Daily national Republican., 1863-02-11
Ths Elnan-t.l ousS,
To ne Editor Of ~ Ropnblioau,

| y
mont profit 10 the bank issuing IL, depends upor
variety Of contingencies, When the business
Of the country and the necessities Of commerc,
require the use Of bank notes in large amounts
when tho supply Is not forced upon the market
In eEcess Of tho demand; whom the minds Of
men are not inflated by wild speculations and
money Is abundant at a rate Of interest lower
than that charged by the bank, and when The
amount thus issued ls gradually returned for
redemption, no faster than the bank can take
care Of II from It's own resources, then q large
| circulation is pleasant and profitable affair.
But this combination Of circumstances has
rarely existed during my short experience. II
has come so rarely in these latter years that
country bank officors do not build many hopes
upon it. 1t much oftsner happens that some
event takes place TO produce slight stringency
In the money market, just when circulation
has reached Its highest point, when speculation
is rife, and whom all concerned arc least pre-.
pared for II. The rate Of interest In Wall OF
State street, advances one or two per cent, and
the bank which has been experiencing the pleas.
urs, must now look for the pain Of large cir.
culation.
There is no country bank officer who will
soon forget the months Of August, September,
and October, 1857. refer to this year, for IL ID
not at all an exceptional case. Il has happened
often, and, under our present system, must
continue to happen.
June and July had no unpleasant symptoms.
The financial Sky was unclouded and serene.
The West gave promise Of lururlant harvest;
circulation must be had TO move Il. All that
the East could spare would be needed, and
more, for the wool, lumber, and grain, which
were waiting for buyers. Circulation must be
had, but upon time. -Four and six months was
the shortest paper which would answer. This
was all to DO promptly met, and long before
this circulation was returned, tho paper would
mature 10 redeem IL. The banks responded to
the appeal and all went on smoothly. The ag-
gregate circulation in July was, probably, lar
ger than ever before.
August brought with II signs of nervousness
in the financial system. The money market
began TO tighten. The prices on the share list
ceased advancing, and some of the weaker
stocks recoded. Those banks were fortunate
whose officers saw the signs Of the approach
ing storm and got ready for II. This was the
case with very few. The larger proportion only
looked upon the stringency as temporary, and
continued to deal out their circulation with a
liberal hand.
In short time the city banks began to col
lect their call loans. Others could not be no
gotiated in their place except at higher rates of
Interest. The money market was decidedly
more stringent. Now, instead of the grain,
lumber, and wool, it was the circulation which
began TO como forward" from the West, and
that in amounts not pleasant for the country
banks to contemplate. The exchange which
this enormous amount Of produce was to create,
instead Of being below par in Chicago and 81.
Louis, was first one, then two, then three per
cent. above par. AT almost every street corner
OF every town in the West was a curbstone
broker to pick up Eastern bank bills and send
them by the swim express to Boston, or New
York. Tho packages Of notes which were is
sued to pay out to country farmers In the far
Interior, for circulation, where they were TO stay
for indefinite periods, came back to tho Suffolk
Bank unbrokCn, and in less time than that or
dinarily required for mall communication.
The other necessary results followed in rapid
succession. The paper, on the discount Of
which this circulation was issued, was yet far
from maturity. The country bank balances In
the cities were absorbed in week. Then came
the notices from the Suffolk, and other city
banks holding country accounts, to the coun.
try banks, that they must keep their balances
good. II they did not, their notes would be
"thrown out at the Suffolk" This was equiya-
lent to failure, and, In many Of the States,
brought heavy penalties upon the banks them
selves. The anxious faces of country bank
officers were frequent in State street, but State
street could give them no aid or comfort. State
street had its own liabilities TO account for.
The prices Of the share.list receded frightfuIly.
Real estate went down. The storm was com
ing
The one anxious thought now, with the coun-
try bank which "made money on Its circula-
tlon," was, how to bridge over the time until
the maturity OF Its paper. That point once
reached; "all would be we'll" Ii was dis
counted against -four and grain, wool and lum-
Der 1t was sure to be paid
Never, alas was hope more fallaclous but
1t was a hope after all. The efforts Of the coun.
try banks to keep their city balances good were
strenuous and untihng. The help which the
city hanks should have given them was with
drawn, as 1t always will be whom most needed.
But two ways were left-one was to borrow at
any rate Of interest, the other to force out a
circulation by system of exchange. In short,
by the friends of each bank exchanging It's
notes as fast as possible for the notes Of other
banks which were redeemed at the Suffolk.
Before the month of September had passed
away, the aggregate Of interest which the coun-
try banks had made" as they believed, upon
their circulation, was more than absorbed in
the high rates they were compelled to pay for
loans, and other expenses, in taking care Of
their redemptlons. There were few banks that
would not have gladly compromised by paying
all they had thus received to bridge over the
chasm;. But the worst had not come.
There was now time when the New England
system showed its weakness, and the value TO
TIE banks hsmsslUsS, Of having some ell-known
and certaln DroyIGiOn for the radsr,ntIo, ~ al,