Year: 1861

Ever since that popular phrase erich as bank
first obtained currency, large class of unthink
ing persons have become impressed with the
belief that bank has some mysterious power of
producing money; and that such an institution is
n species of mine, or placer, whose producing ca
pacity can be extended indefinitely, and may be
well nigh exhaustless. Thus, in popular par
lance, the banks are charged with making money
scarce" when the market is little stringent; and
no one of this class of critics appears TO question
for moment the ability Of these institutions to
lend any sums which may be demanded of them,
if-they were only disposed to be accommodating.
This proposition may appear to be a little ridicu-
lous when so plainly stated, and yet brief ex
animation will show that il takes practical shape
in the popular mind, and that many are under its
influence who ought to know better. Banks are
established by borrowers ''to make money plenty"
and place it within their own control; and there
are thousands of persons of more than ordinary
intelligence who accept without questioning this
popular idea of the production OF capital, and
never in their whole lives get hint OF its fallacy
If this false idea of the producing power of a
bank were entirely oblitcrated, and it came to be
understood that such an institution could only
control absolutely, as much money as amounted
to its own paid up capital, and that any issue be
yond this, must be based upon an uncertain credit,
the power for mischief which i'll founded or i'll
managed concerns of this sort now exert so dis
astrously, would be greatly curtaed, and host
| of idle theories would instantly vanish. Ninety
nine out of every hundred banks that collapse, are
started and managed by those who want to bor-
row, instead of those who have money to lend; it
] is the effort of the needy to produce money, or
create capital, through the machinery of bank,
and il fails because there is no such creating or
productive power in the instrument used. lt is
but an instrument, and can generate nothing.
Sometimes the machinery becomes attractive, and
capital is permanently drawn into the concern.
| Money lenders are induced to purchase the
stock, or find it convenient to leave their funds
in the banks on deposit, and thus a basis for sue
cess is finally secured; but in such cases the sub
stance follows the shadow, and success is possible
only as far as this reality is obtained Borrowers
can not do banking business successfully, for
! they are on the wrong side of the fence. Banking
is lending money, not borrowing IL; and start
/ ing a bank" BY borrowers to produce capital, is
like starting hotel by a lot oil hungry travellers,
/ to ge. dinner.


And vet it is this movement on grand ele
which is now gravely proposed TO our Gown
ment. The Treasury is empty, and greatly IN
debt, and therefore the Administration must or
ganze a bank to replenish i'll If the Government
were a lender, and had surplus funds, it might be
successful in the banking business, although we
think there would be too much friction fora large
machine of this sort TO work proftably. But for
a borrowing government to commence banking,
is to inauc urate the old experiment under circum
stances far less hopeful than the average of those
which have left such sad records in the past. II
it be said that a mere bank of circulation Is all
that is recommended, we reply that the influence
of such an institution on any scale. large or small
has ALWAYS been unfavorable, and its ultimate fail
ure certain. The force of the disaster would he in
creased in this case, because to make the scheme
successful as means of supplying the wants oi
the Treasury, the volume of circulation must be
constantly charging, and thus the crash rapidly
accelerated Issuing bank notes for such pur
pose is the mere borrowing of money ION call, .
with the added certainty that the creditors will AL


be clamorous at the same moment, and by such
an act depreciate the only currency in which pay


ment can be made. In this opposition, We art
looking at the question merely as a financial
scheme for raising money-taking no account o
the effect of such food of paper money upon tn,
well being ofthe country itself. This last is, per
haps, more important aspect of the question
than the other, the imitation of the currency Il
the extent proposed would be ruinous in its re
suits but it is quite sufficient for our present pur
pose to show that it is impracticable, even as
plan for relieving the Treasury. IL is style o
borrowing that has not single merit TO recon
! mend it, and one which could have no possible
hope of success.