Grant County herald. [volume] (Lancaster, Wis.) 1850-1968, 1857-12-19
specie req Tired, to them.

IOC III Us, Vic Sdhifo w SOl'Sl
ted into gold and silver at the moment o
pressure, as our experience teaches, in sui
%icient time to prevent bank suspension anC
the depreciation of bank notes. Ia Eng
land, which is to a considerable extent /;
paper money country though vastly behinc
our own in this respect, it was deemed ad
visable, anterior to the act of Parliament
|of 1914, which wisely separated the issue
of notes from the banking department, fol
the Bank Of England always to keep OF
hand gold and silver equal to one third Of
its combined circulation and deposits.
If this proportion was no more than suf
%ficient to secure the co: vertibility of it>
notes, with the whole of Great Britain.
and to some extent the continent of Eu-
rope, as a field for its circulation, rendering
it almost impossible that a sadden and i'm
mediate run to a dangerous amount sho'Id
be made upon it, the same proportion
would certainly be insufficient under our
banking system. Each of our fourteen
hundred banks has but a limited circum-
ference for its circulation, and in the course
of a very few days the depositors and note
holders might demand from such a bank
a sufficient amount in specie to compel it
to suspend, even although it had coin in
its vaults e qual to one third its immedi-
ate liabilities.
And yet am not aware, with the ex
ception Of the banks of Louisiana, that any
state bank throughout the Union has been
required by its charter to keep this or any
other proportion of gold and silver, com
bined circulation and deposits. What has
been the consequence? In a recent re-
port made by the Treasury Department on
the condition of the banks throughout the
different States, according to re
turns dated nearest to January, 1857. the
aggregate amount of actual specie in their
vaults is $5s,34a,838, of their circulation,
$215, 77e,s So, and of their deposits $780,
35l,352. Thus it appears these banks in
the aggregate have considerably less than
one dollar in seven of gold and silver com
pared with their circulation and the depos-
its.
1t was palpahle, therefore, that the very
first pressure must drive them to snspen
sion, and deprive the people Of a converts
bic currency. with all its disastrous conse
queuces. II is truly wonderful that they
should have so long continued to preserve
their credit, when a demand for the pay
ment of one.seventh of their immediate Ii
abilities would have driven them into SOL
vency. And this is the condition of the
banks, Notwithstanding that four hundred
millions of gold have flowed from Califor-
MIA in upon us within the last eight years
and the tide continues to flow. Indeed,
such has been sthe extravaganza of bunk
credits that the banks now hold a consid-
erably less amount Of specie either in pro-
portion to their capital, or to their %circula-
ton and deposits combined, than they did
before the discovery of gold in California.
While in the year 1913 their specie, in
proportion to their capital, was mor than
equal to one dollar for four and a half, in
1857, it does not amount to one dollar 70.
every six dollars and thirty-three cents Of
their capital. In the year lS48 the spe-
Gle was equal, within a very small fraction
to one dollar in five oftheir circulation and
deposits; in 1857 it was not equal to one
dollar in seven and a half Of their ~circula
ton and deposits.
From this statement it is easy &c &C
count for our financial history for the pas
forty years. 1t has been a history Of ex
travagant expansions in the business Of tn,
country, followed by rninou contractions
At successive intervals the best and mos
enterprising men have been tempted t
their ruin by the excessive bank loans {
mere paper credit, exciting them to eA
travagant importations of foreign good
wild speculations and %rtinous and demo,
alizlng stock gambling. When a crisis al
rives, as arrive it must, the banks can ex
tend no relief to the people. In a val
struggle to redeem their liabilities in spe
Gle, they are compelled to contract thei
loans and their isstes; and at last, in th'
hour Of distress, when their assistance j
most needed, they and their debtors to
gcther sing into insolvency.
CURRENCY X THE TARIFF.
It is this paper system of extravagan
expansion, raising the nominal price of ev
erd article beyond It's real value when com
pared NTH the cost of similar articles il
countries whose circulation is wisely regu
lated, which has prevented us from com
peting in our own markets with foreign
manufactures, has produced extravagan'
|im~portations, and has counteracted the eft
feet of the large incidental protection at
forded to our domestic ma ,ufactures by the
~present revenue tariff. But for this tx
branches Of our manufactures composed o
raw materials, the production of orr owl
country, such as cotton, iron and wooler
fabrics, would not only have acquired al
most exclusive possession of the home mar
ket, but would have created for them
@|selves a foreign market throughout tn
world.
Deplorable, however, as may be on
present financial condition, we may yet in
duIge in bright hopes for the future. N
other nation has ever existed which coulC
have endured such violent expansions an
contractions of paper credits wlthou
lasting injury; yet the buoyancy Of youth
the energies Of our population, and tn
-: LII 80 onailS hafora diHicultIns