The Elk County advocate. [volume] (Ridgway, Pa.) 1868-1883, 1878-10-17
PANICs.
THEIR HISTORY AND THEIR CAUSES
Some of the Evil Effects of Democratic Far
tisanship as Exemplified in the Past
Shall It be Repeated2

|
the history of the United States Bank up TO the
year 1st9 thus tells the story of the disaster that
befel our trade in that year:
fortunes were wiped out in day, specula-
tive companies, that stood everywhere thick as
shocks in O wheat field, vanished magically,
and shareholders were aghast; suburban lands
and city lots that were to return a hundredfold
dropped TO almost worthlessness. AS ex-
ample of the effect of the panic ON real estate
here an old citizen says that land on Boyd
Hill held at $4,000 an acre dropped to 500; lots
on Fourth avenue held at $4,000 fell to 800;
property in the region of Market street, on
which were good brick houses, only partly paid
for, were wholly abandoned, as property quite
as good could be bought for less than the sums
due on these. But the United states Bank, with
its capital of S35, OOO 600, weathered the storm,
and by furnishing the country again with a
stable currency of uniform value won back pub
lie confidence, aud again compelled the State
banks to go into liquidation, or to raise the
value of the notes TO the standard of the ma
tional bank Notes. This, together with the
temporary settlement of the slavery agitation
by the compromise of 1920, and especially with
the impetus given to home manufacturers by
the tariff of 1924, and the work OF internal i'm
provements, set the country upon its feet once
more
"It is not in man, however, to let well enough
alone, above all when it stands in the way OF
| his political theory. The second charter of the
| bank was to expire in 1886. When the Thirty
third Congress assembled on the I'd of December
in that year, President Jackson said in his mes
| sage that in the interim his Secretary of the
Treasury had ordered the removal of the gov
| ernment deposits from the United States to the
state banks, and he gave as his principal rea-
| son lor This That the bank had used these de-
posits for partisan purposes. The parliament
| tary warfare that followed this action was un-
paralleled for vindictiveness, and is too long
| to be narrated here, even If germane to the sub
| Ject. The constitutional point Involved was
| the old one that Jefferson had con tended for
| VIZ, the power to charter banks was q right
| reserved 10 the states; they alone could sup
| ply a constitutional paper currency. The
| state rights question had come bounding
| to the surface again. This authoritat tive
| recognition of the value and usefulness of
| the State banks, and the importance attached
| to them as government repositories, stimulated
their organization to an extraordinary degree
| Many were chartered to take the place of the
United States Bank, the closing of which was
expected. The State banks increased from 2s2 in
1880 to $50 in 1887. During the same period their
capital rose from Sl45 900, 900 to $780, 900, 900;
their circulation from SOL 000 900 to S1i9 O00 900;
their loans and discounts from 5000, 900, 900 to
Sis5, ,0OO O0O their deposits from $685. 900, 600 to
| S27, ,00O 900. Thus during these seven years the
banking facilities of the country had been con-
sideraby more than doubled, while the increase
| in the capital of the country was small, and
| there was no manifest need of the addition OF a
dollar to the currency. The result of the in
crease of the currency was an unexamp ed
delirium of extravaganza and speculation,
| nf ctrrr
| tive collapse of 1887. Ruin reigned on
| every hand; almost every business man and
| business house in the land was involved in The
| common wreck. Collections We're next to i'm
| possible, and In some States, as notably Missis
| sippi, wholly so. Credit everywhere was de-
| stroyed. There was a general suspension of the
| banks at the first blast of the storm in 1887. In
| 1888 they made q heroic endeavor, and resumed
| payment, but the year following those of Phil
| adelphla and the regions of the south and west
again bent before the storm. The distress was
| pitiful, and during the first two years of the
panic 1T was necessary to import large quanti-
ties of food from Europe. The country that a
| short time before abounded in what IL called
| wealth. and boasted loudly of its many re-
| sources, could not furnish bread to the hungry
| The failure of the banks holding the deposits of
| the government left IL without penny. Con-
| gress was hastily summoned, and Treasury
notes were issued to keep the department going
| until the Sheriff could sell out the share-hold-
| ers OF the defunct banks and recover the de-
posits. Finally the government divorced It's
monetary affairs from those of trade and COM
| merce, and established the Independent Treas
| ury. The disaster was SO complete that one
| cannot point to any exact date when the hard
| times ceased. The recovery was in fact IN the
gradual recreation of the ruined industries.
| THE ACTUAL BANK CIRCULATION,
''Until 1858 the volume of paper money in
| creased slowly, and only according to the actual
| wants of expanding trade but at that period
| specie began 10 gain largely on the volume OF
| paper, and the people, learning nothing from
| the painful lessons of the past, enlarged the
volume of paper In proportion to the influx OF
gold from California, until, in 1851 the circula.
tion reached S214;0O0, 900, which was far beyond
legitimate need, and then came the third grea,
commercial crisis of our history-the panic OF
| 1851. According to Treasury statistics the
| actual bank circulation of that year was S2l4
| IT'S, s22 and inside of twelvemonth ii shranB
to Sl55, POS, 3iI, contraction of nearly S60 OOO
0OO And during the same period the total bank
loans shrank from 1854, 1885, 600 TO S533, 165 OOO q
contraction oil more than $780, 900, 600, WIN ch Of
ltself reveals the suffering of business then.
The crisis was quick and sharp and bitterly
felt; but our ri ch soil, fine foreign market fol
| our cruue prouucllons and the rapid deyelop.
ment of industry under mild taxation, restored
property, and by 1860 the paper circulation hat
risen to s2Ol 600, 900, almost as great as before
the panic. Another panic was imminent then
and was only averted by the outbreak of the wal
and the suspension of specie payment by th,
banks, December 80, 1861, when the govern mem
loans first of $50, 900, 900 and then of s15o 600,
OOO, had been drawn by Secretary Chase,
"Several prominent facts are observed as on,
glances over our commercial history. The frs
OF these is lis popular passion for paper money
NO disaster has been severe enough To teach il.
people the dangers of speculative wealth. Tn,
second is the fact that the longest and cruelis
period of suffering that this country ever en-
dured, previous to the civil war, was broueh
on by political tampering with the currency
The financial question was a leading issue il
the reelection of President jackson. and Ia
had hardly stepped from his high oftica wbei
the panic of 1887 spread dsmay in eyerv house
hold. The third fact is the marvellous recupe
rative powers of the country, as exhibited il
the signal instance-to take only one. nj th
aggregate wealth of the country in spite of tn
desolating panic of 1887, increasing twice a
much during the ten years from 1910 TO 1850 as