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It is hoped that a much larger supply of the small gold coins may be furnished by the mint in season to meet that demand. A very considerable amount of quarter eagles has been put into circulation within the last two years, of which but very few are now to be seen either in circulation or in the banks. They must be kept in small amounts by individuals into whose hands they have fallen, and until the coinage becomes large enough to make them plenty, probably cannot be expected to circulate freely.
The propriety of increasing the banking capital of the State, always a subject of great delicacy and importance, is rendered unusually so at this time by the unprecedented demand upon the Legislature from all parts of the State, indicating as it would seem a strong current of popular opinion in its favor.
The causes which have operated to produce the conviction that a very large increase of legitimate banking business, calls for this enormous addition to our bank capital, are truly and forcibly set forth in the Governor's Message, and they are such as are well calculated to escape the notice of those whose opportunties of observation are at all limited. An unusual press upon the banks for discounts by persons engaged in trade, while money at the same time is plenty, is naturally attributed to a corresponding increase of their business, without suggesting the inquiry whether other causes may not have contributed to withdraw from trade some of the capital which it had usually employed.
The business operations of the last year have been of the most extraordinary character both in amount and variety. Foreign exchange being in our favor, a large amount of specie has come in, the United States Bank has extended its loans many millions, the government deposites have accumulated rapidly, so that money has been plenty and the banks have been enabled without embarrassmeut to sustain a line of discounts exceeding that of any former year. Notwithstanding the abundance of money produced by these circumstances, the demand for it has scarcely ever been greater.
Immense investments have been made in stocks, in western lands, in city and village lots in almost every part of the State, and in real estate of every description.
These investments, being esteemed more productive than capital at interest have absorbed very large sums which heretofore have been, or otherwise would have been, in various ways, brought into use in aid of the mercantile interest, or the different branches of productive industry. Agricultural productions which, for several years, have borne liberal prices, have advanced still farther during the last season, and to an extent difficult to be accounted for by any known increase of demand or deficiency of crops.
A diminished production, in consequence of emigration; an increased demand for consumption upon works of internal improvement and in the manufacturing establishments, may have had some influence upon their prices, and it would be gratifying to feel assured, beyond all question, that they have not been influenced by a redundant currency. It is natural that the price of lands should advance as the productions of agriculture appreciate in value, and quite as natural that when on the advance excitement should operate to speed its velocity towards the point of reaction. Looking at the immense operations to which we have alluded, altogether unprecedented both in variety and amount, it is difficult to resist the impression that much has been the result of excitement. Excitement upon such subjects is difficult to be avoided, even by the more prudent and calculating part of the community. He who stands by and witnesses the profits realized by a single operation, equalling perhaps the accumulations of his whole life of industry and perseverance, and witnesses such operations not occasionally only, but as familiar every day occurrences, must possess an unusual indifference to gain, or an exceedingly well balanced mind, not to be affected by the mania for speculation.
Operations of this kind, particularly in city and village lots to be occupied, perhaps, by the next generation, and the value of which of course is entirely imaginary, have been so common of late, as to have engaged much of the public attention, and become matters of notoriety.
The existence of an adventurous spirit of speculation is injurious to the community at large, as unsettling the relative value of pro perty, inducing improvident investments of capital which might be otherwise uscfully employed in the pursuits of -industry, but more especially injurious in its influence upon the industrious habits of business men.
The minds of the young particularly who are just entering upon business are perverted by this sudden though hazardous means of obtaining wealth from the more sure and steady pursuits of industry and economy, which administer so largely to the comfort, quiet and order of society. Rapidity in the accumulation of wealth, (however desired by all,) almost invariably leads to extravagance in its expenditure, with the attendant and contagious evil of its example.
The banks, it is believed, have not been the voluntary instruments of encouraging the excitement for speculation; but yet it can not be doubted that much actual capital has been withdrawn from ordinary business, to carry on these speculations, and its place supplied by credits at the banks, of an actual or supposed business character.
It surely can not be a cause of complaint that individuals possessing capital should invest it in government lands at the west, or in lands or lots within the State, or elsewhere, for the purpose of realizing the best profits they can; indeed we may safely calculate upon speedy and rich returns from the capital invested in the productive regions of the west. But if an excited spirit of speculation is abroad, and requires to be fed with an extravagant increase of banks, all will agree that if it were desirable to sustain or encourage its enterprizes, this is not the appropriate means of effecting the object. By connecting the currency with the success of such enterprizes, we should not only give fresh impulse to the excitement, but expose the whole community to the disastrous consequences of a revulsion.
On the other hand to whatever extent capital formerly invested upon interest, and directly or indirectly employed in trade, may have been withdrawn in consequence of the prospect of a more productive investment elsewhere, (and in reference to the inquiry under consideration it is quite immaterial whether such investments may be judicious or not,) a new credit would seem to be required, in order to sustain the interests of trade, and to that extent a recourse to the banks appears natural and proper.
For although the creation of banks creates no new capital, yet banks do furnish to the community, beyond the amount of their capital, a credit which answers the purposes of capital to men in business.
They also distribute capital in their neighborhoods drawn by means of their stock from other places and other investments, and locally, threfore, produce an actual increase of capital.
In so far, therefore, as the mercantile or manufacturing interests may demand an enlargement of the banking capital to supply the place of capital recently withdrawn from their use, and permanently invested elsewhere, we do not perceive why the application is not a fair one, unless it be conceded that we had too much before.
So also in regard to the increase required to meet the constantly growing demands of business.
Such considerations, however, from their nature, approximate but little towards any definite rule of action opon the subject. In this country every thing in the way of business progresses with such astonishing rapidity, in consequence of its new and immense resources, which are daily developing, that no human mind can undertake to measure the amount of currency which may be sufficient for our wants, and yet not sufficient to derange the value of property. Banking with us is an experiment, in a great measure unknown to the rest of the world, and we should therefore proceed with caution as the lights of experience may guide us.
The question is, how far is it safe to extend this system of credit?
Upon any rational calculation which we are capable of making, we cannot believe that the amount of additional bank capital actually required, and which might be safely granted, bears any respectable proportion to the amount petitioned for. But yet we do believe that some additional bank capital is required, and may safely be granted.
In our estimates upon this subject it should be borne in mind, that besides the direct increase of banking capital which has been made within the last few years, there has also been an indirect increase by the accumulation of Canal Fund moneys in the hands of the banks, by the government deposites, &c.
The possession of these funds has enlarged the ability of the banks to discount as upon nearly so much additional capital, and
it is only by the use of them now, that the banks are enabled to sustain the large amount of their discounts.
The following table will shew the progressive increase of capital, other means and business of the safety fund banks, for the last four years, by which it appears that their loans to the community during that period, have almost doubled.