Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1878-04-10
Forty Years Ago.

Forty Years Ago.
The experience of the country is full OF
the evils of an inflated and irredeemable
currency. We are only treadng in paths
that our fathers trod before us. in strug-
Cling with inconvertible paper and its de-
moralizing and damaging effects upon the
public and business. The New York
Tribune briefly reviews the financial sit
uation forty years ago, in an article which
presents pretty good mirror of the times.
AFTER the refusal of the United States
government. in 1888" says the Tribune,
ito re-charter the United States Bank the
State ofPennsylvania by special enactment
continued its existence. The other States
OF the Union, following that example,
rapidly increased their banking capital, the
local banks being made the repositories
of the United States government funds and
thus supplied with additional means for
extended credits. Prices everywhere adj
vanced with surprising rapidly, and all
kinds of speculation ensued, until there
was nothing too dear to buy, and no en-
terprise too wild to engage in. the banks
themselves leaving their legitimate bust
ness to deal in merchandise, stocks and
bonds. Production was thus everywhere
stimulated. Cotton, then the principal
export of the the country, was in exces
eiva 1anand anI
q day. Suddenly all this seeming pros.
perity was followed by bitter disappoint-
ment. Foreign creditors demanded paw
ment. and the balance of trade, be ng
largely against US, Am, rican stocks and
bonds could no longer be negotiated
abroad. Cotton, from over production.
became drug in the home and foreign
markets. and short grain crop precipilat-
ed the catastrophe. Foreign bills returned
unpaid. the English banking-houses in
volved failed. and in 1887 all cur banks
suspended specie payments. Business
was paralyzed. American securities were
almost worthless. Real estate was of
very little value as an available asset and
the national government itself found its
funds deposited with the banks for the
time locked up.
Owing no public debt however, and
having to meet only the current expenses
of an economical administration. the gov
ernment soon got its affairs on sound foot
ing. and Immediately cut loose from the
banks as fiscal agents, establishing, in
stead, sub-treasuries of its own to trans
act its business in gold aud silver curren-
cy only. The burdens OF taxation ON the
public were, therefore, very light. As
for the banks, except upon the seaboard,
they we're found TO be hopelessly insol-
vent. and had to be wound up with almost
total loss to bill-holders. Philadelphia
bank notes were at II per cent. discount
from those of our city, while the latter
were about the same discount from specie.
The public could no longer endure this
condition of financial affairs, and general
discomfort ensued. The contrast between
the transactions OF the government, all
10 specie, and that of the banks. was so
great that public sentiment demanded
either that they should redeem their de-
precialed paper without further delay or
wind up. Political parties also demanded
this change, and the banks still existing
resumed specie payments without serious
difficulty or disturbance. Habits of econ
omy were formed, and prosperity steadily
returned. The adherence of the national
government through this period to a gold
and silver currency had great and
wholesome influence on events. At this
time we are suffering from similar ex-
cesses, and ii is well thus 10 review the
past and to gather wisdom from its ex-
perience."