Evening star. [volume] (Washington, D.C.) 1854-1972, 1883-08-18
CITY AND DISTRICT.



To the Editor of THE EVENING STAR:
A suggestion In the heading of an exceedingly
Interesting and instructive article in the EVENING
STAR of the 18th inst. relating TO surplus gov
eminent revenue, that the partial distribution
to the states under the act of 1886, produced
an Injurious effect upon the states. is. perhaps,
not sustained by the article ITSELF and certainly
not by the history of the times. 1t is not easy
to convince states or individuals that the re-
ceptlon OF money by them is Injurious. They
are usually willing to accept such risk
The situation therein so graphically de-
scribed, the extravagant spirit of speculation
the wild cat" banks and other causes which
produced the panic of 1897, all existed before
the passage OF this act. They were caused, in
great part at least, by the removal of the de-
posits of public funds from the United States
bank, in 1885, to local state banks, in different
parts OF the country. 1t was the increase OF
so many millions to these banks and the in
crease of banking issue that caused or produced
such disastrous results.
President Jackson. in his message Of De-
cember, 1886, says that in two years there was
an increase of the banking capital of over
$50 0OO, OOO; and of so. 600. 900 one third Of
the paper currency in year and half This
immense expansion OF the credit system. he
says, sis believed to have been produced,
Chiefly by numerous interpretations Of new
banks without suitable restrictions in states"
he then portrays fully the consequences likely
to result and which afterwards did occur
The situation is thus deScrib by James
Buchanan in-the Senate: LIT that time (June
1856, these banks We're not required to pay any
interest on these deposits. These accumula-
lions OF public money were loaned cut by them
to individuals. whilst all the profits arising
from such loans went into the pockets of their
stockholders. A wild spirit of speculation was
thus fOstered. which threatened to destroy the
regular business OF the country and to convert
our public domain into paper money. The
enormous evils of this system were palpable
The banks were thus INJECTING deep INJURIES
upon the country by the manner i'm which they
used their money. and it was every day becom-
Ing more and more uncertain whether they would
be able to meet the demands of the government
when called upon for this purpose. Theke are the
reasons be gave for having supported the bill
which required the deposit of the surplus reye-
nue. with the states, and it will be observed
that he Is describing the situation as it existed
before the passage Of he act of 1886.
john Z. Calhoun said in the Senate December
81, 1885, THAT the states should have the use
81 the money. in preference TO the banks, was
the great and leading principle which lay at the
foundation of the act of last sessiOn-an act
that would forever distinguish the 9th Con-
gress-an act which will go down with honor to
pOsterity as it had obtained the almost unani-
nous appreciation of the present day. The
passage had inspired the country with new
hopes. 1t had been beheld abroad as a matter
OF wonder; phenomenon in the fiscal world
such as could have sprung out of no institutions
but ours, and which went ina powerful and i'm
pressye manner to illustrate the genius of our
government"
In the elaborate discussion npon the questions
0fthe repeal of the act aud the postponement of
the payment OF the fourth instalnlent in the
1ail OF 1881. no one took the ground that the
then existing financial distress or disasters were
at all attributable to the act of deposit with the
states. D. RS