Wilmington journal. [volume] (Wilmington, N.C.) 1844-1895, 1859-03-18

ScorcH BANKING The latest lesson in Scotch bank
ing is not very favorable to that system but taxing
in its workings of $50 years. it shows less nuctnauon
and loss than have prevailed in England and the United
States The following is an extract from report made
to the Glasgow Chamber Of Commerce, upon the SUD
ieet OF commercial crises:
The best security against commercial CONFUSION IS 10
limit credit The nearer come to cash BUSINESS the
sounder will be trade The comparative sec urty OF
French during the late crisis was, no doubt,
greatly owing to the modified nature OF It's credits and
on the otter hand the disasters which overwhelmed the
of America certainly the result OF an
exaggerated credit system Everywhere the sab ty OF
commerce is in inverse ratio to the development oil
credit But the abuse of mercantile credit could not
exist to any great extent it not fosered by the
abuse of banking credit.
In our commercial system the credit given by one
trader to another depends mainly on the credit given by
bankers to traders. Traders could not give excessive
credits unless bankers supplied them with I'm
prudent banking is at the root of all unsound trading
The great fault of modern banking is the insuhcency
of reserves Bankers like traders bound to provide
for their sovency; they must reserve ample means to
meet obligations and in their any departure from
this rule the more nexcusabe that the proper amount
of reserve for them to hold may be ascertaned with al
most mathematical precision. But the desire OF profit
or the urgency of their customers induces bankers IN
too many instances to invest their deposits more closely
than prudence warrants safety sacrificed for an adj
dtonal percentage of profit the is allowed to
fall dangerously low, and when time of pressure comes
the bank has nothing to fall back upon. This INSULT
cheney Of banking the immediate of
panics When pressure great money lenders
the first to take alarm with enormous liabilities and
inadequate of Immediately available resources
they feel that their sovency is endangered and their VIC
lent efforts to regain position of safety the chief
of disturbance in the money market Instead of
lending to Others they become themselves the most i'm
Fortunate Of borrowers They who should sustain cred
the chief authors of discredit they who should
inspire confidence themselves panicstricken. 1t is
not the needy depositor ignorant noehoder Of the
provinces who causes our pancs; it is the millionaire
money lender of our great centres of commerce One
great of insufficient reserves is undoubtedly the
high rate of interest allowed upon deposits. Such rates
can only be paid and profit realized, by close invest
ment of deposits. Our trading credits rest mainly on
accommodation from the banks. The provincial banks
deposit great part OF their with London bank
ers on call. The London bankers again invest their de-
posts closely, and trust mainly to advances from the
Bank of England in OF need, while the Bank o.
England itself allows its in times of pressure tC
fall to trhing fraction of its deposits Thus the vast
superstructure of British rests ultimately
mere trife Of reserved capital Our whole credit sys
tenn is inverted pyramid. Your committee does moi
look for any legislative remedy for the abuse of credit
The cure must be found in the honest and intell
gent appreciation of their duties by all who either give
or take credit