The spirit of democracy. [volume] (Woodsfield, Ohio) 1844-1994, 1857-12-16
THE SPIRIT OF De No ACY

banks in the aggregate have considerably
less than one dollar in seven of gold and |
silver compared With their circulation
and deposites.
1t was palpable, therefore, that the
very first. pressure must drive them to
suspension, ahd deprive the people of a
convertible currency with all its disastrous
consequences. 1t is truly wonderful
that they should have so long continued
10 preserve their credit, when demand
for the payment of one seventh of their
immediate liabilities would have driven
them iato insolvency. And this is the
condition of the banks Notwithstanding
that four hundred millions of gold from
California have flowed in upon US within
the last eight years, and the tide still
continues to aow. Indeed, such has been
the extravaganza of Dank credits, that
the banks now hold considerable less
amount of specie, either in proportion to
their capital, or to their circulation and
tdeposits combined, than they did before
the discovery of gold in California;
Whilst in the year 1913 their specie in
proportion to their capital was more than
equal to one dollar for four and a half, in
| | $50 it does not amount to one dollar
for every six dollars and thirty-three cents
of their capital. In the year ls49, the
specie was equal within very small frac-
tion to one dollar in Eve of their circula-
tion ard deposites: in 1857 il is not equal
to one dellar in seven and a hall of their
circulation and deposites.
From this statement it is easy to ac-
count for our financial history for the
last forty years. 1t has been history of
extravagant expansion in the business of
the country followed by ruinous contrac-
ticns. At successive intervals the best
and most enterprising men have been
tempted to their ruin ty the excessive
bank loans of mere paper credit, exciting
them to extrav.gant importations Of for
eign goods, wild speculations, and ruin
Gus and demoralizing stock gambling.
! When the crisis arrives, as arrive it must,
the banks can extend no relief to the pee-
PIE. In vain struggle to redeem their
liabilities in specie they are compelled to
contract their loans; and at last, in the
| hour Of distress when, their assistance is
r most needed, they and their debtors to.
: geihcr sink into insolvency.
- II is this paper system of. extravagant
: expansion. raising the nominal price o
s every article far beyond its real value
: when compared with the cost of simila
articles in countries whose circulation il
n wisely regulated, which has prevented u
n from competing in our own markets will
S foreign manufacturers, has produced ex
j. travagant importations, and has counter
: acted the effect of the large incidenta
a protection afforded to our domestic manu-
t. facturas by the present revenue tariff Blu
d composed of raw materials, the produc
l. lion of our own country, such as cottor
,r iron and wcoIen fabrics would not onl
of have acquired almost exclusive possessio
h of the home market. but would have ere
p ated for themselves foreign markt
Id throughout tue world.
of Deplorable, however, as may be o.
H. present financial condition, we may u
ht indulge in bright hopes for the futur
S. No other nation has ever existed whic
lis could have endured snch violent expansion
n and contractions of paper credits witho'
ne lasting injury; yet the buoyancy of yout
of the energies of our population, and tt
an spirit which never quails before dificu
nd ties, will enable US soon to recover fro
nd our present financial embarrassment, al
nd may even occasion us speedily to forg
at the lesson which they have taught.
ed In the meantime it is the duty of t
cir government by all proper means with
cir its power, to aid in alternating the suffe
no ings of the people occasioaed by the su
)n pension of the banks, and to provi
in against recurrence of the same calamit
Unfortunately, in either aspect of t
- case, it can do but little. Thanks to t
tes independent treasury, the government h
Ga not suspended payment, as it was CO.
70 PEELED to do by the failure of the ban
.se in 1887. 1t will continue to dischar
IN. it's liabilities to the people in gold and s
ot yer. It's disbursements in coin will ps
,ce into circulation, and materially assist
nix restoring sound currency. From
nix high credit, should we be compelled
an. make y temporary loan, it tan be effect
~ en- advantageous terms. This, howev
70, m shall, if possible, be avoided; but, if "a
,or then the amount shall be limited to
;cb lowest practicable sum.
om have, therefore, determined that wh
of no useful government works already
old progress shall be suspended, new wor
IN not already commenced, will be postpon
his if this can be done without injury to
to country. Those necessary for its defer
the shall proceed as thoughthere had been
ex- crisis in our monetary affairs. Is d
eld s9 But the federal government cannot
ost much to provide against a recurrence
ate fexisting evils. Even il insurmounta
be constitutional objections did not'yel
uld against the creation of q National Ba
nix this would furnish no adequate prevent
s curity. The history of the last b