Evening star. [volume] (Washington, D.C.) 1854-1972, 1873-12-01
REPORT OF THE CONTROLLER OF
THE Ct RRENUY.

Z The report OF the Controller of the Curren-
cy shows that curing the last year IS banks
have been organized, II have failed and q gone
into voluntary liquidation, leaving l $50 in ex-
istence November l, 1873. The apportionment
Of the currency allowed by law, 1854 900 900, is
as follows: Eastern states, SIG 1855 $50; middle
states, Sl2i Cos l39; southern and southwestern
states, 3S, loo ,30s western states, S7S 49, Jas;
Pacific states and territories, al ,g2i ,6SS.
The Controller renews his recommendation
that the law be so amended that national banks
may be organized without circulation, upon the
CeIosit of $40 OCO of United States bonds with
the Treasurer, instead Of the deposit of one
third OF the capital paid up, as now required.
He also recommends that banks already organ
lied without circulation may be authorized to
Withdraw the bonds now on deposit In excess OF
$4,000, and that banks desiring TO reduce their
circulation may deposit legal-tender notes for
that purp0se and withdraw proportionate
amount OF bonds.
THE PANIC OF 1873.
Inc monetary crisis of 1873 may be said to
September s, by the failure of the warehouse
security Company, and of two houses which
had left their regular business to embark In en-
teTprlses foreign thereto which were followed
on the 18th by the failure of large firm of
Stockholders. On the 18th and 10Th two of the
largest banking houses in the city, we'll known
throughout the country, which were Interested
In the negotiations of large amounts of railroad
securities, also failed; and On the Goth of the
same month the failures of the Union Trust
National Bank of the Commonwealth, and
three other well-known banking houses were
announced. on the same day the New York
Stock Exchange, for the first time in its exist
ence, closed its doors, and they were not again
opened FOR period of ten days, during which
period legal-teDder notes commanded a pre-
MUM over certified checks of from One-fourth
OF one per cent. to three per cent. An active
demand for deposits commenced on the 18th,
and increased rapidly during the 18th and 10th,
chiefly from the country correspondents of the
rat II Pnvsfin staH 70.
extent, "csling back their deposits in a me-
dunn never before received" that the reserves
or the banks were alarmingly reduced.
The "call loans" amounting to more than
sixty millions of dollars, upon which the banks
relied 10 place themselves in funds in such an
emergency, were entirely unavailable, because
the means OF the borrowers were, to q great ex-
tent, pledged with the banks, upon the sale OF
which they relied 10 replenish their funds.
These collaterals in ordinary times could have
been sold, but at that moment no market could
be found except at ruinous sacrifices. adthere
been a market, the payments would have been
made in checks upon the assoc lated banks which
casb.
The suspension OF currency payments fol-
lowed, and was at first confined TO the banks of
New YORK city but afterwards extended TO other
large cities because the New York banks could
not respond TO the demands of their correspond
ents. The Immediate cause of the crisis the
Controller construes as follows:
The money market had become overloaded
with debt, the cost OF railroad construction for
five years past being estimated to have been
slt00, 600 600, or about 1910, 900 900 annually;
while debt based upon almost every species OF
property, State, city, town, manufacturing cor
poratlons, and mining companies, had been sold
III the market. Such bonds and stock had been
disposed OF to considerable extent in foreign
markets, and as long as this continued the sale OF
similar securities was stimulated, and additional
amounts offered. When the sales OF such sacu-
rites could no longer be effected abroad, the
bonds of railroads and other enterprises of like
nature which were in process OF construction
were thus forced upon the home market, until
their negotiation became almost impossible.
The bankers OF the city of New York, who were
burcened with the load, could not respond to the
demands of their creditors, the numerous hold
ers OF similar securities became alarmed and
the panic soon extended throughout the coun-
try.
degree, be attributed to the intimate relations
of the banks of the city of New York with the
transactions of the stock board, more than one
fourth, and IN many instances nearly one-third,
Of the bills receivable of the banks, since the
late civil war, having consisted of demand loans
TO brokers and members of the stock board,
which transactions have tendency to impede
and unsettle, instead of facilitating the legiti-
mate business interests of the whole country.
Previous TO the war the stock board is said to
have consisted of only one hundred and fifty
members. and Its organic principle was strictly
commission business, under a stringent and con-
sentative constitution and bylaws. The close
az the war found the membership of the stock
board increased to eleven hundred, and COM
posed OF men from all parts of the country, many
Of whom had congregated In Wall street, adopt
Ing for their rule of business the apt motto of
Hora,e e, Make money; make IL honestly If you
can; at all events make money"
INsoLvRNT BANKS.
The report then goes on to show the number
Of insolvent banks for which receivers have
been appointed, which include the First Ma
uonal OF Washington. ID. c., and says: The
failure Of oil these banks may be attributed to
the criminal mism cement of their Off GERS. or
TO the neglect violation of the act on the part
Of their directors. The officers of two Of these