, 1879-08-08
FINANCIAL SUGGESTIONS.
uaw to Catrn thS Evils of tho Crcttt SJa-
tenl-Prutcct1nn or 1Sanik"!'ey,oalturs.
10 the Editor oJ The Tribune.

complex forms and methnds Of credit. We
huve adopted every form kn0wn 10 civilized
traffic, und Invented supplemental dcyices to
satisfy tho demands Of our own speculative
emergencies. It penetratcs every deiail Of
trade, stimulating II Will, a stcallly.incrcas,nE
energy, through the vartous pNasos Of healthy
activity, ambitious expansion, dropslcal fnf1a-
tion, speculative fever, insane gambling, cxpo-
sion, collnpse, ruin. With nstontshns peril.
nacity we tcrate arl rettcsatc tl.e dcuslvo stcpa
OF this rutuous formula, without ono SERIOUS
thought nr inquiry concerning moro prudent
aud profitable commercial method.
As an exsra legacy Of cvt,-a sort Of codic
Of calatnities,-our late credit experience hns
la!t m entatlmcnt Of popular lunacy on tic ma
turo and Office Of rca} money and its PAPER rep
rcsontatIvc. This public ha'sucinatIon on tho
subject Of an irrcdccmablo currency and "Fiat"
money has Influenced the action OF Congress,
and seriously iuterfcrcd with salutary measures
for the restoration OF prosperity to tho country,
aud Is the final illusory product Of this dement,
Ing system.
Tile Immense nonoman.ac debtor class, hlnscd
by solf-inscrch., and eoadel 10 desperation at
the collapse OF their paper fortunes, dcmanl
the subycrsion Of all Cur best financial methods
ind institutions, that have ripcncd to public
utility through tho storm Ut war aud most
costly experience Instead Of yielding to thls
lunnt1c pressure for the legal stimulation OF
credit to nN lnstart imitation, the sober sense OF
tho country ought to devise immediate meas.
ures for The reorganization Of the entire credit
system OH a basis OF efficient c;.ccIss and bal.
Nuccs, that will insure Its future control, and
safe, legitimate notion.
Specifically. thrrc ought to hr:
Ftrst-A revision Of tl,e sfnal' or retail credit
and demorallx!nE OF asl Ito forms. III this
brapch Of traae prompt cash.paYmeut ought to
bc tho lnflex!blc rule: nnd perhaps the most
efficient sny for attainment Of that end wnutd
he he repeal OF nl laws for the collection ot
small accountst except for labor performed, and
personal ana professional service rendered.
Then, II scores arc rim. tt must bu ot, the per
sonal chnraetcr a,nl integrity Of the debtor.
Such n ncnsnro would tend to cultivate iuteg-
rity Of character III tratla instead of, m the law
and CUSTOM now do. large litter Of stnai Vices
that nru .pasnperea into Srimes rs t!,e scoue IT
opportun!sv enlusgcs. y IL difficult to conceive
small or retail credits. II The retailer wcru to
soil for casll, llo could buv for cash OF the who'c-
aaier; and SO, oil the war I'D through trade,
satisfaction md proit of ali euuerrurd. y @'
A aetond limitation uf cscdlt ought 10 be I'M
posed by voitl.uE the legal obligation Of ,tu-
secured debts boyond certain reasonable per
rentaeo ot the valuation Of tho tlebtnr's ns-
sets. IN other words, tho same principle OF
limitation Of the right to contract Indebted
ness that our State Constitution imposes on
municipal authority ought to be extended to
restrain neraonal anu cornornte right Of credit
within solvent bounds. It is IN outrage OF pub
lie III we'll as OF private right and prnpruty to
Rl'nw person or corporation to contract oblt-
ghtfous c1uAl 10 The value Of his or Its asscta,-
not to suenk Of swelling aucfl Yo!stmu tn many
times st1c! valtle, ne Is rho currcnt rustom,-a
grAs abuse nf the credit systu.n, A curtalImcnt
OF credit Tint operates so hrncrcntly Oh nlnntc-
ipal purity nntl hunorl as we'll rs oM Tho public
security, rs n,lr constitutional inhibition coufess-
ellp does, may reasonably le presumed pntcn-
tlal of vnstly greater benefits when extended to
Include this rlass OF PERSONS and obligations III
dtcntcd
a further check on the prevailing abuse Of
credit might be fo,lud IN legal prnrtsfon That
foreclosure Except In case Of fraud) shall dts
ctareo tho inoFtEagor against tho further ro-
cnllrsc Of the ntortgaga.ercdltor. Tho effect oi
this would bo 10 reHuird more amr1e security,
nstl limit The borrower within tic solvent pro-
efncts OF cdtt,-tus operating 10 lt,c sllbstall-
tal advantage of both partics In interest, and Ut
tho public ut large.
A fourth uMd more important regulation
ought 10 he he'a1o2tcd rs eNIupleto Qnunrin1 and
commercial conseyyator OF stabiiity, by which nit
hanks Of lcposlt-Nutio',aa and .private-should
na REQUIRED to put n pledge solvent securities
they are now required to do tor il,elr
biIl:crcd!tors. Congress, In tho acs orfanizin.
the .Na,lonat-bankius ssstcm. recognized the
}ustlet hIlu utCEsAlY I'll kIt4 uTlnclpIo IN G pAc-
tial and iuadcauato provision tlsnt hvsrv bank
should srt apart an tnVloiate rcserye.funu of
united States notcs equal 10 aLpcs rcut OF its
curront aepna!ts, for the security OF ta deposit
banks In thclr own vanlta has, In every Instance
II belIuye) nf d bank-iaurr, proved to be
mytl,-io hare been trcatea IA ordinary funds,
md ltsposcl Of In currcat transactions. HIT
The equity Ut tho principle Of security for the
deposltor Is, nevertheless, recognized bv tho
4crtna OF the act: md public policy, rs we'll Us
private right, entttlca him 10 tho same full
measure of security as that ep}oycd by the bill
crat creditors OF thu bank, on tic same basfs OF
equitable 1nycsturs In Us assets, with no Just
ground for preferential dtst!ncton: The fA!lnre
to my tho doposltcredllors oi hauK Ia
ssa eonsaerci ea ~ ei 1eia'toa. ss"s:'ni ana
effects, Us Is tho failure TO pay tic
blll'hold!ng crod!tor. Tic future ot uuul to
pay Its dcpostt.crcdttoFa always creates more or
less OF panic. md run OIL Tic deposits NJ All
elss ba1!ks,-resultlns In u contraction of cretl-
tts aud 2 serious embarrassment, II not dis
astcr. 70 thn public.
The III effects of such failures s0netlga8s eI.
tend to soeial a,lA political consequences. ~ well
as financial ana industrial, Us tlero Gun bs no
question that, from tho several bank -fa!lurrs IN
Chicago tho naas three years. by which Is 900
sorans our soscensto ae !auds t"ga. sa ""sl Wiz
Us ratnpant schedule against tho social ordes,
Ae1tAer lhe puhlta nor the banks themselves
Gun AHofa 10 eontuuo such risks, even though
they igloIe 1he rights md Interests OF tho de-
posttor. But avery prudent consideration OF
,a., p,oslt anA policy ought 70 impo thu banks to
the banks would enjoy lhersby perfect in:
mnulty nEalnat "panIcs y and "ruus," that
now 20 curtall their operations at cHtlca! t!ulus,
ana bold IN tdtnnoss, as . satsty-tund. 90 lar4e
percentage Of their cash.reaourccs.
a further benefit Woull accrue to the banks
oy th9s reinforcing tue public with solid. per-
petual confidence {thg essential life Of ali sue
cessiul bankl'lc) Ia their solyuncy, by throwing
~ s noney 81 TIC enuutry Into taer h1nds for
cut time. and at all Zines, there IL well.founll.
"a dtstrust Of thu entire safety Of teposlt.money
!n bank. lhls IL costided by t1e private dooo.it
Of sl01, ZOO 0oo OF coin aud currency ia tito Sab.
Treasury for "safe" kcepiug. Iisro may 10
an equal amount locked 10 eafe-denostt Grpyers
nId the legendary atockIng,los OF lilo u,alaeu,
Al OF teis vast sum y dsatl p!oporty to lhe pub.
lie, to Tile banks, md to Its individual owners.
A lt!tle well.founded confidence ia tic bauks
would put thta vast hoard OF wealth In their
possession, and through thcnl into benciciai
public USE. FAe amount OF This den.onctIzeI
alli unproductiya capital IL equal probably, to
NJ In tjr ~