The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1858-01-08

Total amount surrendered from September
70 TO October Is, inclusive 81 ,l9S ,099 az
The amount stocks surrendered the interior banks
than that placed the department from June TO Sept
26 the dates OF the two last reports, was $S3 1913 81
Total s7O4 2oS az
These figures show the gradual but increasing pressure
particularly upon the interior banks during June July
August and September From the LIST Of October when
the decision Of the Court permitting banks to reduce their
securities below slo0 900 by return of their circulating
notes and individual bakers below $50 0o0 upon the
same terms the Of the banks and bankers
with the department. evnced the part of those located
in the interior of the State strong disposition not to sus
/ pend payments until the New York banks set the ex-
! ample.
The interior banks, with but few exceptions succeeded
in having the honor Of striking their dag after those OF the
remains for them to learn after examining their profit and
loss account
The Superintendent believes that in producing this re.
suit the to the interior banks at least half mil
lion Of dollars in positive loss and depreciation Of their
remaining securities and that its only effect was to pro-
long the actual suspension, perhaps week at the
farthest
The immediate cause, rather the that tended
mainly towards suspension about the LIST OF October was
the redemption of bank notes at one quarter OF one per
| cent in the city OF New York.
That the notes OF the banks and bankers in this
State possess strength with the public beyond any the
world is fully confirmed by the fact that they, with those
Of the incorporated banks that stood through the ordeal OF
October until the 18th instantly after the suspension, be-
the basis of settling balances between the New orS
banks in the clearing house in that city STILL up TO the 18th
| of October, this currency thrown out with
out hesitation by the Metropolitan and American Exchange
Banks when the account OF the bank issuing was not
good for the full presented for redemption; and
when thus thrown out, the bank Immediately posted
in all the newspapers in the State as failed
In makirg these remarks the Superintendent does not
blame intend any upon either OF those banks
The suspcp preceded by desperate struggle be
tween al the banks themselves and distrust ald fear OF
currency more apparent among them than with the
Tho superintendent feels tia, the immediate liabilities
Of the hanks oC this state had been carried up during
the preceding summer TO the very verge OF prudence
still, they were able TO NEE, all ordinary demands, but
their utterly inadequate 10 meet gn de.
mand for coin, or panic among their deosors and bl
holders.
thirty failed banks located in this State to be seen
daily in newspaper, began TO tell fearfnly anon.
the public generally The merchant, the mechanic the
grocer and the butcher began business 10 the morning
by examining what broken banks had been added 10 the
list OF yesterday and their customers found that the bank
note TIA, psssed freely yesterday rejected this
ming Il \ not 10 be wondered at that feeling u distrus
and alarm began 10 prevail throughout the State in rela
ton to our banks STILL with large majority Of oui
currency secured by deposit in this department, gen
era suspension could not AMI would not have taken place
upon currency alone The currency had been largely
contracted during the month preceding the actual suspen
sion, and could not have been Withdrawn from It's ne
cessary and actual use IN quantities sufficient to produce
Amore fearful and mighter power lay Dormant, yet
behind this disturbed currency the deposiors in oui
banks, usually quiet, stable and reliable
The scarcity OF money In the city OF New York amona
the merchants and business men continued to increase
steadily and surely during September the rate OF ntere
also steadily advanced. This tended IN reduce deposits
and after few spasmodc attempts at expansion Of loan
and discounts by the BANKS in that city steady and fear
Tul contraction was begun.
N New YORK CITY Il became question OF the sspen
sion OF the banks or the merchants body. Capts
in the shape Of deposits. for the FIRST time in the historj
Of this country and think may say IN the world, sidec
with The business men against the banks The grea
concentrated call loan was demanded, aud In suci
amounts that single days struggle ended the battle anc
the banks went Gown before Storm they could no' post
pone resist.
THIS result has demonstrated, and that too IA tone
that cannot be mistaken and should not be Forgotten
tina, basis Of one dollar q coin 10 nearly nine OF i'm
mediate liabilities will produce home panic OF bsni
CREDITOR and home demand for coin AZ before re
| marked, this suspension stands alone, without prece
dent The teachings Of experience could not avail th
bankers No state Of things like the present had ever be
fore been Appropriated. The most sagacous banker
his most apprehensive MOOD never for moment deem
possible 10 have general suspension IN this state from
home demand for while coin Itself was ai little or NJ
premium with the brokers. This result sets at deisncs
the experimental knowledge Of the Oldest and mos,
| ccssful bankers In the state.
what should both tho banker and the public learn from
FuspensOnf In the opinion OF the Superintendent NJ
this simple iessontha system Of paper credits may be
enlarged TO render the position of our banks one
imminent peril, with contracted currency; that
the creates, danger TO the banker, a. well as to h'
public lies In the large amount OF his deposit, and the
least In the currency he issues
This fis heresy compared with opinions heretofore
entertained upon this question by of experience. II
show thai bank notes were consdered In former times hs
Liability which supposed ~ be dangerous tothe public
and consequently 90 the banker the legislature in h'
last section OF the 6 1898 Authorizing the business
Of banking compelled each association 10 keep twev,
and hsif per cent Of it, circulation in specie wa
The idea that deposits we're dangerous eemcn, tb,
banker SIX n'ntts ago would have stamped ~ promul
sion has taught cannot, and will not be lost upon bani
officers and directors who feel the responsibility OF Oh
trust committed 10 them The test or successful banking
hereafter will be (as should), not In the large amount
dividends declared but in the ultimate safety Of the cap
tai invested m the business with secured currency
like that issued by the free banks Of this State,
pension Of specie payments arising from excess of pa
Xpekn In NO IN hat has her f1ra
considered IL strergh--its deposits. This has beer
cherished and concentrated by the pernicious sys
tenn before referred TO- Of paying interest upon individual
deposits, well for balances between banks them
selves. This practice, particularly individual accounts
has been instrumental In changing the very basis Of bank
ing or rather the Liabilities OF the banker himself and this
too In 80 quiet way that however vgant he may have
been, his experience furnished warning Of his posi-
ton.
To illustrate thu look the liabilities Of banks 10
1887, Immediately previous 10 the Suspension; - -
hue individual depos,orp NEUTRALITY-SUSPICIOUS.. 10 ,ss2 ooC
Leok at the same items in June Of the prcsep, year
Slrculs,on SS.ssS ooc
The effect Of this practice is 10 take from lis
nee sfge sneun, o. capita and turn our mutual naeo,
liabilities and turns the entire business Of the country
into the banks II revcrses the whole system Of sound
banking by making banks borrowers well as lenders
OF money increases the tendency o speculation, by
enabling the capitalist TO have his money at command for
that rurpo@e With but very slight loss Of interest
prevents leaning OF money upon bonds and mortgage.
sher securities, upon the heretofore usual length o.
time curtas the circulation OF bank notes, by the in
offered In the shape OF interest for their return
10 the borrowing bank and thence for redemption to tbs
issuing
The payment Of interest deposits in particular bcsl
ties have proved hat profitable but gene
raj rule the fact The difference 10 the rate psii
and received hardly sufficient 10 guarantee even bank
recevsbis.
AZ before said unnatursly forces the mass Of our
credits into short paper and svels the Liabilities OF the
banks without corresponding profits for the double rss
Of the operation
While the regular deposits without interest uhe amount
depending upon the locality and business connections
and influence of the banks managcrs) are comparatively
relsbe. exactly the those pon which inter
est s paid. They I've there waiting the chance OF bees
investment and fall in the value placed upon property
reduces them. while rise OF the svells their
volume. The Superintendent s old fashioned enough n
believe that any attempt the part OF bank 10
It's deposits by the payment OF interest upon general
count or upon daily balances e. wrong tn principle
sta