The Leavenworth weekly times., 1878-07-04
TFor the Leayeuworth TEES.
THE MONEY. AND COLLATERAL.
QUESTIONS.
By WM. VI. HOWSLEY.

Mr.. EDITOR With your consent, | pro-
pose 10 furnish your readers with few
facts and reflections upon these absorbing
questions Of the day. For these facts and
reflections, gathered through long life
of personal observa alton and experience, /
will, As basis for the remark | wish TO
make, call attention to the State OF Ken
lucky, the STATE OF my birth. The lessons
taught by this State upon the money ques-
tion, will, Ihiuk, furnish pretty clear
index to the condition OF any other State, or
all the States united, under similar circum-
stances. l am now in my S0th year, and
have passed through three of those scenes
called the money crises of the country be-
fore the one row upon us.
The first OF these remembered by me had
its most noticeable beginning in 1871, culmina-
ting in 1919, with its necessary results up
TO 1924.
| In 1877 the legislature in its wisdom.
came to the conclusion that there was not
money enough in the country TO meet its
business wants, and for remedy whereof, so
far as Kentucky was concerned, they re-
solved to make large addition to the pa
per currency, bottomed upon the faith of
the State. Consequently they passed bill
chartering foriy-seven banks in addition to
the banks already in the Stste. These last
were styled Independent bdnks. The charter
OF these independent banks required them
| to have in their vaults TO redeem their own
paper only the notes OF the bank of Ken
lucky or any OF its branches, allowing them,
as well As | now recollect, to issue and put
into circulation three dollars for one of the
amount of Kentucky paper subscribed TO
the capital stock of each bank SO chartered
1t is doubtful whether anything like the
amount oi State bank paper subscribed was
ever paid into these independent banks.
There is, however, one thing quite clear, |
that is, there was not one dollar OF gold or |
silver in their vaults, for their charter did |
not require either. Thus the whole affair |
was virtually nothing more nor less, than |
an unprecedented imitation OF the State
bank paper. which before the erection of the |
forty-seven new banks was at or about par
In the course of the Summer of ISIS all /
of these forty-seven banks went into opera
ton. Even the little town of Lebanon, of
which i was then a citizen, not being 20
much as county seat, had one of these
banks. As consequence of this inordi-
nate number of new banks, the whole
country was literally flooded with their
currency. The people, OF a large majority
OF them, seemed TO think that now every
man, who wished to, could soon become
wealthy, seeing that money was plenty and
easily procured, there was nothing to do
but to make the effort and his fortune
would soon be made.
Men who before could not perhaps, COM
mand thousand dollars, would be deem
ed sufficient security, and draw out from
two to three thousand dollars. As the
surest and quickest way to make a fortune,
selling goods seemed TO many as the short
est road. Thence hundreds, | might say
would forthwith start East,
mostly to Philadelphia, for goods, paying
down some three or four thousand Of this
independent money, and getting some four
or five thousand dollars more on six
months time. Thus the whole country
was flooded with goods. Men did not hesi-
tate to buy with unusual liberality, seeing
that money was 20 plentiful and like
ly, as they thought, to keep so.
But the home merchants had hardly I
got fairly settled in business, till the paper
paid IN the last, TOR goods, began to pour I
into the State for RECEPTION, first in Ken S
,uckv paper, and next in gold and silver, $
As that was what the State bank and c
branches promised to pay. These Inde- s
pendent banks, together with the State L
bank and her branches were thrown into I
The widest confusion and panic. The /
principle of self-preservation seized upon
Every bank, and each to save itself would
bounce upon its neighbor. A continual
'un upon each other Was thus kept
lp until within twelve months after COM I
nencing business, there were but seven of +
he forty-seven independent banks that had b
,ot becomes things Of the pest They blew c
lp one after another, in quick succession '
Ike row of powder mills. lie
What next?-The notes given East, ON iv
ime ID nov fallen due, and the couse- 4
y ek the co1ntg vss literally II