Banking theories in the United States before 1860

Bibliographic data

Monograph

Identifikator:: 1755492553

URN:: urn:nbn:de:zbw-retromon-133529

Document type:: Monograph

Author:: Miller, Harry Edward http://d-nb.info/gnd/1055250875

Title:: Banking theories in the United States before 1860

Place of publication:: Cambridge

Publisher:: Harvard University Press

Year of publication:: 1927

Scope:: XI, 240 S.

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

i D om MODERATING THE CYCLE 213 Edmund Dwight, in 1851, had called attention to the distinct characteristics of the deposits of the New York banks, in so far as they consisted of balances due to interior banks. The creditor banks, Dwight observed, regarded these deposits as ‘specie funds,” relying upon them largely for means of meeting unusual demands for specie. Hence it behooved the New York banks to keep an extra large reserve ratio, as do the central banks of Europe.! Dwight now reiterated his ideas after the catastrophe of 1857. Our panics, he declared, are not accidental; they are due to the inherent weaknesses of our banking system. The law of interest is always urging towards the last point of expansion, and that of necessity and safety hurrying them [the banks] back to contrac- tion. The limit of expansion is not fixed by statute, nor by any rule of sound banking. The only recognized limit is danger — immediate and pressing danger — and the mode of contraction, therefore, suits the cause: it is run for life. and its motto is sauve qui peut.2 Could the New York banks be induced to keep but eight or ten millions of dollars of additional cash, much distress would be avoided. For lack of that surplus lending power the nerve-center of our financial system ceased to function when most sorely the banks for meeting the needs of their local borrowers. (Connecticut Bank Commission, Report, 1848, in U. S. House of Representatives, 30th Congress, 1st Session, Document 77, p. 179; New Hampshire Bank Commission, Report [1849], p- 15). Unfortunately the New York money market was not well organized to give a good account of itself in performing these functions as a financial center. The Connecticut commissioners in 1844 also referred to the unwholesome effect that the accumulation, in times of ease, of outside funds in New York might have in fostering excessive speculation. (Report, 1844, U. S. House of Representatives, 20th Congress, 1st Session, Document 226, p. 234.) A curious commentary on New York’s financial position, rather fortuitously prophetic, was contained in the reflections of the New York Herald on the crisis of 1857. Each crisis, this journal observed, had resulted in strengthening New York’s position as the country’s financial center. ‘The late struggle of 1857 was in a great degree between New York and London, and has terminated to the advantage of the former city. And the time must ere long arrive, when New York, and not London, will become the financial centre, not only of the New World, but also to a great extent, of the Old World.” (Quoted by D. M. Evans, in History of the Commercial Crisis, 1851-58 (London, 1859), p. 114. ! Dwight, “The Progressing Expansion,” Hunt's Merchants’ Magazine (1851), XXV, 152. ? Idem, “The Financial Revulsion and the New York Banking System,” Hunt's Merchants’ Magazine (Feb., 1828). xxxviii. 1<8. —h LE EEE @ Oo 2 © 9 [= v oo 8 «AS wi [] SO LC 0 © O N~ < { ~ 0 ~ 3 2 - - N } ™ Lam: | D oO oO — I ts les LS Bs 63 -— — D © ~~ — 0 — § : r oO oN 8 0 1 0 nN 3 N Es ON 0 ON FY $ 3 ¥ - DS «a = n o Q o m= B = LL * ry =

Access restriction

Copyright

fullscreen: Banking theories in the United States before 1860

Monograph

Table of contents

Download

Monograph

This page

Image fragment

Citation links

Citation recommendation