Essex County herald. [volume] (Guildhall, Vt.) 1873-1964, 1873-12-13
The Currency Question.

The report Of the Controller of the Currency
has the following with reference TO the panic
Of 1873:
Tne monetary crisis OF 1873 may be said to
have had its beginning in New York City on
Sept 8, by the failure of the Warehouse Secu-
rlty Company and of two houses which had
left tneir regular business 10 embark in enter
pIises foreign thereto. which were followed on
the 18Th by the failure of number OF leading
stock broker firms In New York, Tue suspen-
sion OF currency payments followed, aud was
at first confiued to Oanks OF New YORK City, but
aiterward extended to other large cItIes be-
cause tue New York banks could not IespOud
to the demands OF their correspondents In
those cities, and these III turn could not re-
spond to the demands OF their correspondents.
The exchange on New York, which would 9th
erw1se have commanded a slight premium,
was at q discount, and to a considerable ex.
tent unavailable. The suspension of the banks
in ether leading cities almost without excep-
tion followed. ana their partial or entire sus-
pension continued for forty DAYS, until conf
dence was III a measure restored by the re-
sumption OF the New York City banks on the
first day ofNoVemDer.
The harvest was nearly OIL quite complete,
and the bins ana granaries we're full to over
flowing. The manufacturing and mining
interests mad also been prosperous during the
year. and there was good promise that the fall
trade, which had opened, would be as large as
during previous years. The value OF the ceTe-
as, potatoes. tobacco. and hay, for 1872, is esU-
mated by the Department of Agriculture at
81, ,324,3S5 900. Au estimate based upon the CEN
sus returns of 1869 gives the probable aggre-
gate value of marketable products of industry
that year as S4,036 900. and a similar est-
mate upon the same basis and upon the returns
to the Agricultural Department, gives an lL-
crease of ST. 798 600 600 tor 1878 over the amount
for 1868.
The immediate cause OF the crisis is appar-
ent. Tue money market had become over
loaded With debt, the cost of railroad cOnstruc,
ton for i've wears past being estimated to have
been 81 100000 900, or about S340 900 900 annu-
oil Iu W am
species Of property, State, city, town, manu-
featuring corporations, and mining companies
had been sold IN the market. SuCl bonds and
stock had been disposed of to a considerable
extent III foreign markets, ana as long as this
continued, the sale Of similar secur ties was
stimulated, ana additional amounts offered.
When the sales of such securities could no
longer be effected abroad, The bonds of rail-
roads and otner enterprises OF like nature
which were in process OF construction, were
thus forced upon the home Idrket, until their
negotiation became almost impossible. Tue
bankers OF the City OF New York who were
bur1ened with the load could not respond to
the demands of their creditors. The numerous
holders of similar securities became alarmed,
and the panic soUn extended throughout the
country.
Many measures of reform are proposed in
order that the lessons of the criSls may not be
lost, and others be led hereafter to commit
similar errors. Unity OF action among the
leading courts of the great Clues Will do more
TO reform abuses than any Congressional en-
actment, for unless such corporations shall
mite and insist upon legitimate methods of
conducting business, the laws of Congress In
reference thereto will be likely soon to become
imperative, sucn enactmenLs be observed IN
their true spirit by the few, while the many
eyade them and thus invite repetition OF
similar disasters. If, however, the banks are
dlslnchued to unite for such a purpose, the
legislation required IF CONGRESS will be sucn
as will induce associations outside o! the CITY
of New YORK TO retain IN tnelr vaults sucu
funds as are not Deeded at the cUmmerCiai
centre for purposes of legitimate business.
The Controller IN his statement says tldt The
whole amount of National Bank currency, le-
gal slender notes ana fractional currr ncy IS
sued up to October 18Th was S756,3l5,l35 No
vpmher 1st the amount mad increased to $780,
161 239.