The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-05-23
Greniug Telegraph
wEDNEsDAY, MAY %, 1866.
About Financial Crises.


TIE history of all modern financial crashes is
one long tale, not of misplaced confidence, but
of oauseless distrust. As general rule, the con-
vulsions which overturn the whole monetary
world are not occasioned by any hollowness on
the part of the capitalist, but by tlmidity on
the part of the depositor. It is important that
this doctrine, cardinal yet simple, should be
borne in mind, as by 1t much of the anxiety
which will result from the crisis in London will
be dispeled. Because Sir MORTON PEro and
and OvEREND, GURNEY & Co. have been
ruined, and the whole financial world stands
waiting with trembling for new developments of
losses, there is cause for supposing that there
is any radical defect in the system of monetary
transactions. There is no cause for the fear of
Sir MoRToN's depositors becoming infectious,
nor is there any occasion for extended
anxiety. The truth is that those who
have been wrecked by the failure of
these leading banking houses, have themselves
and their fellow dcpositors to thank for what
ever loss tn ey may have sustained. The Incl
dents of 1867 are of too recent occurrence for us
to look with any wonder at the destruction of
even such a colossal name as that of the British
baronet, so lately our guest 1t seems that the
customary alarm was felt, and, as usual, with
out Just cause. A rush Of men, each actuated
by the meanest sel6shness, to secure all his coin,
even at the expense of total loss on the part of
his neighbor, took place. While Sir MoRToN
PETo had millions of capital invested yet his
supply of funds on hand were not sufficient to
meet the unexpected demand. The consequence
wasl that financial paradox--a rich man, with
millions OF property, becoming insolvent. The
great banker failed with twenty-five millions of
dollars within reach of his hand in ten days. The
cause was the inconsiderate greed and over
anxiety of his depositors; THE result will probably
be a sacrifice of what would otherwise have more
than covered all besides the loss of time, large
proportion of their money, and the ruin of an es-
tsblished and universally respected house. There
is but one lesson to be deduced from this Incl
dent If ever there is a rush on a banking
house. try rather to diminish the thing than to
add one more to its number. The probability is
that if the excitement continues the house will
fail and large percentage of your funds be
lost; but if it ease off in time, eight chances out
of ten that within two days you can draw your
money in perfect quiet Such a course is die
tated not only by sympathy for the banker,
but also by selfinterest and wisdom.
We have had parties asking Indignantly,
to meet all demands? ?" 1t does not require long
for the capitalist to know very nearly how much
will be demanded of him as a daily average. If
he keeps twice as much as this average on hand,
that is all that any reasonable person can ex-
pect If all the money be allowed to lay in the
vaults of his establishment, where is he to make
a living from? The anking business would be-
come a species of universal charity, and the
he would be responsible but which he
could not use. Any reasonable demand
firm house can stand, but there are rushes so
wild and so general that the Bank Of England
could not withstand them. Speaking of the
Bank of England reminds us of certainly safe
but not particularly intelligent preventive for
such a catastrophe. The charter of the bank
compels it to keep 100000, 900 in its vaults So
that this vast amount of gold is left from CEN
tury TO century laying idle in order to meet an
anticipated demand which could be IN all
likelihood avoided under any circumstances.
But such course may be that OF wisdom,
although it compels the bank to charge higher
rateIof discount, yet it gives firmness to all its
proceedings and renders the awful terrors of
failure of such an institution impossible.
One word more. The causes which have con.
splred to occasion this convulsion have been
greatly augmented, if not originated by the
political uncertainty of the British empire. The
excitement over the Reform bill, and the general
d,scomposing incidents of state of wild public
feeling, have conjoined to hasten this crisis. If
Great Britain IS thus subject to the effect of dis
cussion in the money market on what a volcano
must we be quietly resting If the present
excitement in our political world continues IT
cannot but produce feeling of uneasiness and
retard trade. We have seen its baneful influence
already All we can do, however, is to seek to
be prepared for any danger, tor yield we cannot,
and our adversaries will not; hence safety to us
lies in confidence ia the stability of our free
inetitutons, and an abiding faith in the capa.
bIlIty OF man tor sell-government.