Juniata sentinel and Republican. [volume] (Mifflintown, Juniata County, Pa.) 1873-1955, 1878-10-09
PANICs.
THEIR HISTORY AND THEIR CAUSES.
Some of the Evii Effects of Democratic Par
tisanship rs ExempfAed in the Past
Shall 1t be Repeated?

the various financial panics which have oc-
CURED in our history, and after reciting brieny
the history OF the United States Bank up 10 the
year lss thus tells the story of the disaster thai
befel our trade In that year:
Fortunes were wiped out In q day, specula-
tive companies, that stood everywhere thick as
shocks In a wheat field, vanished magically,
and shareholders were aghast; suburban lands
and city lots that were TO return hundredfold
dropped 10 almost worthlessness. As an ex-
ample OF the effect of the panic on real estate
here. an old citizen says that land on Boyd S
Hill held at 5000 an acre dropped 10 sl00; lots
| on Fourth avenue held at 5000 fell 10 Si0o;
| property IN the region of Market street, on
| which were good brick houses, only pai lily paid
| for were wholly abandoned, as property quite
| as good could be bought for less than the sans
| due on these. But the United States Bank, with
its capital OF Ss5, 600, ,OO0 weathered the storm,
and by furnishing the country again with a
stable currency OF uniform value, won back pub
lie confidence, and again compelled The State
| banks to go into Liquidation. or TO raise the
value of the notes 10 the standard of The ma
tioual 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
4
provements, set the country upon its feet once
| more.
| UNPARALLELED FOR yINDICTIvENEss.
| at is not in man, however, TO let well enough
alone. above all when il stands in the way OF
| his political theory. The second charter of the
| bank was to expire in 1896. When the Thirty
| third Congress assembled on the ID 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 for 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 germa1e TO the sub
ject. The constitutional point Involved was
the old one that Jefferson had contended for,
viz. the power to charter banks was a right
reserved 10 the States; they alone could sup
ply constitutional paper currency. The
State rights question had come bounding
10 the surface again. This authoritative
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
y A2ttA Ailt Cluslus Oi WHICH was
expected. The State banks increased from 2s2 in
1880 TO 60 in 1885,. During the same period their
capital rose from sI45 900, 600 TO $780, 900. 600;
their circulation from sol 600 600 TO sli9 OOO 900;
their loans and discounts from 500, 600, 900 to
Sass OO0 OOO their deposits from $50, OOO, 900 TO
sl2I, 200, coo. Thus during these seven years the
banking facilities of the country had been con-
siderably 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 unexampled
dellrium OF extravaganza and speculation,
in the midst OF which came the destruc-
tive collapse OF 1851. Ruin reigned on
every hand; almost every business man and
business house in the land was involved in the
common wreck. Collections were next 10 i'm
possible, and in some States, as notably Missis-
sippi, wholly so. Credit everywhere was de-
stroyed. There was general suspension OF the
banks al the first blast OF the storm in 1881. In
1888 they made a heroic endeavor, and resumed
payment, but the year following those of Phil
adelphIa 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 II was necessary to import large quanti-
ties of food from Europe. The country that a
wealth, and boasted loudly of its many re-
sources, could not furnish bread 10 the hungry.
The failure OF the banks holding the deposits OF
the government left il without a 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 its
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 1853 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 s21i, 600, 900, which was far beyond
legitimate need, and then came the third great
commercial crisis of our history-the panic of
1851. According to Treasury statistics, the
actual bank circulation of that year was s2l4,-
rs, SD, and inside of a twelvemonth il shrank
to sl55. 20s 34i contraction of nearly SO, Co.,
600. And during the same period the total bank
loans shrank from s6si 80. 600 to S5S3, le5 900,
contraction of more than $50, 600, 900, which of
itself reveals the suffering of business then.
The crisis was quick and sharp and bitterly
felt; but our ri ch soil, fine foreign market for
our crude productions, and the rapid develop
ment of industry under mild taxation, restored
property, and by 1sGO the paper circulation had
risen 10 S20I, 900, 600, almost great as before
the panic. Another panic was imminent then,
and was only averted by the outbreak of the war
and the suspension OF specie payment by the
banks, December 30, 1861, when me government
loans, first of $50 900, 600 and then OF $50 OOO
600, had been drawn by Secretary Chase.
''Several prominent facts are observed as one
glances over our commercial history. The first
of these is its popular passion for paper money.
No disaster has been severe enough to teach its
people the dangers OF speculative wealth. The
second is the fact that the longest and crnelist
period of suffering that this country ever en-
dured, previous to the civil war, was brought
on by political tampering with the currency.
The financial question was leading issue in
the re- election of President Jackson, and he
had hardly stepped from his high office when
the panic OF 1881 spread dismay in every house
hold. The third fact is the marvellous recupe-
rative powers of the country, as exhibited in
the signal instance-to take only one, of the
aggregate wealth of the country, in spite of the
desolating panic of 1851, increasing twice as
much during the ten years from 1910 TO 1850 as IL
did during the ten years from 1850 10 1860. -