, 1873-10-22

10 any hcaltny anu cuou1AH8 eoi''''Ae"A fA"o |
porlty.
LoAN.CERT1F1CATEs IN NEW YORK.
Thoro Is roaBon to bolIoyc, from Now York nd
vices, that tho strong banke OF that city will
bring = p.ossu1o to boar upon tho Clearing"
Houao to abandon tho eystom Of pooling groea"
backs and making Bottlcmonts with certified
checks by tho frat of noxe month. It would not |
be surprising If. in tho failure to bring thi7
about, tho atronger bankb would Secede from
the Oioating- House, and allo" tho othoF banks
to stand or fall on their own inertia. At all
events, 1t Ia evident TINT tho stronger banks
cannot afford much longer to bear tue, .atfa'n
which this system puts upon thern in carry
inR tho Heakor banks; aud, whom tho !
practice is finally abandoned, whether By action
Of tho presont CloAsfnR- Houae or tho with ]
drawal Of the notably stauDoh inssituttons, It Ia
altogether likely that ;Bomo Of tho NO" XosS
banks viii havo to go into liquidation. It docs
not appear that tho amount Of loan-ocrttfoatoa
has boen materially reduced within tho past two |
weeks. Tho bost ndvices indicate that thero arc
now Gao, ,000, 900 Of them. Thor nature Is that
OF make-Bhitt, tho adoption OF which merely !
postponed tho day Of settlement. When the7
shall hare ccasod to DO recognized by tho bank
Ing community, and currency payment shall have
boon resumed by the strong banks, Ill the
bnnka which have not boen able to convert
sufficient amount Of their biliB roceisabio to
meet tho demands for currency that may 10
made upon them will DO obliged to close thoir
doors and wind up their buainess. -.
A brief examination Of the practical working
Of this loan-oertiAoato business will convince
any ono Of the danger to tho strong banks OF
much longer continuation Of tho systoua. II
thsro arc now $40 600 Of loan-certiacstes
outstanding, 1t amounts practically to thia'
Tho strong banks have loaned 10000, 600 to tho
| weak banks. Under tho present systom' certi-
fed chook on any bank in the Clearing House
must DO accepted by overy other bapk IN tho
association. Now, while many Of tHB banks
have boon paying out no money OF any, oonsp-
quouco over their eountors, but meeting oil de-
mands with certified checks, other banks.
stronger in funds and moro consdorato Of tho
rights Of thoir creditors, have sbosn paying out
considerable amounts Of currency: Two OF threo
Of tl1om claim to have mot oil demands with cur
rency. At tho Same time they are forced to ao'
copt 1oan-cortlflcates in payment for the certl-
lea oheoks on other banks, which they turn into
thu Clearipg- House. Tho result iB that tho
whole strain Of tho currency stringenoy ia thrown
upon tho stronger banks, for thoy not orly suf'
fer drain Of curroncy, being tho only
bauks that pay currency, hut st TIM
Hamo tlme, carry the .banks which do not pay
currency. II tho banks Of ample RESOURCES
could afford, in tho inte1estB Of tho general
bnnking fraternity, to sustain this pressure Tor
time; they caunot afford to pro1ong tho practice
: beyond the limits OF their own Rafety and rop"
utat,on,, and TINT limit must BIO rapidly ap
proaching, -.
In addition to the urgent necessity thai
must be felt by tho strong banks for tue
abandonment of tho loan-certihcato systom, tht
demands of tho commercial and mercantile
claasos ii this roapeot IRE ovon moro impora
tive. Thoy nccd t1oir money, and must hav'
1t, or the most Of it they can get. II i
IL invested in fancy stooks to carry epeoulasors
aud the banks that have thus invested 1T arc no
willing or able to got 1t OUT then these seourltie
must bo turned out to .thoir creditors, who WI
realize the most they can aud. stand tho losa
/ Wa do not believe that these demands OF th
/ strpug bankers On tho one side, and OF th
t merchants on tho other, will tper1nit the cor
: tiuuation Of the present practice beyond th
i, close OF October. When it ia dropped. It il a.
i ,most iney!table that aome of tho New Yor
= banke should go down. But 1t 10 botter tha
o this should enaue than that thoy should be sul
It tainea in weakness that promises to got n
}, bottor, and at the expense aud poril {
it tho banks that hre actually strong. III
10 merchants, too, Us d class. can bett'
ia AFFORD to stand the LOSS that will result from tt
1t ueceeeary sacrifice Of the securities turned o'
it to them than to DO deprived much longer Of tt
% monoy really necessary to tue continuation I
their busiuess. The change Of the banka fro
a. lle dobt system to the cash system may III
IN only lead to tho suspension Of nomo Of IL
ID banks, but probably to aono morohntlle emba
in rassments requiring extensions. It is better
In look forward to these contingencies than to
70 surprised and frightened into d panicky re1ep
10 by their occurrence. The bulk Of tho sufo1i1
ho that will be occaslonea BY tho change will
CO confined to New York, and tho sooner tho fal
b. system a exploded the less damage viii be dpn
in In the end. It ~ better for the New York pqoE
DO that the woak banks should lnd their Own ley
st. -''' 1zt-=~%z---E.9
m THE CITY FOB CONVENTIONS.