The Washington union. [volume] (City of Washington [D.C.]) 1857-1859, 1857-10-31
BANKS AND BANKING CONTINUED.

rency aud Justify the banks in refusing to pay their
debts, resort 10 extraordinary assumptions. One
class prcends that the extravaganza of tho times in
dress and the and style Of living is the great
cause II cannot be denied that there has been
wasteful extravaganza in dressing with many and
that thousands have lived in the most reckless and
absurd manner But this did not cause the banks to
fail and to refuse to pay their debts in lawful money
The banks do not openly pretend that their Gus
toners cannot pay them iii currency good az that
which they lent them. Although many merchants
have failed, the banks crippled first, and were tho
great cause why thoy did So Extravaganza in dress
and living had no connexon with banks refusing to
redeem their obligations But, on the other hand,
the extravaganza complained of naturally resulted
from the action of banks in stimulating credit with
almost unlimited issues of paper The facility with
which they could issue their bills, and their desire
to make profit by loanng their credit naturally led
people to borrow and carry business upon the high
pressure principle and dash and live in accordance
with their stimulated hopes. The managers of banks
set the example which they unwsey, if not wckedy,
followed The fashion of folly and extravaganza,
having been set in the cities, spread to the vii
lagos and country, and all OF less, participated
All this is easily traced to our bloated paper SYSTEM
which has given unnatural impulse to almost
everything, and set the world upon gallop. The
system has exploded extravaganza is being curtail-
ed, and people are returning to natural gait. In
time things will go on smoothly, unless the paper
currency shalt again expand and make men as giddy
and exhavagant as before.
Another class assumes that over-trading abroad
L 4
the banks to set their creditors at defiance. For the
sake of the argument we may admit that there has
been over-trading, which has caused the shipment of
specie. But those who are enamored of paper cur
rency, and are opposed to of coin, can hardly
complain of the consequences of their own favorto
system They desire paper currency because they
prefer it, If the system expodes it is because they
have mistaken its capacity for good, and are over
whelmed by it,. The paper System is the real cause
of over-rading, and, as the currency it has &C.
casioned is yalueless abroad, of course something
else must be sent to cancel whatever may be
there due The extent Of over-trading and amount
of these balances are never correctly stated 1t is
true that our commercial tables have sometimes
shown that we import more than we export but
this does not prove how the actual balance stands.
If we ship hundred thousand dollars of American
products to China, which we there SELL and in
vest the proceeds i'll teas and silks and import them
if we have done our business at profit shall APP
pear to import more than exported by the amount
of that profit. But, in truth, we export more than
we import. In the year ending June 80, 1856, we
exported domestic produce to the amount of $780,
5s6,33O If sold at profit of twenty per cent, it
br;n ,br no
Sl6,37S 578 of foreign imporations which, added to
our sales abroad, would make 1889 ,Os2, ia. Our
imports for the period amounted to only S3l4
639, 942. Our exports Of domestic produce and of
foreign merchandise added amounted to 1926 964-
9Os, being Sl2 1874 1866 more than our whole Imports
The previous year our exports were about fifteen
millions more than our imports. If we add reason
able percentage for profits exports, it would
show that the real balance of trade is now largely in
favor. Hence this theory will not account for
the banks not having the means of paying their
debts The facts assumed are untrue but, if con-
coded, they would not furnish the muchneeded ex-
cuse. .....
If it were true, however, that some specie had
been sent abroad, the true reason for it would be
found not in the aucied balance of trade but in orr
paper-cmrency system. When this system expands,
it raises prices high that people abroad will not
pay what it cost us. In 1897 we had 7SS banks
and branches, and in 1856, 1895 Our paper cur
rcncy has expanded with this increase of banks.
Every species Of property has increased in its nomi-
nal value, as well as labor. Every article we have
to sell costs increased price in proportion to this
increase of the. currency. In countries where the
currency is more limited compared with the quantity
of the property to be measured by it, the cost of the
articles is much less, and consequently there
the producers undersell u.s. and still mako fair
profit. They do so, and drive us out of tho market
as sellers. When our wheat costs us dollar and
quarter bushel to raise and send it to market we
cannot successfully compete with those who can af
ford to sell at seveDty-fve cents. We do not often
export that upon which can make no profit The
paper system is the true cause why our manufac-
tories SO frequently fail and stop, instead of
hourishing and supplying the world with their
products. Our currency is abundant than
that in in other countries, making our
prices high, that they can undersell u.s.
If tho quantity of our currency werc less our prices
would be less exravagant, and we could in almost
everything compete with the world and undersell
all other producers. The marking everything al n
high or low price does notincrease or diminish the