220 BANKING THEORIES IN UNITED STATES 
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needful coin at any moment.” But in practice it is not so. The 
causes which alarm one bank alarm the whole. Upon any shock to 
confidence, they all call in at once. The stock collaterals are forced 
upon the market at the same moment that its ability to take 
them is almost destroyed by the total cessation of new loans.” ! 
The prices of stocks collapse, while merchants are in turn ad- 
versely affected by the struggle of brokers for money to avoid 
sacrificing their holdings, and by the cessation of bank loans. 
The country banks share in the panic and the whole country be- 
comes involved. By the operation of these call loans, millions 
come suddenly due, and, while they ruin fortunes, they are com- 
paratively impotent to strengthen the banks. The calling of 
loans cannot increase the total of specie holdings in New York 
until it has had time to turn the domestic and foreign exchanges 
in favor of that city.? 
The call-loan evil was referred to in the next few months by 
many others, including the special committee appointed by the 
New York Clearing House Association immediately after the 
crisis, and a similar committee of the Boston Board of Trade.* 
The necessity of maintaining surplus reserves in the New York 
depository banks, of discontinuing the practice of paying interest 
on deposits, and of eliminating the use of call loans as a secondary 
reserve, were matters of commonplace knowledge after 1857. 
These criticisms of the specific conditions producing the crisis of 
that year, read in the light of what Raguet and others had to say 
about the more general nature of the cycle, leave the reader feel- 
ing as if he had just turned from the comments of some economist 
of 1008 upon the crisis of the preceding year. 
t Dwight, “The Financial Revulsion and the New York Banking System,” 
Hunt's Merchants’ Magazine (Feb., 1858), xxxviii, 1509. 
2 7bid., p- 160. 
3 Bankers’ Magazine (April, 1858), xii, 826. 
¢ Ibid. (May, 1858), xii, 253.