209
Walker were perhaps the most prominent of a host of writers who
urged this course. But, given the facts as they were, with banks
in existence and issuing notes more or less freely, what correctives
were suggested?
The proper use of a variable discount rate, we have seen,! was
understood, and then incompletely, by very few of the writers.
Many urged the necessity of continuing liberal accommodations
in times of panic, but did not associate this with raising the rate
at which such loans were made. The burden of Mathew Carey’s
Essays of 1816 (the first noteworthy discussion of crises I have
found) was that banks should pursue ‘“a steady and systematic
career.” 2 The distress then prevailing among the merchants of
Philadelphia he ascribed partly to the liberality of the banks in
the early months of the year, but more largely to the drastic curtailment
 of accommodations that had followed. He repeatedly
urged the banks to meet the crying needs of the business men.?
In the introduction to the Essays we are told that his advice was
heeded by the banks and “the very resolution to extend their
discounts raised murdered Confidence from the grave, and revived
 her once more.” *
The banks, in Carey’s opinion, had tied up too large a portion
of their funds in government securities, and when they found it
necessary to contract their liabilities, had thrown the burden of
the contraction too largely on commercial loans. Banks should
recognize their obligations to care for the needs of merchants, and
when curtailment of their advances becomes necessary, should

! Chapter XV.
? M. Carey, Essays on Banking (1816), p. 32.
3 Ibid., pp. 88, 133-151, etc.
t Ibid., p. vii.
Nicholas Biddle, writing of his conduct of the Bank of the United States in 1825,
said: “I then endeavored to ascertain the real state of things by separating the danger
 from the alarm, and having done so, on the 22d of November, the letter annexed
was addressed to the Branch at New York, suggesting the propriety of increasing
its loans.
“From this moment confidence revived, and the danger passed. I then thought,
and still think, that this measure, the increase of the loans of the Banks, in the face
of an approaching panic, could alone have averted the same consequences, which,
in a few days afterwards, were operating with such fatal effect upon England.”
See Gouge, Short History, part II, p. 182.

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