The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1872-01-31


These are not pleasant signs in our financial
skies. For the last three or four years-snce
the war, at all events-we have had threaten
ing tokens. There was general upheaval of
all business interests on account of the war
the necessity of raising enormous sums of
money, of paying unusual rates of interest, of
suspending specie payments-of having cur
rency at one rate to-day and another to-mor-
row. With this came the fever OF specula-
ton, the haste to obtain wealth, and the con-
sequent violation of those sound business ak
IONS which have governed the money markets
OF the world. Nature and science seemed to
have added to this unnatural condition of affairs.
The discovery of gold In the Western Terrific
ries and Of petroleum in Pennsylvania and
Virginia only intensified the fever. Every
one seemed wild for immediate gain. The
war over, we were confronted with new and
embarrassing problems of political economy.
Our great debt pressed upon our commerce
and our industry. like the volcano which,
we are told in the classic fable, rested upon the
giant Enceladus. The masters of our Treas
ury dealt with financial problems in an en-
pirical fashion. Craftsmanship was supplanted
by quackery. We had tariff which was
premium upon smuggling and internal reve-
nue. laws which were simply an encourage
ment to dishonesty. Then came Black Friday
and its audacious conspiracy against the credit
Of the republic. After this we had the
Chicago fire and the appalling waste of
property which shattered the credit of many
of the largest insurance companies in England
and America. With this came the explosion
of Tammany, the cessation Of all pay
ments Of money by the city, the shrink
ing of our municipal credit and the with
drawal from business of the current money
expenditures of city as large as New York.
Then came the exposure of the financial rings
in the South-the atrophy of State credits like
those of Georgia, South Carolina and Loui-
siana. With this we had the failure of rail-
roads in the South and West to keep their en-
gagements the speculation in bonds upon
roads that ran from nowhere to nowhere, and
could scarcely pay their working expenses;
the sudden disaster to the Erie combination,
entailed by the death of Fisk. And now, to
crown all aud bring misfortune and unrest
in the families of the poorest, we have the
failure of three or four savings banks, run
upon an institution reputed to be of high
credit and large resources, and a general
withdrawal of deposits from these institutions
These are surface indications, it is true but
they show that our whole financial system is
diseased. When the blood is tainted the body
becomes unhealthy, and we have ulcers and
eruptions and fevers. During the last few
years we have, on several occasions, been
on the verge of panic threatening to
exceed in its destructive sway the panics
Of 1887 and 1857. The cause of it is
akin to the causes which produced former
panics The laws of business are like the laws
of health. They cannot be violated with i'm
punity. The tendency Of our people to over
trading, giving credit taking improper ven-
lures, specializing upon the rise and fall of
gold, has been fraught with danger. We have
been walking upon the brink Of a precpice.
So when great disaster comes we are not in
position to meet it, and the instinct of safety
| compels moneyed men to close their safes, call
| in loans, advance the rate of interest and pre-
pare for storms. As a consequence our business
lacks stability and purpose, and we have the
gard to savings banks.
We have seen a bank with millions of de-
posts, to all appearances abundantly able to
meet every engagement, suddenly run upon.
Now, we cannot exaggerate the effect of
misfortune like this for any event that
weakens the faith of the community in
public institutions is calamity. The
depositors in these banks are, mainly,
poor men and women. They are igno-
rant Of financial matters, and with them to
doubt is to disbelieve. Their whole earnings
are frequently in one bank, and when their
faith is shaken in that, little remains. 1t is a
blow at the whole savings system. The
possession of money invites temptation and
dissipation. We have the hiding of money
in drawers and stockings, where it
bears no interest. Worse than all, per-
haps the poor, frightened depostors fail a
prey to sharpers. The habits Of thrift, so
necessary to the poor, are broken, and the
public comfort is sensibly diminished. Peril
comes to those who have mortgages to
pay Very few of our middle class people
can raise money on a mortgage, in answer to a
summons that comes in the night So we
might continue our illustrations and show how
this spirit Of distrust and anxiety must gradu.
ally permeate all branches of business, and lead
| IN tho most disastrous results The whole saw.
ings banks interest of New York-and it is Of
enormous magnitude-is trembling, and little
would be needed to overthrow it altogether
and produce ruin to our business classes