
had protected the people against the evils
of an excessive and irredcemablc paper
currency. They are not responsible fol
the existing anomaly that government
endowed with the sovereign attribute ol
coming money and regulating the value
thereof should have no power to prevent
others from driving this coin out Of the
country and filling up the channels Of cir
culation with paper which does not rep
resent gold and silver.
1t is one Of the highest and most re-
sponsiblc duties Of government to insure
the people sound circulating medium,
the amount OF which ought to be adapt
ed with the utmost possible wisdom and
skill to the wants Of internal trade and
foreign exchanges. If this be either
greatly above or greatly below the proper
standard, the marketable value Of every
mans property is increased or diminish
cd in the same proportion, and injustice
to individuals as well as incalculable evils
to. the community arc the consequence.
I Unfortunately, under the construction
of the federal constitution, which has now
prevailed too long to be changed, this i'm
portant and delicate duty has been dis.
severed from the coming power and vir-
tually transferred to more than fourteen
hundred State banks, acting indepcnd-
emily Of each other, and regulating their
paper issue almost exclusively by n re-
gard to the present interest oftleir stock
holders. Exercising the sovereign power
of providing paper currency, instead Of
coin, for the country, the first duty which
these banks owe to the public is to keep
in their vaults sufficient amount ofgold
and silver to insure the convertibility Of
their notes into coin at all times and un-
der all circumstances. No bank ought
ever to be chartered without such re-
strictions on its business rs to secure this
result. All other restrictions are COM
parativcly This the only true touch
stone, the only efficient regulator Of a
paper currency-the only one which can
guard the public against over issues and
bank suspensions. As collateral and
eventual security it is doubtless wise, and
in all cases ought to be required that
banks shall hold an amount Of United
States or State securities equal to their
notes in circulation and pledged for their
redemption. This, however, furnishes no
adequate security against overissucs. On
the contrary, it may be perverted to in
iatc the currency. Indeed, it is possible
by this means to convert all the debts Of
the United States and State governments
into bank notes, without reference to the
specie required to redeem them.
However valuable these securities may
be in themselves, they cannot beconvcrt-
cd into gold and silver at the moment Of
pressure, as our experience teaches, in
sufficient time to prevent bank suspensions
and the depreciation Of bank notes. In
England, which is to a considerable cx-
tent paper money country, though vast.
ly behind our own in this respect, it was
deemed advisable, anterior to the act OF
Parliament of 1874, which wisely scpara-
ted the issue of notes from the banking
department, for the Bank Of England al.
ways to keep OH hand gold and silver
equal to one-third of its combined circu-
lation and deposits. II this proportion
was no more than sufficient to secure the
convertibility of its notes, with the whole
of Great Britain, and to some extent the
continent of Europe, us field for its cir.
culation, rendering it almost impossible
that sudden and immediate run to O
dangerous amount should be made upon
it, the same proportion would certainly
be insufficient under our banking system
Each of our fourteen hundred banks has
but limited circumference for its circu'
lation, and in the course of few days
the dcpositors and noteholders might de-
mand from such bank q sufficient
amount of specie to compel it to suspend
even although it had coin in its vault'
equal TO one third Of its immediate liabil
tiles. And vet | am not aware, with thu
exception of the banks of Louisiana, tha,
any State bank throughout the Union
has been required by its charter to keel
this or any other proportion Of gold anC
silver, compared with the amount of it
combined circulation and deposits
What has been the consequence In |
recent report made by the Treasury De
partment on the condition of the bank
throughout the different States, accord
ing to returns dated nearest to January
1857, the aggregate amount Of actua
specie in their vaults is S5s,349,s3s, o
their circulation s2l4,77s,s22, and o
their deposits S23O,35l,352.
Thus it appears that these banks il
the aggregate have considerably less thar
one dollar in seven in gold and silvc
compared with their circulation and dc
posts. 1t was palpablc, therefore, tha
the very first pressure must drive then
to suspension, and deprive the people o
a convertible currency with all its disas
trous consequences. 1t is truly wonder
full that they should have so long contin
ucd to preserve their credit, when a dc
mand for the payment Of one seventh o
their immediate liabilities would hav'
driven them into insolvency. And thi
is the condition of the banks, notwith
standing that tour hundred millions o
gold from California have flowed in upon
us within the last eight years, and tn,
tide still continues to flow. Indeed, sucl
has been the extravaganza Of bank credits
that the banks now hold considerabl,
less amount Of specie, either in proper
II a. l.. Il Al -