Fayetteville observer. [volume] (Fayetteville, Tenn.) 1850-1966, 1859-03-31


Written for tic Fayetteville Observer.
BANKS AND BANKING.
The banks of Tennessee had, On
the lst of July, 1857, circulation
of six millions of dollars, with two
millions Of specie in their vaults as
its base-three dollars to one. Now
suppose demand were to be made
upon them for one million OF specie.
What would be the result? They
would be compelled TO withdraw
three millions of their circulation;
and then the account would stand,
one million specie and three millions
paper.-three to one as before. Now
suppose again that they conclude to
withdraw from their circulation, but
one million of their paper for the
one million Of specie withdrawn from
their vaults; then the account would
stand
So millors specie, 6 mill paper, 8 to
withdrawn /. 30. -. do do. do
leaving 81. 90. do. 8. do. do, to
a risk immiuently hazardous. The
banks understand this fully; and
whenever any specie is withdrawn
from their vaults, we find them Gen.
tracing .heir circulation accordingly.
In 1889 the aggregate bank cilcu.
lation in the United States amounted
to one hundred and thirty.fse mil
lions Of dollars. In 1910 there was
a demaud upon them for twelve mil.
lions of specie; they accordingly re-
duced their ejaculation from one
hundred and ttirty-fve millions to
one hundred and Ska reduction Of
twenty.nine Millions nearly three
to one. Again in lS4l their circu-
lation was one hundred and seven
millions. In 1912 there was anoth-
er demand upon them for six mil
lions, and they Immediately withdrew
over eighteen millions of their Cir
culation; reducing it from one hun
dred and seven millions TO eighty.
three millions--mors than three to
one. Again in lS4S their circula-
ton Was one hundred and twenty
eight millions. In lS49 there vas
withdrawal of three millions oil
specie from their vaults, they accord
ingly withdrew over nine millions Of
their circulation; reducing it from
one hundred mud twenty-eight mil.
lions to one hundred and fourteen
millions more than three to one
Again in 1854 they had circulation
of two hurd1ed and four millions
! Ia 1855 they were called upon fol
six millions Of specie; and they i'm
mediately withdrew eighteen mil
lions of their circulation, reducing
lit from two hundred aud four mil
lions to one hundred and eighty-siz
, millions, precisely three TO one.
I These facts are sufficient to estab
tlish, beyond all doubt, the huctua
ting and unsteady character of pa
per money, as a circulating medium
It will nov be proper to inquire int
the effects, which such currency
has upon the prosperity Of the coun
try; aud this brings Us to the consid
Grafton of the second proposition.
%. 1t stimulates the business o
the country at one time, to an unnat
urag degree Of activity, and cores
pondingly depresses it, at another
When the banks commence ex
panding their circulation, the coun
try soon becomes filled with money
consequently, the price of everything
is enhanced. and business OF ever.
: description is suddenly stimulated t
: excess. Men are induced to 'abal
!, don the ordinary avocatioDs of lift
and engage in wild and rockies
: speculation. Our foreign commerce.
partaking Of the same activity,
corresp ondiugly expanded, Unde