MODERATING THE CYCLE 219 
whereby banks seek to increase their earnings, included without 
comment the practice “adopted by many of the banks of New 
England, and perhaps of other places, of lending to brokers on 
interest, repayable on demand, a large proportion of the amount 
which banks in other places consider themselves bound to keep 
on hand, in coin, to meet possible demands.”! The Massachu- 
setts bank commissioners in their report of 1838 mentioned that 
some of the banks were making collateral loans at call “for the 
purpose of being prepared, at a moment’s notice, to meet any 
contingency,” and gave the practice their approval.? In 1853s, 
however, they deprecated such loans, observing that “however 
beneficial this class of assets may be to an institution standing by 
itself, the current of public opinion seems to run against them as 
a common practice among the banks. If they become general, a 
sudden retrenchment of them may become general too.” Such 
an episode they believed to have been largely responsible for the 
pressure in the money market of that year, and they urged the 
banks to substitute for this type of loan “paper so timed that it 
will turn up at proper intervals without surprising the public.” 3 
But the panic of 1857, which in its banking aspects must be 
grouped with those occurring under the National Banking Sys- 
tem before 1913, marked the beginning of the latter-day agitation 
against call loans. 
Ezra C. Seaman, the historian, writing in December of 1857, 
included excessive resort to call loans in a tedious recounting of 
he varied causes which he considered responsible for the crisis 
of that year.* The keen observer Dwight went into further detail. 
Resort to “the treacherous resource of ‘call loans,’ delusive alike 
to the banks and the public,” he termed, “the great panic- 
making power. . . . Call loans with stock collaterals are put in 
the place of specie. The theory looks plausible as proposed by 
each separate bank. ‘If the balances are against us we can call 
in our loans — get checks on other banks — and thus obtain the 
' Raguet, Currency and Banking (1830), p. 3009. 
* Massachusetts, Report of the Bank Commissioners (Dec., 1838), p. 2I. 
' Ibid. (Dec., 1855), pp. 74, 75. 
Seaman, “Panic of 1857,” Hunt's Merchants’ Magazine, (Dec., 1857) xxxvii, 
Fry