, 1881-11-20

years is too long tor any war to WORK DESC
!; lntiou, und the fate OF $500 worth of Con-
gressional documents is not sufficient
! ground for raking up the embers OF an
| ancient feud.
SIGNIFICANCE OF THE LATE BANK FAIL
! UhLS.
The suspension of the million-dollar Pa
; citic National Bank OF Boston and the em-
: barrass.l,ent Of the Central Bank Of the same
t city. following shortly upon the future OF
! The Mechanics National Bank of Newark,
/; n. j., denote Il shrinkage in values which is
/ anaturai reaction from overstrained specnla-
!. tiou. This circumstance has a broader sig
: nlticance and more important bearing on
! business affairs than the Immediate conse-
! Yuences to Stockholders and depOsitors.
f, Whether the Mechanics Bank of Newark
I; was Quilted in order to carry morocco
leather manufacturing firm which had
extended its business far beyond its
resources, or to crafty its Cashiers
inclination to speculate in Wall street.
and whether the suspension of the
Pacific Bank Of. Boston was necessitated
BY the overdrafts of Il single deposition or BY
gambling iii Stocks, the result in both cases
!; was due to the contraction Of the last two
months, which is the rebound from extraya-
gaut aud unreasonable speculation. The
universal tendency to rush..in and buy secur-
tiles and commodities Of all kinds, and to
;; strain individual and corporate credit III
order to purchase to Ill extent largely III cx-
cess uf the power to pay. led to top-leavy
prices. and thus to tumble which has borne
; down upon some Of the most reckless specu-
lators and involved their hackers. %
One Weeks, 4 stock-broker, is said to have
exhausted the resources of the Pacific
| Bank to degree that made suspension nee
essary. This operator is represented as
carrying about $4,0oo,000 Of stocks on 4
margin Of a small fraction of that amount,
and apparently drew from the Pacific
Bank nearly the whole OF his margin. The
shrlnkage III speculative stocks during the
past few weeks has practically exhausted his
margin. and, OF course, he could not meet
his liability to the bank. Probably other
operators were carried by the bank in like
manner, and similar shrinkage in the
walercd stucks helped to dep!ete the assets
An oyerstraln Of credit is sure to lead to
disaster s0uner or later. Individual cases Of
this kind are constantly occurring in the
very best of times and among the prosperous
communities. 1t is OWING to the fact that the
Initiation Of credits had become very general
that reaction set i'll OIL all sides about the
same time. and overlook and swallowed up
tEluse who had got i'll beyond their depth
The revival Of prosperity during the past
,1.-on .a;o- fho
variety of new investments, and the tempta-
tion to make money rapidly by speculation
are circumstances which have led thousands
of men to risk more than they had. As the
lambs tiocl1ed in to buy bonds, stock, grain.
provisions, and everything else which is sold
On 1narains the prices went up; the advance
was continuous until the spectators under
took to realize on their fictitious profits, and
other unfayorablo conditions presented
themselves. The graln-buyers in the
West began to find that, though the
American crop was short, there was
Il surplus Of Russian, Californian, and Aus
traian wheat to supply the foreign demand,
and that there was no call for the wheat of
the Northwest at the extravagant prices to
which. speculation had advanced it. Stock
tatiUiAAE III AFNH A. " a AGNC4FCA O. o1oAh
from the assault OH President Garfield which
was sufficient to disturb public confidence.
The spectators who had made profit
sought to unload their stocks, and decline
set in which has gone OH more or less steadily
ever since. As margins began to waste away
under this decline there grew up more
desperate demand for money, rates Of inter- |
est advanced. the supply Of money became
scarcer, many of the speculat0rs were driven
to the wall, and such banks as were most
deeply involved with the speculative class
were weakened. 4 few OF them have been
forced into liquidation.
We cannot regard the failure Of such In
stitutions as the Mechanics National Bank
Of Newark and the Pacific National Bank Of
Boston in the light Of public calamities. It
is not unlikely that good many other banks
throughout the country are complicated with
the speculators, and in all cases where their
capital has becn seriously impaired it is to
be hoped that something shall occur to force
them to wind up their affairs 1t is in every /!
respect better that unsound financial institu-
tious, involved ny speculation, should be
wiped out than that they should continue to !
sustain fictitious prices and an excess Of |
credit BY abusing the misplaced confidence
of their depositors. IT imitation Of credits !!
were to be maintained and further encouraged |!
By the banking interests generally, the result t
lit the end would be n general collapse; but ;
if the banks which have become weakened !
BY bad management, a dishonest use of as !
sets, or reckless speculation shall be prompt ;
ly compelled to settle Up their affairs tile In !
dividual losses of stockholders and deposit :
ors will be insienidcautas compared to asud- j,
den explosion all along the line at some day !;
not far distant AS concerns like the Me- !,
cl1aaics' aud Pacific banks are wound up. aft
er having been disemboweled by the conniv- .
ance Of dishonest officers and reckless specu- :;
lators, the chances for conservative man !:
a.emcnt will improve among other institu- .
tions of the kind. and the process Of squeez- !:
ing the air and water out Of inflated credits !
will be continuous, gradual, and effective !
without any general sllock or punic. /
1t is to be hoped that there may be earnest |
and determined prosecution Of all the bank ;
officers who have engaged in practices which /