The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1858-02-20

manufacturing villages has naturally produced q
These causes have probably added hundreds OF millions
OF credits, "a 70 De hquidatea upon basis sufficiently
small for the safe transaction Of our business in 1S4o
The compc@0n Of railroad companies and OF land specu
tos for loans at exrsvsgant rues Of interest constituted
another Of danger but bnkers they take pro-
per precautions independent OF the risks OF com
merce is only by imprudent proceedings Of their own
that theF be rendered unable TO meet their engage
menss "The result" as Mr. Cook justly observes has
demonstrated and that too in tones that cannot be mis-
taken should not be forgotten, that basis of one
dollar in coin 10 nearly nine Of immediate liabilities
wiR produce home panic of hank creditors and
a home demand for coin" Il may be added
het, the specie reserve was Of course unequally
divided, of the banks must necessarily have fallen
far short Of the average capacity pay ninth
their liabilities cash. body OF independent institu.
tons ought to maintain collective beyond the
amount which might be required by the Bank of Eng
The dangers Of the deposit system were aggravated by
the practice Of allowing interest the balances due from
one bank to another. The reserves OF the provincial
banks IN part consisted Of the which they were
peled to keep in the city to meet their notes and other
lances, were compelled 70 employ the amount in
their own business; and, consequently, two So
parate operations Of credit were based on the
same limited capital The consequent risk s, however,
only exaggerated form of that which necessarily
arises when bankers become borrowers we'll lend.
In prosperous times trade is stimulated by the
Ason of private savings with the capital ordinarily
pIOyed in commerce. Even when pressure is impending
bankers compelled to remunerate themselves for
interest which they allow to their customers On the ar
rival Of crisis deposits suddenly withdrawn TO the
great Of trade and to the ruin of specuia
tive bankers The Hank Superintendent of New York
eves that the note circulation exercised influence on
the recent suspension but after the beginning Of August
"both banker and depositor commenced q mutual on
slaughtthe one upen his lire Of loans and dscounts
other upon his bank deposits" The unequal contest was
decided in Q few weeks. By the 10th of October
the banks haa reduced their discounts by twenty millions
OF dollars, but they had paid away than thirty mil
lions TO their depostors Three days aerward they
pended specie payments although the circulation had only
varied wthsn narrow limits.
One Of the remedies proposed 70 the State Legislature
may perhaps deserve consideration by the committee of
the House Of Commons. Mr. Cook recommends that all
banks should be requedito keep OF coin equel
TO twenty per cent their average weekly deposits Of
descriptions. They would thus be compelled either to
allow themselves wider margin Of profit deposits,
TO decline the payment OF interest to their customers
further suggestion perhaps exceeds the Of any
Assembly or OF Parliament To enact measures "n such
Language as shall place their beyond the reach
of udcia decisions is q natural but vain aspiration 1t
is perhaps well for the interests of American jurspru
dence that courts OF law impose restriction the
eloquence OF legislators judges habuay assign every
enactment the smallest possible meaning and that which
least consistent w its supposed purpose but for this
wholesome check the Code OF New York might perhaps
be ornamented, like the sicia documents OF the State,
with fgurave illusions TO "sorms" and ''mutnies TO
"balarces, 'Sfywhees, =, and "nature" Unfortunately
no rhetorical decoration eaectuay conceal ntrn
sic bacpess and dryness Of all dsqusons credit and
currency.