New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1873-10-07
FINANCIAL INDEPENDENCE.

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where. This is IN object SO desirable thu
no doubt the banks themselves woul
eagerly catch at any plan which woul
insure them against such casualties. Tha
a system of banks all on safe line {
discounts should lie compelled to limit il
customers and the community to mer
market money is q monstrous contradit
ton. We can not agree with conten
porary that this calamity is owing to
redundant paper currency. 1. The loo
up of the banks is accounted tor by tn
large amount of stocks held as collaterals
2. The currency was within twelve o
thirteen per cent Of par. and still main
tains that relation. No redundant cur
rency could produce distrust when it hat
so far corrected its own depreciation, ant
when this improvement was maintained il
the face Of panic.
To constitute New Orleans 4 money cen
ire independent Of others. at least to the
extent Of her own circulation. is The
problem. 4 very intelligent correspond
ent-one, we may remark. as intimately
| connected with al monetary transactions
! based on real estate as any in our city. has
treated this problem in communication
published in another column. 1t is his
| idea that there should be q board Of COM
| missioners appointed to represent ths
| banks: that they should be furnished by
these institutions with the means 20 pur-
chase sufficient amount Of gold TO pro-
tect the city circulation. This the CORE
sponden. connects with proposition to
hold our cotton for gold exclusively. We
shall leave these proposals to the consid-
Grafton of our sagacious readers. There
can be no question as to the policy OF
adopting such mode of trade. We will
not here awaken discussion upon the
practicability of enforcing such system
of purchase and sale. we should be too
much interested III its success TO interpose
objections to the experiment.
We prefer. like most other financial
practitioners, to prescribe our own pana-
cea FOR the disorder. With us. the con-
nection between our own suspensions and
that of Eastern banks proceeds from the
the fact that our banks prefer discounting
distant to domestic obligations. The pur-
chase Of exchange by a bank is undoubt-
eply legitimate transaction. 1t is very
profitable branch of banking. and, there
fore. naturally turns the resources of the
bank into that channel. Now. if We sup
pose system of banks to accumulate all
their credits in Eastern or foreign institu-
:ious. We may very well see why they can
not substitute or render them available at
any moment or emergency. For just
when our banks would like to draw or sell
sight exchange on their Eastern credits.
the debtor institution may no. be paying
out at all. Thus ouc banks may be COM
PEELED to suspend. not because. as said by
a contemporary. ''the people do not pay
their notes. but because 1he banks them
selves caa not Withdraw their deposits at
the East.
Now, we neither declaim against spa.
per money" nor broker-shop banks. nor
do we expect any money dealers TO con-
duct their business on any but business
principles. But. assuming the transfer Of
an undue proportion Of our banking capi-
tai TO points whore These credits can be
sold at premium. We do not hesitate to
Soy il would be fox the interest OF the
banks themselves that larger proportion
o. their capita! should be kept a; home.
10 illustrate: Suppose the line OF dis.
counts on capital deposits Of a bank
to one million five hundred |
thousand dollars. If nj this sum be in
vested il exchanges. it is plain that. upon
an Eastern suspension. our banks can
neither coilec. Eastern balances in curgen-
ry. nor can they sell exchange on Europe.
It the East. for currency. Sup |
pose, however. line Of discounts
adopted which would keep at home
II the hands of mercantile and mechan-
cal enterprise at least as much capital as
would cover the deposits. We haze
Explained that bills receivable are not
afc resource to cover Il call fer deposits.
ut they would be Il resource pro !o'te,
nd would aid greatly in relieving the
wants Of the public. lbccause each of
hesc domestic debtors. anxious to pro-
ect his credit. would import the currency
/ any COS: to NEE: his obligations in
'ank. and the concurrent resources of
hose debtors could bu. attract to our
anks u larger amount of currency than
be banks themselves could command.
We continc ourselves 10 the interests of
he banks. which we conceive the only
egi.;m1te point on which We can bas. an
preal to them. l. may be granted that
he discount o: domestic negotiable paper
;ould 40: he as profitable ~ simia. in
cs;lUent in an Eastern .. .,rvi"n accept
nee. Still it is safe:
!. Because domestic securities can he
etter investigated and assured than for
ign securities.
=. Because such 4 line Of domestic dis
Ouu!s. being based on domestic trans
cticn, ana no. liable to complication !
nth .o:eigi Suspensions. can be better
cmmanded whlu needed to lAak. good
eposi:s.
We have treated these domestic dis
cunts in the nat'.rc OF Il currency reserve.