The daily phoenix. [volume] (Columbia, S.C.) 1865-1878, 1873-09-28
COZ 4: ME:BE s u G,
Sunday Morning September %. 1873.
BankinE Troubles,


BsakinE Troubles, .-
In former days. when the country was
full Of State banks. it was rare that peo.
pie in a panic withdrew their deposits.
The danger to the banks was from their
own notes OF circulation. They were
collected and brought back upon them
80 30 redeemed, in goid. The people
considering Aa danger. were disposed
to sympathise with the banks. and make
common,o ,oause with them. The broker
who gathered up the bank-notes and
demanded their redemption in gold at
the counter olshe bank was regarded by
the citizens "a little better than a free
booter or robber. It was this demand
for the redemption of their notes that
caused banks Ito suspend. Our new
banking system Is based upon the ma.
tional tredit,:oud the. notes handed to
the; banks by the Government for the
Government bonds deposited by them.
all have the same credit and ara received
indiscriminately everywhere. They can.
not be very readily gathered up and as
sorted fer rnnson banks for gold, even
il gold we're pow paid by them. But
We have seen, what was not generally
anticipated, that there is great scarcity
of bank-notes, and as they are the me-
dium OF payment Of debts, the banks
find as much trouble from their scarcity
as they found from the acarcity of gold
in former days during specie payments.
This scarcity Of notes is produced by
several causes:
FIRST. The general credit OF the ma.
tional currency dihuses it more widely
than was possible with the currency OF
the local State institutions of other
days.
SECOND. At particular seasons when
the crops are being moved this currency
is required in large quantities in the
principal producing regions of the coun-
try, Whlch lncfeases scarcity elsewhere
THIRD. At suoh seasons, It has been
favorite trick Of the millionaires Of the
great. metropolis to look up few mil
h0ns OF currency, in order to eugender
feyerishness In the stock and gold mar
ket. and profit by the vibrations OF
values under the. iokleness and fears oi
dealers. This also produces a pressure
amongst moneyed institution and forces
oollaterals at public sole, causing sacri.
fees and always more or less disturb
auce. sa-tl'
FOURTH. At snch. time. panic ex-
cites depositors tol-Withdraw balances.
and they. or many d them. hiding away
bank-notes for an opportunity, they be-
come still more scarce in the market.
It is easy to seetas the Richmond
Dispatch suggests how panic under
suoh state OF things may cause gene
raj crash. The bes. banks ever invent
ed were not proof against sudden and
general demand from depositors. The
Bank of England. it is stated on good
authority. seldom keeps more than
eleven to twelve per cent. Of its liabiii-
ties in cash reserves: and Mr.. BaRehot
says that the London and Westminster
Bank-the 'hrst OF the joint stock
banks in public estimation"-keeps
only thirteen per cent. OF its liabilities
in cash. So. after all, that most strik.
ing trait OF oivilization-faith and trust
amongst men in one another-is the
main reliance OF banking as it is of com.
merce and Of all the civilized pursuits.
OF course. there are many badly con-
Quoted banks; but panic sweeps both
good and bad, and this is the dreadful
nature of the panic. Banks are them.
selves check upon one another. and in
time will weed out the rotten ones.
But panic sweeps away the detectives
and the delinquents. So it may we'll be
concluded that sound institutions have
been forced to suepend by an unreason-
able public opinion, to the general and
serious injury of the public. These ex.
amples only increase the reasons that
should cause well.ordered aud solf-pos-
sessed communities to felicitate them
selves for having avoided the rock upon
which others have 30 fortuitously split
and wrecked themselves. Tho Dispatch
says:
os