The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1872-04-09


operators and bankers ia this city to lock up
currency with view to creating stringency
in the money market and corresponding de-
cline in stocks was yesterday the subject OF
inquiry before the Clearing House Association
and United States Commissioner. In the
former body resolution was adopted direct
ing the Clearing House Committee, whenever
it may appear in its judgment that legal ten
der notes have been withdrawn from use
through the agency of any bank being men,
Der Of the association, TO make an immediate
examination into the facts, and, should there
appear to be completely on the part of the
bank or its officers to suspend such bank from
the Clearing House until action of the associa-
ton shall be taken on the case. The hearing
before the United States Commissioner was on
the charge preferred against the Tenth Ma
tional Bank of having withheld United States
funds from circulation in violation of the first
section of the National Banking law, and after
brief session an adjournment took place. The
matter also came before Congress in the shape of
a resolution instructing the House Committee
on Banking aud Currency to investigate any
|
engaged in conspiracy to lock up currency
with view to creating money panic, and
directing the Secretary of the Treasury to
report any information ne may possess on that
subject and what legislation he deems neces-
| sary to prevent recurrence OF the evil. II
therefore seems probable that some steps may
be promptly taken to break the combination
that for the past two or three days has set
Wall street in an uproar, and that has added
another to those disgraceful pieces Of sharp
practice that have already inflicted such
serious injury upon our national credit The
throwing ont of an offending national bank
from the Clearing House, the presentment Of
its officers to the United States District Court
and sharp examination into the matter by
Congressional committee would not only have
healthful effect in the future, but would
probably turn the tables effectually at the
present moment upon those who may be part
| ners in the conspiracy.
This scheme Of locking up money for the
| purpose of creating panic on the market
| and bringing down the stock list with q crash
originated with the old Erie party.
Four years ago the men who were then
initiating the vicious system so well fol-
lowed out by Fisk and Gould took eight mil
lions of currency out of circulation on our
market and fed with 1t to Jersey. At that
time the operation was more easy of accom-
pshment and could be more effectively per-
formed than now. By means of certified
checks, given for deposits Of greenbacks, the
conspirators could then tie up for the day
twenty millions Of dollars with one million.
Congress came to the rescue of the people and
passed law forbidding any national bank to
make loans on greenbacks; but still the power
remains in the hands Of these cliques or. COM
binations to paralyze the loaning power of the
banks to quadruple the amount Of the money
they actually clock up or withdraw from
circulation. The banks are required by law
to retain in their vaults an amount OF legal
tender notes equal to twenty-five per cent of
their liabilities, and hence when five million
dollars in greenbacks are drawn out of the
banks and withheld from them their power to
loan is lessened to the extent Of twenty mil
lions. In other words, if the five millions of
legal tender notes remained in their posses
sion they would be entitled under the law, on
| the basis of that reserve, to loan four
times that amount OF twenty million
| dollars These are simple facts within
the knowledge Of every person ia
milar with the business Of the
market; but we state them here thus plainly in
order that the uninitiated may understand
how it is that handful of conspirators, with
comparatively trifling amount of capital at
their command, can manage to create 50 much
excitement and to do SO much mischief both
to the general interests of the people and
to the national credit. II is evident, then,
| that while the law of Congress called
for by the orig inal conspiracy of the old Erie
| party effected some good, there must still be
| a radical evil in the system that admits of the
| pernicious operations of to-day, and strin gent
legislation is still needed to prevent our whole
commercial and business interests from being
held at the mercy of handful Of reckless and
desperate gamblers.
There are two great tides in our money
market during the year-in the fall and
spring-and these seasons are chosen by the
spectators for stringent market for their
operations The first of April is the great
settling day in the country, when buyers and
sellers, laborers and employers, get together
to make new contracts for the coming
year. Money is naturally stringent about
this time, and hence the attempt to tic
it up is more likely to be successful
now than it would have been few
weeks ago. The explanation Of the present
conspiracy is simple enough Money was
easy and accumulated fast in the latter
part of this winter, and the settlement
OF the Erie questionable impetus
given to the national credit at home
ana abroad by the great revolution