The national era. [volume] (Washington [D.C.]) 1847-1860, 1857-12-10

our financial history for the last forty years. 1t
has been history of extravagant expansions
in the business of the country, followed by ruin
Gus contractors. At successive intervals, the
best and most enterprising men have been
! tempted to their ruin By excessive bank loans
of mere paper credit, exciting them to extrava-
CANT importations OF foreign goods, WILD specu
| lations, and ruinous and demoraliz'ng stock
| gambling. When the crisis arrives, las arrive
| il must, the banks cen extend no relief to the
people. In a vain struggle to redeem their Ia
bilities i'm specie, they are 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 together sink
into insolvency.
1t is this paper system of extravagant expan-
sion, raising the nominal price OF. every article
far beyond it's real value, when compared with
| the cost of similar articles in countries whose
circulation is wisely regulated, which has pre-
vented US from competing in our own markets
with foreign manufacturers, has produced ex-
travagant importations, and has counteracted
the effect of the large Incidental protection
afforded to our domestic manufactures BY the
present revenue tariff. Butt for this, the branches
of our manufactures composed of raw materi-
ais the production of our own country-such
| as cotton, iron, and woollen fabrcs-would not
| only have acquired almost exclusive posses
| sion of the home market, but would have crea-
ted for themselves foreign market throughout
| the world.
Deploreble, however, as may be our present
financial condition, we may yet indulge in bright
hopes for the future No ether nation has ever
existed, which could have endured such violent
expansions and contrac.ions of paper credits,
without lasting injury; yet the buoyancy Of
| youth, the energies of our population, and the
spirit which never quails before difficulties, will
enable as soon to recover from our present
| financial embarrassment, and may even occa-
sion US speedily to forget the lesson which they
! have taught.
In the mean tune, it is the duty of the Gov
eminent, by all proper means within its power,
to aid in alternating the sufferings of the people
occasioned by the suspension of the banks, and
| to provide against the recurrence of the same
| calamity. Unfortunately, in either aspect of
/ the case, it can do but little. Thanks to the in-
dependent 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 discharge its liabilities to the people in gold
anjsilver. Itsdisbursementsi in coin will pass into
circulation, ard materially assist in restoring a
sound currency. From it's high credit, should
we be compelled to make q temporary loan, it
can be effected on advantageous terms. This,
however, shall, if possible, be avoided but, if
! not, then the amount shall be limited to the
| lowest practicable sum.
| have therefore determined that, whilst no
useful Government works already in progress
shall be suspended, new works, not already COM
menced, will be postponed, if this can be done
without injury to the country. Those necessary
for it's defence shall proceed as though there
| had been no crisis in our monetary affairs.
Bat the Federal Government cannot do much
| to provide against q recurrence of existing
| evils. Even if insurmountable constitutional
objections did not exist against the crea-
ton Of a National Bank, this would furnish
no adequate preventive security. The history
of the last Bank of the United States abundant
ly proves the truth Of this assertion. Such O
bank could not, if it would, regulate the issues
| and credits of fourteen hundred State banks in
| such q manner as to prevent the ruinous expan-
sions and contractions in cur currency which
| afflicted the country throughout the existence
| Of the late bank, or secure Us against future
| suspensions. In 1925, 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 accordingly COM
| menced system of curtailment of its loans and
issues, in the vain hope that the Joint stock and
private banks of the Kingdom would be COM
PEELED to follow its example. 1t found, however,
that as it contracted they expanded, and at the
end of the process, to employ the language OF
a very high official authority, whatever reduc
ton OF the paper circulation was effectedby the
Bank Of England lin 1921 was more than
made up by the issues of the country banks"
But Bank of the United States would not,
| I POuld in no 81
State banks, because its duty as regulator OF
the currency must often be in direct conflict
with the Immediate interest of its stockholders.
Ii we expect one agent to restrain or control
| another, their interests must, at least in some
degree, be antgonistic. But the directors of a
Bank of the United States would feel the same
interest and the same inclination with the di.
rectors Of the State banks to expand the cur.
rency, to accommodate their favorites and
friends with loans, and to declare large divi-
dends Such has been our experience in regard
| to the last bank.
After all, we must mainly rely upon the pa.
triotism and wisdom of the States for the pre-
vention and redress of the evil. If thew will
afford US real specie basis for our paper cir
culation by increasing the denomination of
bank notes, first to twenty, and afterwards to
| fifty dollars; if they will require that the banks
| shall at all times keep on hand at least one dol.
lar OF gold and silver for every three dollars of
their circulation and deposites and if they will
provide by selfexecuting enactment, which
nothing can arrest, that the moment they sus
pend they shall go into liquidation, believe
that such provisions, with weekly publication
| by each bank of statement of its condition,
would go far to secure us against future sus-
pensions of specie payments.
Congress, in my opinion, possess the power
| a Uniform han Low Ill -
banking institutions throughout the United
States, and strongly recommend its exercise.
| This would make it the irreversible organic law
of each banks existence, that suspension of
| specie payments shall produce its civil death.
| The instinct of selfpreservation would then
compel it to perform its duties in such man.
ner as to escape the penalty and preserve its
/ life.
The existence of banks and the circulation
OF bank paper are so identified with the habits
OF our people, that they cannot at this day be
suddenly abolished, without much immediate
| injury to the country. If we could con6ne
them to their appropriate sphere, and prevent
them from administering to the spirit of wild
and reckless speculation by extravaganza loans
and issues, they might be continued with ad.
vantage to the public.
But this say, after long and much reflection,
If experience shall prove it to be impossible to
| enjoy the facilities which wellregulated banks
might afford, without at the same time suffer.
| ing the calamities which the excuses of the
banks have hitherto inflicted upon the country,
1T would then be far the lesser evil to deprive
them altogether of the power to issue a paper
currency, and conine them to the functions OF
banks OF deposit and discount
Our relations with foreign Governments are
| upon the whole, in satisfactory condition
1 Ihp Htr,IO - Ia L.