The Caledonian. [volume] (St. Johnsbury, Vt.) 1837-1867, 1858-03-06

the erection Of cotton and Wopllen mills
upon a grand scale-ths building Of nam
moth steam ships. in oonneHion with gen
eral disposition Tor over trading This state
Of things so ghFlSas now, was not nppreolal-
ed nor iis extent understood until brought 10
light by the recent catastrophe, Now, the
wonder is not that the crisis has taken place,
but that Il did not sooner occur and the good
sense NJ the community, taught by the sever
ity Of the lesson, will apply the correction
But this state Of things cannot, with any
justice, be referred exclusively or principally
to our system Of paper currency and Bank
credits. have already remarked that those
commercial countries IN Europe, whose cur
reney IL wholly or mostly composed Of golu
and silver, were, equally with US, oyerwhelm.
cd by the late financial emblrrassment,-
Messrs. BersuberF, Gosser CO., Of Ham
burg, whore there are no Banks Of issue, iu
their aireularof January 18Th say
"lhe year 1851, which commenced under
tho most favorable uuspeesRnd went on Win
advancing prices lur most articles lll sep
I tumhrr, terminated u such crisis Hs WAS new
I
spects lbs extent and severity"
But the assumption that our misiorunes
have been produced solely by eur system Of
paper currency and Bank credits, Is contra
dicled hy facts within our knowledge
The amount Of deposits inhaHks Ia thfcIty
Of n, Y.mnges from soycnlytonlnety millions
Of dollars and In Boston, from fifteen 10
twenty five millions, These large sums be-
long not 10 the stockholders, but arc eSolu-
siye Of the capital Of the Banks, deposited
mainly for safe keeping, and are seeking Tor
profitable investment, wholly irrespective Of
the capital or the circulation Of the Banks
The Banks are 20 q certain extent, the medl-
um 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 generally been negotiated
/ by Brokers, whose operations might as we'll
I be ELECTED though there were no Banks Of i''
sue and circulatiunj and Il Is noticeable that
/ the amount ofcurrcucy issued by these Banks
Z bcar- 49, proportion Go the asFf~Fs'e Nmeaet
Of their loans The average amount ~ looms
and discounts Of the New York City Banks
. tor the week ending January Esd, 1888, WAS
. Sl0ll72Gi2, while their average circulation
was but sG,39G0i2. The same time last year
their loans and discounts were Slll,09iil6.
and their circulation S7,s70027, showing that
a large proportion Of their loans we're from
capital deposited The amount oF loans and
discounts in these Banks il always in excess
/ Of their capital and circulation,
The proportion Of circulation to the amount
Of loans is larger in the country Banks, hut
even these afford no ground for the opinion
/ that our mi,fortuncs are rcfcrahlc TO our sys-
tenn Of paper currency, Still, this opinion
prevails extensively and is advocated b. gem
tlcmcu Of great rcspcctablity and moral
worth II has been the subject of fippant
communications in the newspapers and Of
grave aud elaborate editorials. II has been
made the text Tor reports 10y legislative com
mirtccs, and with view 10 SECURE uniform
cuaclmcuts for decreasing the circulation Of
I Bank notes, II ha'bcon grn,cly proposed that
the Governors of the SEA cral Slaics shall meet
IN council
The remedy generally proposed Is to re-
quirc the Banks to kccpin their vaults larg-
or amount Of specie in proportion TO their
deposits aud circulation, and to suppress III,
issue Of small bills In short that such lUg
is,nlnn should be had as will force ont of cir
.culaiion a grcnl aroporiion Of our pnpcr- chr
rcncy with a view to more general d flu
sion of gold aud silver among the people ;
and the process, according to this theory, is
to be continued, until our present mixed cur
rcncy shall give place - an exclusive metal
ic currency,
/ lnarccent report Of the joint standing com.
mttcc on Banks and banking, in the Massa-
chusct,s Legislature, it is assumed {" that as a
country grows richer, it should constantly pro-
vide u more aud more substantial basis forauy
[ paper currency that it may have been oousid.
cred cNpedicnt tn tolerate at an earlier time,
and under different circumstances, until lie
paper cn be ,choHy watdcaicn from circu'a-
tio'L and the currency Of tie country thus be-
come firm foundation for the taJric Of pr.
rate credit" In other words, the policy of
the country should beto abandon our system
of mixed currcncy--to drive from circua-
ton all Bank paper and to substitute there
for an exclusive hard money currency.
As have already remarked the country
has grown up and expanded in population
and wealth, under tue operation of the cred
/ it system, Of which the institution of Banks
/ forms part aud the circulating currency
OF the country under this system, has been
and is composed in part of paper. The IL
ne of every commodity, and the price of la.
I Dor, is gradtNied somewhat upon the amount
of the currency thus constituted. 1t is obvi-
Gus, therefore that any policy which shall
materially diminish the amount Of currency
in the country, will necessarily lessen the val
ire of property gpd diminish the price of la
bor The effect of these changes will be
greatly in favor of the capitalist, and adverse