The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1859-11-01

cercly reprobated, presenting steady encourage
Won't 70 tbe perpetraton of frauds aud defalcatons,
remarkable simply from our persistence in credu-
,ous reliance upon system of practical banking
rotten at the core. 1t is moreover to be regret
ted that, while every business man deems it In
cumbeat to keep bank account, and the nominal
governors OF banks are especially drawn from
commercial and trading classes, banking has
neither attained the dignity Of profession nor an
approximation towards scientific APPROXIMATION,
lacking which no financial operation can be con-
Quoted with profit and in security.
Political economy, as o unitarian study, having
been generally neglected as branch in mercantile
education, metropolitan traders, active and not
theoretical fnanciers, are apparently content with
having economical truths driven into their heads
by dint Of experience from pecuniary CASUALTIES,
in lieu of shaping monetary transactions in accord
ance with requirements OF an investigated science.
To compensate for this void in preliminary tuition,
merchants acquire knowledge of their respective
Vacations through clerical apprenticeship, and con.
sequenty may be assimulated by well educated
commercial men, as regards intellectually in their
calling, unto well favored profcents in wholesale
pedling for, with be it conceded, that our
merchant princes bear little resemblance, socially
or politically, to the Jacques, Occurs and Medicis Of
past generations
Honestly admitting commercial magnates to be
destitute of economical knowledge, can it be ra-
tionally expected that the great mass of minor
traders Of trsckers and of artisans, either
prehena or appreciate the practice of banking as
being deduction from theory, or as scientific
creation? On the contrary, these people-the
body of reliable bank dealers-simply regard bank
inn and with ytpat show of iusticp tn he anenies
of reputable pawpbroserage, under which the rich
bypothecate with associated Lombards, notes,
bonds and certificates of stock, for purposes of
raising the wind, precisely in a manner and with
motive similar to the deposition of day laborer's
superfuous apparel 10 the temporary guardianship
of the unpopular hero of three balls. And, in truth,
it does require pretty ingenious mind to define
distinction 10 the nature of collateral whether
it be railroad bond or pair of boots. Moreover,
this popular parallel can be substantiated by any
who has been casually initiated into the work
ings Of practical banking, or who has been pro-
fessionaly employed in the management of none
tary institutions, in which the cardinal aim of the
directors seeks to obtain the maximum of profit,
even if attended by proportonate risk as to loss.
As banking is regarded by intelligent authorities
to constitute an important branch in political eco
advanced and enlightened practice of banking, ap
plicable to the emergencies of an extended com
mercial system, should demand competent pro
fciency in economics. In Europe, where
bankers are not merely custodans, or loaners
of moneys but elements in political systems, regu
lating governmental forces this is regarded as a
fundamental necessity. Nevertheless in our city,
where bank directors stumble into the business
aao,J 80 OF, l, ~
to regulate joint stock associations combining dis
sonant trading interests, we have been unable to
rise through intellectual incompetency of these &C.
cidental economists, above absolute mechanism in
the occupation, and remain, as it were, pettifog-
gers, practising without theoretic knowledge Of
financial jurisprudence. Stationary, as to this stan
dard, will we ever remain until bank officials Sc
lected from intelligent, professionally educated
men, comprehending at least elementary principles
of political economy and their application to inter
national commerce, in place Of retired merchants
wellto do mechanics or specializing landholders
whose proudest aspirations are limited to the ad
vancement of local. selfnterestng projects for il
dividual emolument. The chronicles of metropolis
banking are re olete with instances of ineficienc
in attaining the purposes of its design. Durins
every financial fever or monetary crisis our bank
nave eAulUtttu LDpOtbut W dCCOWpUsI
good, and all powerful in augmenting evil. They
have rarely assumed responsibility in, director
of, moneyed matters, during an emergency nor
warned by experience elsewhere, have endeavorct
to anticipate SO as to avert coming storm. Quite
the reverse. Each bank, actuated by sordid mo
tives for selfsalvation, has devised separate and
contradictory lines of conduct, and through inrin
sic weakness as to executive ability, derivatve
from fundamental organization, has contributed tc
render the confusion consequent upon the financia
tempest the worse COMPOUNDED. To save theil
capitals, our banks radically destroyed individual
credit, which was jeopardized for passing mo-
ment, and could have been sustained either by pre-
senting combined opposition against sinister
influence or by nursing PRECAUTIONARY their re.
Hpeotive dealers, and in this wise to present a
common local barrier against pressure from foreign
causes. They even transgressed the bounds of fra
ternal decorum, and suffered, through selfish stu
pidity, many OF their own craft to totter and fall
and thereby convinced the community, through
paipable example, of the utter hopelessness Of
seeking support during financial adversely Fl ON cor
porations unable to maintain themselves in credit
In few words, these metropolitan traders are ap
parently convinced, Judging from effects without,
ascending to causes that existing banks as regards
unitarian purposes, are limited to sphere of dis
count and deposit during seasons Of prosperity
fer experience has taught them that reliance upon
their method of management, as an economical
problem, during periods of embarrassment, i.
worse than that placed upon decayed reed
Practical banking, contemplated and persisted
in by cur city institutions, is quite on par with
their theoretic pretensions; and of the thousands
Oh stockholders and depostors, comparatively very
lew ever attain correct information to the inter
nal regulations of banks, and as to how their affairs
are managed, or rather mismanaged, as between
directors and stockowners, officials and depostors,
ana the trading community at large Diminishing
further illusions to strictly theoretic ideas we sb ali
now endeavor TO enlighten our readers with respect
to the mysteries Of practical banking, EXPOSING ts