Vermont phÅ“nix. [volume] (Brattleboro, Vt.) 1834-1955, 1858-03-20

ton While Others with equal evidence of facts,
refer the calamity essentially to other agencies.
beyond the control or the influence of the Banks
Mr. Appleton, gentleman of great experience
and enlarged views supposes that the catastro-
phe was accelerated and rendered unavoidable
by the unnecessary contraction of the Banks in
the city of New York, at a time when by u rca-
sonablc expansion of their loans, the panic might
have been arrested, and the credit of the country
saved. On the contrary, Mr.. Buchanan, in his
annual message to Congress- asserts that " it is
apparent that our existing miSiortunes have pro-
cccdcd solely from our eXtravagant and vicious
system of paper currency and Bank credits"
This latter theory has been eagerly adopted by
writer's for the press and by the executives of
several of the states, accompanied with the
recommendation of cnactmcnts, which if adopt
ed, must lead to changes of very grave char
acter, operating, as ! conceive, to the detriment
Of the masses of the community.
review Of the past few years exhibits in
every department of business, a tendency to ex-
travagant and reckless adventure. Gigantic
schemes for the construction of Railroads, re-
quring millions for their complexion plot
ting of large towns for the purpose of creating
a Fictitious value of building lots,-thc invest
ment of large sums in western lands--thc cree
ton of cotton and wooen mills upon a grand
scalc--the building of mammoth steam ships. in
conncxion with general disposition for over
trading. This state of things. so obvious now,
was not appreciated nor It's extent understood
until brought to light by the recent catastrophe.
Now. the wonder is. not that the crisis has tax
en- place. but that it did not sooner occur, and
the good SENSE of the community, taught by the
severity of the lesson, will apply the correction.
But this state of things cannot, with any JUS
tice, be referred exclusively or principally t. our
system of paper currency and Bank credits. |
have already remarked that those commercial
countries in Europe, whose currency is wholly
or mostly composed of gold and silver, WERE
equally with us, overwhelmed by the late finan-
cial embarrassment. Mcssrs. Bercnbcrg. Cos
slcr X Co., of Hamburg. where there are no
Banks of issue, in their circular OF January 18th,
say;
The wear lsj7, which commenced under the mos,
favorable auspices, and went with advancing prices
for most articles till September terminated In such
cr>i, was before witnessed in Hamburg both
rs respects It's extent pnd severity
But the assumption that our misiortunes have
been produced solely by our system of paper
currency and Bank credits, is contradictcd by
facts within our knowledge
The amounts of deposits in banks in the city
of y. Y, ranges from seventy to ninety millions
Of dollars. and in Boston. from fifteen to TWEEN
ty-fve millions. These large sums belong not
to the stockholders. but are exclusive of the
capital of the Banks, deposited mainly for safe
keeping, and are seeking for profitable invest
mcnt, wholly irrespective of the capital or the
circulation of the Banks. The Banks are, to a
certain extent, the medium through which these
deposits are loaned, and often for speculative
purposes, but they are by no means the sole
agencies. Loans of this character have gener-
ally been negotiated by Brokers, whose opera
tipre ,,,it,bt ,Vnll l.. ntfngtal tlnuyh thara
were no Banks of issue and circulation and it
is noticeable that the amochit Of currency issued
by these Banks bears no proportion to the az
gregate amount of their loans The average
amount of loans and discounts of the New York
CITY Banks. for the week ending January 23d,
1858, was SlOl,l72, ,642, while their average cir
culation was hut S6.336,O42 The same time
last year thois loans aud di-s~,"t- -~er~ =i'i
O94,1lj. and their circulation S7,S79,037. show 70
ing that large proportion of their loans were
from capital deposited. The amount of loans
and discounts in these Banks is always in excess
of their capital and circulation.
Tbs proportion of circulation to the amount
OF loans is larger in the country Banks, but even
these afford no ground for the opinion that our
misfortuncs are reiorable to our system of paper
currency. Still, this opinion prey ails extensive
", and j, advocated b, gentlemen Of great re-
spcctability and moral worth. 1t has been the
subject of ilippant communications in thc news
papers, and of grave and elaborate editorials. 1t
has been made the text for reports by legislative
committees, and with view to secure uniform
enactmentS for decreasing the circulation of Bank
notes, it has been gravely proposed that the Gov
ernors of the several States shall meet in coun-
ell.
The remedy generally proposed, is to require
the Banks To keep in their vaults larger amount
of specie il proportion to their deposits and cir
culation, and to suppress the issue of small bills.
In short that such legislation should be had as
will force out of circulation a great proportion
of our paper currency, with view to a more
general diffusion of gold and silver among the
people and the process according to this the
DRY. is to be continued. until our present mixed
currency shall give place 10 an exclusive metal
ic currency.
In recent report OF the Joint standing COM
mittee on Banks and banking, in the Massachu-
settS Legislature, it is assumed " that as coun-
try grows richer, il should constantly provide a
more and more substantial basis for any paper
currency that it may have been considered ex-
pedient to tolerate at an earlier time, and under
different circumstances, until the paper can he
Wholiy withdrarn ffom circuidtioR, and the cln-
reHcy Of the count,y thus become q firm f0WHd0-
hoH for the fabric Of prjcdte credit" In other
words, the policy of the country should be to
abandon our system of mixed currency to
drive from circulation all Bank paper, and to
substitute therefor an exclusive hord money ct0-
rcRcy.
As | have already remarked, the country has
grown upand expanded in population and wealth
under the operation of the credit system, OF
which the institution of Banks forms part and
the circulating currency Of the country under
this system, has been and is composed in part
of paper. The value of every commodity, and
the price of labor, is graduated somewhat upon
the amount of the currency thus constituted. II
is obvious, therefore, that any policy which shall
materially diminish the amount of currency in
the country, will necessarily lessen the value OF
property and diminish the price of labor. The
effect of these changes will be greatly in favor
of the capitalist, and adverse to the interest Of
the laboring classes, and the industrial pursuits
ofthe community, prosecuted in part upon credit
The capitalist whose funds are in cash, or in
well secured notes and demands, will find his
property relatively increased in value, while the
farmer, the mechanic, and the small manufac-
turer, whose property-small in individual cases
but large in the ggregate-consists in his farm