The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1865-11-21
The Decline In Government Securities
HAS the BOttOm been Reached.
The late Expansion of Credits.
From GIe NGlv York Commercial and Financial

INC Decline ia Governments Securities
---IIns the BOttOm been Reached.
The late Expansion of Credits.
Prom HIe NGlD York COUimercinI and Financial
Chronicle.
One of the most noteworthy facts con-
nected with the recent stringency is its
effect in depressing tho prices of all de
seFiptiOnS of governmeut bonds. The
collaborating securities have suffered us
much MS the short currency-b bearing
obligations, though the latter are re-
garded usually rs the more sensitive,
and have hitherto suffered most severe
~ in time of pressure. Such wide fluc-
tuAtions are much to be deprecated;
and it is not the least important of their
mischicvOuS effects that they tend to
shake public confidence in government
securities as stable investment for
trust funds and similar tiduciary pro-
perty. Tho practical question now
arises. whether we nre Mt the bottom of
the decline. sEgs1ts
In attempting the solution of this
problem, we must find out, il we can,
by what causes, in the first instance,
the revolution was brought on which
has been, for the moment, equal
ly paralySing to public and private
credit. And the chief plnce among its
causes must undoubtedly be assigned
to the undue expansion and consequent
weakness of some OF our banks. The
reports of our city banks, says daily
newspaper, "shOw that n very large in
crease in loans has been made by such
banks rs have large country conneC-
tons. This Is, no doubt, CAUSED by the
circumstances that some of the interior
banks have been expanding beyond all
safe limits, and have had to seek ne
commodation here in consequence. We
may may mention one country bank ms
an example. Its capital is two hundred
and tifty thousand dollars, all of which
is invested in government bonds, and
placed ut Washington as security for
circulation, or for government deposits.
Notwithstanding this investment of its
available means, the officers have actu-
ally lent to their customers no less than
four millions of dollars. Under the re-
cent preSsnreitn need not be wondered
ut that this institution had to sell at a
sacrifice "a considerable amount of Sew
en-thirtics."
The merchants, operators, and other
persons who received this accommodate
ton were not slow to enter into the
spirit OF the banks that granted il.
They were carried away with the same
contagious example of expansion, and
plunged rccklesSly into speculations
attended with unusual risk The warn
ing was, therefore, not uncalled for
which Mr.. Mccullough is reported 10
have uttered on recent occasion thnf
WAY IueLIl-
selves by "discOuntingp paper, the snnntl.
ness of which depends on continued
high prices"
But this expansion OF credit to spec
ulatorS in brendstutIs, cotton, and other
commodities was not the only means
by which the banks weakened their
position. During the negotiation of the
last 2SO.OOO,OOO OF seVen-thirties, it was
observed thut an unusually small ats-
gregate was taken in the Atlantic cities.
Nearly all was absorbed in the in
terror, and passed, in some cases, into
banks whose means were already
too deeply pledged by prior enERpe.
ments. Indeed Western bank officers.
during the last week or two, have been
seeking accommodation here, whose
accounts showed that they held seven
thirties TO an amount equal to three or
Tour times their capital. From motives |
INTO which We may inquire more par
ticnlarly hereafter, these institutions
nave been induced To load themselves 1
up win u burden OF seven-thirties ten-
iortles, and ,tiNe-lwenties far beyond I
thelr strength. They ventured in fact !
10 invest in these and in other Ciescrin. I
lons OF government paper not aVniln- J
DIG Tor paying their debts, so large a !
portion of their means, that they found !
themselves under the necessity of No |
instng accommodation TO their custoin.j
ers, or OF depending On their cores
pOndentS here to an extent which M
sound conservative bank officer. in the Z
most tranquil times. could t,ontemplate
without grave apprehension.