Article Text
# MARYLAND. ## THE MONEY PANIO. [From the Baltimore American, Sept. 12 ] To some extent the effect of commercial and monetary panios is conservative. Even in their paroxysmal action they tend to neutralise that influence of properity which leads to over speculation and undue extravagancs, aud also ald, indirectly, in the diffusion of wealth. They tem- porarily reduce the price of property, but do not affect ita real value, and thus draw out surplus means which seek the opportunity offered for advantageous investment. in dustry and developement are in this way promoted, and after the panic ceases enterprise finds advantage from the increased means thus brought into active employment. But this is one only and the most favorable aspect that these panics present. On the other hand there is to be con- sidered the disadvantages and incon rentences, the de- rangement of trade, the individual losses, and the injury to credit with which for a time they unfavorably affect ali departments of business. Credit is no longer the synonym of cash, the facilities of business are sud- deniy suspended, and the sacrifices to which debtors are forced become losses falling with more or less severity upon all the portions of that system of confidence which supports mercantile transactions. The measure of the stringency and the extent of the disaster following such seasons of depression, primarily, must depend upon the causes giving them birth. If they be the product of actual need, and the deprivations of the day have been brought about by idieners or waste, or the fallure of the material resources of the country, then the panic is substantial, not only in ita present exigencies but in its permanent effects, and teaches a lesson not to be mistaken by an intelligent and resolute people. We have had such financial pres- sures in this country, following seasons of extravagant speculations, short crops, and over trading, but they have enforced the duty of stricter economy, of restri ted ex- penses, until more laberious exertion has restored the equilibrium and brought the country again into a self- sustaining position. It would be a false tenderness to say that the present money pressure is the result merely of a senseless panto, though it is abundantly true that in many respects it is cause- less, and not justified by anything that is apparent in the present condition or future prospects of the material Interests of the country. We have to some extent over- traded; we have in our very eagerness for developement indulged in a somewhat too rapid extension of railway building: we bave lavished wealth upon enterprises that had no proportionate basis of utility; been guilty of specu- lations that have mocked our extravagant speculations, and perhaps have thought to live sumptuously without the added labor necessary to sustain an increased expenditure. But adaliting the natural effect of these errors as produc- ing causes, there still remains much in the present condi- tion of our financial concerns that must be regarded as the work of pure unadulterated panto-the effect of unreason- ing, contagious alarm Property is sacrificed at the mere thought of danger, and the current of duaster is allowed to reach points from which self rellange and good judgment would have successfully driven it back. A money pressure thus unreasonably founded and so foolishly sustained, though it may do much damage, must necessarily soon exhaust itself I should not, however, be permitted to pass away without earnest investigation as to the causes and means by which it was set affoal. No feeling of gratification at relief experienced should make the commercial world neglect to inquire why and how it has suffered. The great point of perturbation has been New York, and other portions of the country have only saf- fered as the panis there diminished or increased. The first impetus, in the failure of the Ohio Trust Company, is easily discoverable; but why this ovent, in itself in significant, should have given birth to results so disastrous and prolonged is not equally evident. It is natural in these exigencies to make the banks, as the custodians of the finances of the country, responsible for the trouble, and though injustice is sometimes done them in the public desire to seek somebody or something as the scape goat to bear the general burden of sin, yet there seems to be jus- tice in the allegations brought against the New York banks of having encouraged a wide expansion during the summer menths, and now, at the first cry of real need, followed it by a contraction so stringent and cruel us to be almost ut- terly regardless of consequences. The cause of these excessive fluctuations in bank loans is attributed to the practice of paying interest on deposits and issuing demand loans. The country banks are allured by the promise of interest to deposit with banks in the city of New York all the funds which they do not require for immediate use. They think it better to do this than to let their money lie idle in their vaults Thus the city banks become borrowers. Then they are forced to look for cus tomers, but they dare not use this money in discounting notes, even with a short period to run, for it may be re- called at any moment by the parties depositing it. They therefore, in turn loan the money on cali to brokers on al most any kind of security. The brokers, borrowing at 7 per cent, must use the money so as to make their profit on it. They engage in usurious transactions and speculations on this money thus borrowed by them of the borrower and liable to be called for at a moment's notice. If their speculations fail their securities must be pressed upon the market, and the babbie bursts. The banks and the speculators tumble tegether, involving their original depositors also in the ruin. The whole difficul- ty springs from an over eagerness to make money produs- tive, and as long as the system prevalis with the New York city banks of inducing deposits by payment of inte rest, such occurrences sa those which have just trans- pired must be expected, for by the very tenure by which they hold those depcsits, subject to call, they must place them temporarily in second hands, where they can only be employed in some extraordinary and by no means safe operation, which, in the end, must terminate as we have lately seen. Those cities which have had no share in this pernicious mode of doing business have been untouched by the panio-a fact that would seem to show that it is justly ascribable to the causes we have named. In any event such a system is calculated, in times of commercial em- barrassment, to widen and extend the difficulties under which the business community may labor, and some re- straint upon it by legislative enactment might perhaps be very desirable. # MICHIGAN. ## THE BANKS OF TECUMSEH AND MACOMB COUNTY. [From the Detroit Free Press, Sept. 11] We cannot positively announce that the Bank of Tecum- seh has exploded, but we observe indications of rear in well informed financial quarters that it may explode at any moment. Hitherto its issues have been received and paid out by the financial employés of the Michigan South- ern Rallroad Company, but from the fact that they were refused at the Toledo office of the company the other day, we infer that the bank has been discredited along the whole line of the road. We doubt whether the bank could have obtained public credit to any extent but for the soun- tenance given it by the Southern read. We complained of this countenance a long time ago, and predicted that st the first severe monotary crisis the bank would go by the board. When it shall finally go by the board the Southern road will not be found to be a sufferer, because its offi- cers, being on the spot, will have forescen the disaster and provided against it. Bat the public, which has been induced to confide in the bank by the policy of the road, will not have foreseen the disaster, and will consequently suffer to a greater or Jess extent. We suspect, however, that the circulation of the bank is not large, and probably the present is as good a time for explosion as can be anticipated. While the con- cern is yet tottering on its last legs, struggling perhaps to survive, we advize whoever may chance to have one of its notes to "let it slide." We have heard rumors of the failure of the Bank of Ma- comb County, which, we presume, are not well founde i. So small is popular confidence in this bank that the fre- quent late efforts of its owners to circulate its notes have been without success; consequently there is apparently no present motive of failure. It has not a dollar of real capi- tal, and there is not a dollar of security for its outstanding liabilities, whatever they may be. By whom it is owned is not snown to the public, farther than rumor designates its ownership. We are of the impression that some part of its "stock" recently changed bands, but this also is rumor. There is but one certain thing regarding it, and that is, thai la notes are of no more value than so much blank paper. # ILLINOIS. ## A BIGNIFICANT CIRCUMSTANCE. [From the Chicago Press, Sept. 9] Our grain market for some days back has laborered under an unusual cause of embarrassment. The stocks in the warehouses and daily coming in by railroad are abundant, and the dealers stand ready to operate to any extent the Eastern demand may require, but they are deterred by a very natural apprehension as to the cond!- tion of the houses to which they have hitherto been in the habit of making their consignments. Some of those houses have been struck by the wave of disaster from Wallstreet, and at this distance there is no telling who may or my not go rext. The anxious question is, "Who shall we ship to?" This uncertainty has considerably embarrassed orerations for a few days, but we trust that confidence
