The national era. [volume] (Washington [D.C.]) 1847-1860, 1858-01-21
GOVERNOR CHASE ON THE QUESTIONS OF
THE DAY

We alluded briefly last week to the very able
message of Governor Chase, of Ohio. His
views or some of the Questions of the Day, of
general interest, are SO just and statesmsnlike,
that we are sure our readers will be gratifed to
see them.
THE FINANCIAL REVULSION.
/ have already adverted to the financial re-
vulsiop, which has, during the last six months,
80 seriously affected the varied interests of our
community.
Twice before, during the present century,
have similar revulsiops occurred; and both
were accompanied by the same train of calam-
tiles and disasters. The interval from one of
these revulsions to another has twice been
marked by space of twenty years. The causes
of each, though very different in form, may be
reduced to the same general expression, name
| ly, the reckless contracting of debts beyond
means of payment. The spirit of speculation,
eager desires for great and sudden gains, the
spirit Of ostentation and luxury, seek gratifi
cation through debt. AS there is no limit to
these passions of the heart, go there ia no limit
to debts contracted for their qualification, ex.
cept notorious insolvency, which makes credit
impossible. Always most active when prices
are rising, circulation increasing, and credit
expanding, these desires, unchecked, never fail,
under such circumstances, to reach their crisis
in enormous and universal Indebtedness, to be
| speedily and certainly followed by widespread
collapse and disaster
For nearly ten years past, the circumstances
! OF the country have tended to these results
The influx of gold from California has rapidly
augmented from year to year the volume of the
circulating medium; which has been still far
Their expanded by vast, though not equal in
crease of credit currency. In l848, before the
4 vfnf.l ~f e.. H.l.c
menced, the respective amounts of coin and
bank notes in the country were as follows !:
Com, SIZE, OPT; bank notes, $l28, $500, O4l.
In 1857, the respective amounts were-coin,
S276, 100, 442 bank notes. $2l4,778222
The whole currency in 1913 was 255259ll8
The whole currency in 1857 was 490,878 664
The increase of currency was 235,6l9,546
The increase of coin was l49367, Alb
The increase of bank notes was 86,272,l8l
The rapid augmentation effected by the in
crease of coin alone could not fail to produce
| marked effects in the rise of prices, in the mul-
tiplication of transactions, in the enlargement
of credits, and in the increase of debts The
additional stimulation of this tendency by the
further introduction of s6232,l7l Of credit
currency, sufficiently accounts for all the effects
which have been witnessed.
No system of currency can insure complete
protection against speculation, debt, and re.
vulsion; but that system which, more than
any other, directly tends to produce and in.
flame these evils, is, without question, the sys.
tenn of credit currency. That system, there.
fore, chiefly demands precautionary measures
against such results.
Credit currency in the United States is sup.
piled by banks, in the form Of notes circulating
as money. The number of these banks, on the
lst OF January, 1856, was 1898; their capital,
S343,874. 272 their circulation, $l95, TAI $50;
their deposits, S2l2, 705, $685. their other liabil.
tiles, S64, 941,8 1923; their specie, $50, 063 :;
their resources other than specie, S820,7l3,362
Inc number of banks at the present time prob
ably somewhat exceeds l40O. Their circula.
ton is stated at $2l4,778,822, their deposits
at $3.50, 1853 1852, and their specie at 500 OO0 900
1t needs but glance at this statement to per.
ceIve that currency so expanded must great
ly stimulate hazardous speculation, and tend
to financial disorder and that under the ext
gency OF such disorder, the credit currency
must become, in part or altogether, inconvert-
ible into coin.
In our own State there are fifty-four banks
thirty-six branches of the State Bank, and
eight independent banks organized under the
act of iS45, and ten free banks, organized un.
der the act Of 1851.
After detailed statement Of their condition,
he proceeds
twill be seen, from the foregoing statement,
that the condition of these banks, so far as it
is tested by comparison Of specie and other
cash means with immediate liabilities, was
stronger in November than it had been in Au.
gust. The laws under which these institutions
were organized were framed with especial ref.
erence to the security of the bill holder. All
the branches Of the State Bank are made sure
ties for the circulation Of each and the con.
vertibility of the notes Of others is required to
be guaranteed by pledges of State or United
States bonds.
These salutary provisions have protected the
people against serious losses from depreciation
of the notes of the banks organized under
them and it is highly creditable to their
management, that they have passed through the |
recent crisis, made doubly perilous to many of
them by the embezzement of their cash bal |
ances and collection bills at New York, with.
out & suspension of specie payments.
Still, it cannot be denied that the danger Of
q general Suspension has been imminent, or
that some of these institutions have actually |
been in a condition of legal, while others have |
been in a condition of virtual, suspension. |
These facts must necessarily direct your at |
tention to the legislation necessary to protect |
the people against the hazard of so great an evil |
How far the provisions of the charters Of /
the hanks organized under the act of l845 |
will admit Of additional guards against suspen |
sion, is matter of doubt The decision of the |
majority of the Federal Supreme Court, that
the charter of bank by legislative enactment
is q contract, ard cannot therefore be modified |
by subsequent legislation, makes the reforma-
ton of evils in credit currency always difficult |
and often impossible
At the present moment, however, it seems
IL hat ~
acceptable to these Institutions and beneficial |
to the community, by which much larger
specie basis would be provided fer circulation |
and deposits than is now required, and other |
additional securities obtained against suspen.
sion.
The act Of 1851, under which the other Banks
are organized, is amendable at the discretion |
of the Legislature. Their circulation is secured |
by the deposit Of equal amount in State or
Federal bonds. 1t is plain, that in financial |
crisis, when bonds of all descriptions are de. |
preciated, this security becomes inadequate |
/ recommend the provision Of adequate guards
against such a contingency, by an increase of
the proportion of bonds to circulation, and by
a prohibition of the deposit of any other bonds
than those of the State, or of the United States
The experience of the last few years has de-
monstrated, however, that the greatest finan.
cial disasters in Ohio have not been occasoned |
BY legally authorized banks of issue. Most of |
the calamities which have recently fallen upon
the business community Of this State have
originated in the failure Of private bankers and
of the Trust Company, issuing no notes for cir
culation. Many of these bankers, and perhaps
the Trust Company also, however, were Dor
rowers from banks outside of the State, of for.
eipp notes. at low rates of interest, to be circu-