Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1858-03-19

the most favorable auspices, ana went ON with
advancing prices for most articles till Sep
tembcr. terminated in such a crisis as was
never before witnessed in Hamburg, both as
respects its extent and severity
But the assumption that our misfortunos
have been produced solely by our system Of
paper currency and bank credits, is contradic-
ted by facts within our knowledge.
The amount Of deposits in banks in the city
Of New York ranges from seventy to ninety
millions Of dollars, and in Boston from iii-
teen TO twenty-five millions. These large
sums belong not to the stockholders, but are
exclusive Of the capital Of the Banks, depos-
tied mainly for safe keeping and are seeking
for profitable investment, wholly irrespective
Of the capital or the circulation Of the Banks
The Banks are to a certain extent, the medi-
um through which these deposits are loaned,
and arc often for speculative purposes but
they are by no means the sole agencies.-
Loans of this character have generally been
negotiated by brokers, whose operations might
az well be effected though there was no Banks
Of issue and circulation; and it is noticeable
that the amount OF currency issued by these
Banks bears no proportion TO the aggregate
amount Of their loans. The average amount
Of loans and discounts Of the New York City
Banks, for the week ending January %. 1858,
was S1O1.172.6i2, while their average circu-
laton was but SG.336.0i2. The same time
last year their loans and discounts were
Sl11,O91, 10. and their circulation SLS79.-
027 showing that a 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 circu-
lation.
The 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 misfortuucs are rclcrable 20 our sys-
tenn of paper currency. Still. this opinion
prevails extensively. and is advocated by
gentlemen Of great respectability and moral
worth 1t has been the subject Of fippant
communications in the newspapers, and of
grave and elaborate editorials II has been
madc the text for reports by legislative COM
mittccs, and with view TO secure uniform
enactmcnts for decreasing the circulation Of
Bank notes, it has boon gravcly proposed that
the Governors of the several States shall meet
in council.
The remedy generally proposed, is TO re-
quirc the Banks TO keep in their vaults a
larger amount Of specie in proportion to their
deposit, and circulation, and to suppress the
issue Of small bills. In short. that such leg
islation should be had as will force out of
circulation a great proportion of our paper
currency. with view to the more general
diffusion Of gold and silver among the people;
and the process, according to this theory, is
to be continued, until our present mixed cur
rcncy shall give place TO an exclusive metal
lie currency
In recent report of the joint standing
committee on Banks and banking, in the
Massachusetts Legislature. it is assumed that
as a country grows richer, it should con-
stauty provide a more and more substantial
basis for any paper currency that Il may hayo
been considered expcdient to tolerate at an
earlier time, and under different circumstan-
ces, until Hs paper c1n Be otoHy ri0dra'rp
from circulation, and the currency of the coun-
TN Hus become frm foun9a'ion for the fab
ric Of private credit" In other words, the
policy of our country should be to abandon
our system of mixed currency-to drive
out Of circulation all bank paper, and to substi-
tute therefor an erclsire hard 3noneY currency.
As have already remarked the country
has grown 0p and expanded in population
and wealth. under the operation Of the credit
+ system, of which the institution of Banks
forms a 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. 1t is obvious,
p therefore. that any policy which shall matcri-
ally diminish the amount of currency in the
country, viii necessarily lessen the value o
: property and diminish the price of labor
{ The effect of these changes will be great in
{ favor of the capitalist, and adverse TO the in
terests Of the laboring classes, and the indus
trial pursuits of the community, prosecuted in
q part upon credit.
f Tho capitalist, whose funds are in cash, OF
o. In well secured notes and demands, will find
his property relatively increased in value
while the farmer. the mechanic and the small
f manufacturer, whose property-small in indi-
{ vidual cases, but large in the aggregate-con-
e sists in his farm or stock in trade, incumber-
/ ed by limited Indebtedness, will find his
C energies palsed by the relative increase o
@ that Indebtedness, or what is equivalent, tho
e depreciation OF the value 0f his property.
The argument against this policy is not
that the Banks viii not sufer--not that thei
10 stockholders will be deprived of chartered
e privilcros 1t is conceived that under a sys
= tom that will thus decmato the currency
# the Banks can we'll afford to 20 into liquida
C tion-that the capital invested may be profit
n ably withdrawn, and re-inycstcd in propert,
c the operation. The strong objection to thu
- policy proposed, is that it viii operate preju
It dicially to the interests of the massos-to th
d middle and the laboring classes
s. In the report 20 which have referred, it i
- claimed that in time of peace and uninter
d rupted commerce, the benefits OF the higl
l. prices arising from an expanded paper cur
d rency, cannot be secured to the industry O
S, our own community, without the protection
Of high tariff Of duties and as such tart
e, cannot now be had, it is obviously for the in
l. tercst Of New-England, with so large pro
portion of her population dependent on tn
N industrial and manufacturing pursuits, tina
10 the currency should be regulated By re'rictia
A. It so as 10 bring Il nearer IN value to d e cW
S, rency ofAose countries ichich are non o'h gree
le competitors for the supply Of what is consum
of ed by our own people This position, whic
49, has reference essentially TO tile manufacturin
rs interest, plainly implies, that the reductio
Is of the currency, by the suppression Of Ban
n bills. will so reduce the price of labor, as
r enable us to compete in prices with the mar