The Rock Island Argus. (Rock Island, Ill.) 1877-1885, 1878-02-09

Tor meeting dis enlarged engagements, |
realizes increased profit by mourning in
creased risk. Business becomes more
hazardous as credit is substituted for cash.
As an increase in the efficiency of the
circulation, caused by advances from de-
posts, has the same effect upon the mar
kets as an increase In the numerical
amount of the circulation, so a withdrawal
of deposits has an effect upon the markets
identical with that which results from q
diminution in the amount of the circula-
ton. Hence as the system of discount
banking extends, the stability of trade
becomes more and more dependent on the
character of the bankers, and in the sound
ness of the principles on which they scon-
duct their business. When they conform |
to the rules Of legitimate banking -when |
they make their advances upon none but
Immediately available securities - and, |
above all, when they resolutely maintain a
due proportion between their reserves and
their advances, they confer upon the coun-
try the most important advantages.
On the other hand, when bankers depart
from the rules of legitimate banking, when
they endanger their own stability and the
security of the funds entrusted to their
keeping by failing to maintain due pro-
portion between their reserves and their
advances-when they make advances on
securities not Immediately available-when
they speculate in the public funds, or in
stock jobbing enterprises-and,st still furth-
er. when, disregarding foreign exchanges.
they cause the aggregate amount of cur
rency, and of the auxiliary money repre-
sented by book credits, to exceed the
amount at which the law of equilibrium
would maintain the circulation were there
no banks of discount but merely banks Of
exchange and deposit-when bankers thus
abandon their duty to themselves and TO
the public, they infict upon the country
the most serious injury, render more sud-
den and severe that contraction of the cir
culation and of credit incident upon pro-
tracted drain of specie, intensity pressure
into panic, and excite serious doubts in the
minds of thinking and intelligent observers
whether the advantages of discount bank
ing, even when conducted under metallic
currency, balance the evils it inficts.
The unprecedented number of the fail
ures among the savings banks of the coun.
try, not only in the large commercial
centers but also in the smaller towns and
secondary places of business, have inhict-
ed widespread and, we had we'll nigh said,
an irreparable injury to the cause Of
healthy banking, or a public sentiment
favorable to any form of banking. The
doubt which has always existed in the
minds of many IN regard to the efficiency
or safety of banks and their service in the
business of the country must necessaril!
be greatly increased and strengthened b.
, the disclosure of the condition of tn
large number Of failures among banks ant
kindred institutions during the past year
= especially, when the alarming dispro
n portion of assets and liabilities in mos
: cases is taken into the account The ger
eral principles and rules of discount bank
q ing are fully understood. apd are, by a
= bankers worthy of the name, strictly acte
Il on.
D The theory is essentially this: that bank
? ers shall be remunerated by advancing c
g loaniDg upon interest portion of the moi
ey entrusted to their keeping; that tt
= other portion which they retain in the
10 vaults, shall be maintained at an amour
r sufficient to pay at call all the expecte
10 and probable demands of their deposition
G and that, as further security to their d
r. positors, the portion of their money en-
Il ployed as banking capital shall be advance
,r only for short periods and upon availab
d securities, 1t is upon the implied conditio
g. the expectation. and the trust that these pri
re ciples shall be duly acted upon, that mon'
Of is deposited in banks. The banker wi
ot deliberately departs from them yiolat
an implied contract, and commits breat
y of trust. When he has departed fro
il them to an extent which compels him [
s, stop payment-when his deposits have be-
ct Iost-when he has reduced thousands.to pc
r ury, and has thrown other thousands o.
of Of employment-is he to be held guiltles
8. Are the scales of justice held even, VIII
er the petty thief. or the forger of ten dc
ee lar note, is treated as felon, and when
,e specializing banker, who. by such violatio
Is of implied contracts, and by breaches
Id trust, has appropriated to his own u
l. the money Of his custOmers-to the amou
q of hundreds of thousands Of dollars obtai
K from Court of BANKRUPTCY full-liqui,
at alton of his debts, and receives from syu
or pathiziny friends and half ruined credito
BY the means Of recommending his disrepu
G. able and mischievous career2
IS, So long as the scales of justi
On are held in this manner. and 80 long
ut there is no supervisory power lodged els
o. where than in the discretion of bankers
o. Boards of Directors to maintain the prop
re relations between bank advances and bal
be reserves, there is no safety for the publ
I'd and no guaranty against the oppression al
ut injustice of speculative and reckless expa
I'd sion and contraction at the will and plea
re ure of capitalists and the larger BAN
c. at commercial centers.
ne
- The following record of real esta