The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1867-07-30


*For reelection.
General Thomas will do his utmost to keep
the peace on election day; but we fear his
utmost will prove too little. After the cleo
tiOn, we trust the Tennesseeans will bear in
mind that the civil war is ended and betake
themselves to the ways of industry and quiet.
Failure OF the UDadIIIa Bank-ROttsn-
ness OF the National Bank System.
From the World
Unadilla is village on the Susquehanna, in
the southern part of Otsego county. The
bank there is a sample of similar banks
organized Cor reorganized) under the new
national system, located in rural villages and
small interior cities all over the country.
What has occurred at Unadilla rndy occur in
any other place where one of these national
banks is located, which proves that there is
no security in the system. What has occurred
at Unadilla is likely to occur in hundreds of
other places, inasmuch as in this era of hazard
GUS speculation and fast living, other banks
and their managers are exposed to precisely
the same temptations to which the officers of
the Unadilla Bank succumbed The collapse
of the Unadilla Bank, though the latest, is by
no means a solitary instance of the breaking
of national bank. A similar failure has Just
OCCuIIeu dJ WeeuSpOT III Ju6 W6SIeTu part
of this State. Another recent instance is the
failure of the Newton National Bank in Massa-
chusetts. Such failures have been frequently
reported since the beginning of the year; that
at New Orleans having attracted more atten-
ton than any of the others in con-
sequence of the bank holding large deposits of
Government funds.
The liabilities of the Unadilla Bank are
$2O0,0OO; its assets are represented to be very
inconsiderable, the property of the bank hav-
ing been gambled away i'll mining and pro-
duce speculations. 1t is a repetition of the
story told in connection with all the previous
failures. The officers were smitten with the
prevalent passion for acquiring sudden riches
by speculation, and their sanguine and too
credulous expectations tempted them into
extravagant expenses. The source of this
rottenness inheTeS III the national bank sys-
tenn, which presents temptations too power
full for sanguine men to resist, and affords
adequate safeguard to the stockholders
and creditors of the banks. 1t is a system
which stands on no solid or stable standard
of value. All experience attests that there
can be no sound banking system which
does not rest on a legal obligation by
the banks to meet their liabilities by pay
ment of the precious metals. Our national
banks issue paper which they are required to
redeem only in other paper; that other paper
being subject to daily fluctuations of value.
Now state of things in which there is no
stability in values, in which the currency and
! business of the country are constantly tossing
! like a raft upon the waves, infects all men
! who can command money or credit with the
passion for speculation. When values are
settled, or pass only through gradual
and easily predicted changes, men are
not tempted to toss property rapidly from
hand to hand in hope of gain or dread of loss.
OF this spirit of speculation which has seized
| the business men of the country, the national
banks are the focus as well as the origin.
Heavy spectators are in constant need OF
bank accommodations, and sharp-eyed bank
officers have no difficulty in diving into the
business of their customers. Bank officers
have therefore easy means OF gain
ing a prompt acquaintance with every
promising speculation, and can become par
ties to any they please in exchange for pecu-
MARY facilities which such officers can afford.
All the chief speculative projects thus passing
under the inspection of these bank officers,
they are exposed to temptations which ordl-
nary human nature is not strong enough TO
resist. Doubtless the officers of many of the
national banks have grown rich by specu-
lations; sometimes by their sagacity, some
times by mere luck. Our point is not that
none of the national banks are solvent, but
that the community have no means OF know
ing which to trust. The system is evidently
! bad one, since a bank should be in all re-
spects the very opposite of lottery. A bank
ing system should be fitted to inspire and to
deserve confidence, by exempting its creditors
from hazard A vast affiliation of organized
spectators, who daily risk other mems money
in doubtful adventures, does not deserve,
and cannot long retain, the confidence OF the
country.
Even if these institutions confined thenl-
selves to their regular business, they are an
organized means of fleeing the community
Besides the issue of currency, conslderaD.ie
part of the regular business OF the Uhaoill'
Bank has consisted in loans to the farmers,
village merchants, and produce dealers =,
OtsegO county. Let us scrutinize the hatuIe
of one of these loans. wealthy farmer, WHOSE sS9
credit is so good that any of his neighbors VIZ ~
indorse his note for nothing, has occasion W
use thousand dollars, and borrows u az tno
bank, giving his note thus indorsed; NOW
what does he get for it Money NO, ne
gets merely the notes of the Unadllia pann g
for the same amount. 1t is an exchange % Os
the notes of a solvent farmer for the notes VI
am insOlvent institution. But, walVlnS snS .nI
undisolosed insolvency, let us proceeu W.
our analysis. 1t is obvious that the trans"o to
tion is mere exchange of credit; the laiiiI ALL,
exchanges his credit against that OF she .lna p~'
and pays seven per cent. for the dinelenOS3i
when his own credit is so perfectly sovto
that his responsible neighbor ndorses ms oo luz
for nothing The bank takes seventy uolialS sloi,,
for doing what the endorsing neighpor nooty oot;
does without compensation; the endOIsei ool 49,
fyinQ the credit of the borrower 70 the JAZZ ~
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