Lippincott's Magazine of Popular Literature and Science, Volume 12, No. 33, December, 1873

The formation and rapid spread of the Grangers' association in the West, and its avowed design to make war upon the railway interest with a view of securing cheap transportation to the seaboard, was another disturbing element, undermining confidence in railway property. But the greatest and the immediate cause of the crisis was the over-building of railways; and hard indeed are likely to be the fortunes of the unfinished enterprises of this character arrested by its blighting influence; for capital for years to come will be very slow in finding its way into the bonds of roads to be built by the proceeds of their sale. It was a false and dangerous system—and the event has proved its unsoundness—for new companies to rely from the outset upon this source for the means of construction. It was a hand-to-mouth policy, resting upon so precarious a foundation that, in the light of experience, we can only wonder that eminent and otherwise conservative bankers should have adopted it to the extent they did, thereby not only jeopardizing their own position, but imperiling the whole financial community. About six thousand miles of new railways were constructed in the United States in 1872, of which it may be estimated that at least seven-eighths were in advance of the national requirements. Not a few of those now unfinished or just completed will, like the New York and Oswego Midland, be forced into bankruptcy, and it will be long before all the ruins left by the crisis will be cleared away. A shock has been given to the entire railway interest of the country, the full effect of which has not yet been felt; and those who expect the prices of railway securities to rule as high, for a considerable period to come, as they did before the panic, are likely to be disappointed. After all panics we have had more or less wearisome stagnation and depression, growing out of impoverishment and distrust of new ventures; and this last one will hardly prove an exception to the rule. The mercantile interest, too, will probably continue for some time to suffer in consequence of the monetary derangements resulting from it and the want of adequate banking—or rather currency—facilities for bringing forward cotton and general produce from the West and South for shipment; and here and there houses that have so far withstood the strain will break down under it. But in a rapidly growing country, with inexhaustible resources, like this, recovery from such disasters is, fortunately, far quicker than among the less progressive nations of Europe.

One eminently satisfactory feature of the panic in securities was, that it did not extend to United States bonds, greenbacks or National bank-notes. Bonds were of course depressed in sympathy with the scarcity of money and the demoralization prevailing in the general stock market, but there was not the slightest loss of confidence in them among holders, nor any pressure to sell, except to relieve urgent necessities among the banks and others having need of currency. The paper money of the country proved itself the most valuable kind of property that any one could possess; whereas under like circumstances, in former times, when banks under the State laws could practically issue as many notes as they chose, much of it would have been left worthless and the remainder depreciated. But our currency system is defective in one essential particular: it is not elastic. It is, so to speak, hide-bound at seven hundred and ten millions of paper, exclusive of fractional currency, three hundred and fifty-six millions of which are legal-tender notes, and three hundred and fifty-four millions National bank-notes. The safety-valve of a country's circulating medium is its elasticity, and the sooner Congress authorizes free National banking on the present basis of ninety per cent. of currency to the par of United States bonds deposited with the Treasury, or devises some other means of affording relief, the better for the interests of the nation. The law requiring the banks in the large cities to keep always on hand a reserve in greenbacks equal to twenty-five per cent. of their deposits and circulation, and those in the country a reserve of fifteen per cent., should also be amended, the percentage being too high by one-half. It is for the interest of every bank to keep a reserve adequate to its own requirements and safety, and the existing restriction instead of being an element of strength is a source of weakness. Then, again, as National bank-notes are guaranteed by a pledge of United States bonds at the before-mentioned rate of ninety per cent. of notes to the par of the former, the banks ought not to be required to redeem their own notes in greenbacks on demand; and each bank should be allowed to count the notes of other banks—but not its own nor specie, except on a specie basis—as a portion of its reserve. To require the banks to redeem their notes with legal tenders, on presentation, when there are only two millions more of the latter than of the former in circulation, is to demand of them what they would find it impossible to do in the remote but nevertheless possible contingency of the bank currency, or any large portion of it, being simultaneously presented for redemption.

As a measure looking to the resumption of specie payments, however, it would be well to abolish the National bank circulation altogether. This could be done by Congress authorizing the Treasury—through an amendment to the Bank act—to replace the National bank-notes with new greenbacks, and cancel an equivalent amount of the bonds pledged for the redemption of the former. After that was accomplished we should have a circulation based directly upon the undoubted credit of the United States, and the government would be saved the twenty millions (more or less) of coin per annum which it now pays to the National banks as interest on three hundred and fifty-four millions of the bonds thus deposited, for it could withdraw these, by purchase with the greenbacks thus issued in substitution for the surrendered National bank currency, as fast as the exchange of the one for the other might be made. This saving of interest alone would strengthen the government for a return to the gold standard, which could be effected without any contraction of the volume of paper money, except to the extent of the coin thrown into circulation: and the resumption of specie payments by the Treasury—greenbacks to be convertible into coin only at the Treasury and sub-treasuries—would be resumption by the entire country, for gold would no longer command a premium. The National banks thus deprived of their own notes would have to bank on greenbacks, just as the State banks—which have no circulation—do at present.

It is obvious that resumption could be accomplished in this way on a very much smaller reserve of coin than would be necessary if each individual bank had also to resume simultaneously with the Treasury, as would be the case under the present mixed currency system, for the whole of the reserve would be concentrated in the hands of the government, instead of being scattered among the banks all over the country. The credit of the government would, of course, be much stronger than that of any individual bank, and the demand for gold in exchange for greenbacks would probably be very small in comparison with the amount of coin belonging to the Treasury, even at the beginning of resumption, when the element of novelty in it, not distrust, might induce conversion. The banks would then have no more occasion for gold than they have now, greenbacks still retaining their legal-tender character unaltered.

Had the country been on a specie basis when this crisis came upon us, the twenty millions of coin held by the New York banks at that time would have been available for their relief, and have formed a part of the circulation; whereas for all practical purposes it was useless to them, and consequently to the people, as money; and in like manner all the heavy importations of gold which have since taken place, and been converted into American coin, have failed to enter into the circulation, as they would have done on the specie standard. The whole of the forty-four millions of Treasury gold-notes, convertible into coin on demand, held by the banks and the public on the 1st of September would in that event have formed a part of the active currency of the nation, instead of lying as dormant as the whole eighty-seven millions of gold—part of which they represented—in the Treasury.

That part of the currency of any country which is in specie is necessarily elastic, because it is the money of the world, embodying the value which it represents, and subject to that ebb and flow, in accordance with the laws of trade, which attends the circulation of gold and silver coin everywhere. Supply follows demand, and a nation with a specie currency inevitably attracts the precious metals by outbidding other nations in the rate of interest it offers for them. Why, therefore, should we shut ourselves out from the advantages of this form of communion with the commercial world by postponing the resumption of specie payments a day longer than we are compelled to?

    K. CORNWALLIS.

SAINT MARTIN'S TEMPTATION

For forty-and-five long years
I have followed my Master, Christ,
Through frailty and toils and tears,
Through passions that still enticed;
Through station that came unsought,
To dazzle me, snare, betray;
Through the baits the Tempter brought
To lure me out of the way;
Through the peril and greed of power
(The bribe that he thought most sure);
Through the name that hath made me cower,
"The holy bishop of Tours!"
Now, tired of life's poor show,
Aweary of soul and sore,
I am stretching my hands to go
Where nothing can tempt me more.

Ah, none but my Lord hath seen
How often I've swerved aside—
How the word or the look serene
Hath hidden the heart of pride.
When a beggar once crouched in need,
I flung him my priestly stole,
And the people did laud the deed,
Withholding the while their dole:
Then I closed my lips on a curse,
Like a scorpion curled within,
On such cheap charity. Worse
Was even than theirs, my sin!
And once when a royal hand
Brake bread for the Christ's sweet grace,
I was proud that a queen should stand
And serve in the henchman's place.

But sorest of all bestead
Was a night in my narrow cell,
As I pondered with low-bowed head
A purpose that pleased me well.
'Twas fond to the sense and fair,
Attuned to the heart and will,
And yet on its face it bare
The look of a duty still;
And I said, as my doubts took wing,
"Where duty and choice accord,
It is even a pleasant thing,
To the flesh, to serve the Lord."

I turned and I saw a sight
Wondrous and strange to see—
A being as marvelous bright
As the visions of angels be:
His vesture was wrought of flame,
And a crown on his forehead shone,
With jewels of nameless name,
Like the glory about the Throne.
"Worship thou me," he said;
And I sought, as I sank, to trace,
Through his hands above me spread,
The lineaments of his face.
I pored on each palm to see
The scar of the stigma, where
They had fastened him to the Tree,
But no print of the nails was there.
Then I shuddered, aghast of brow,
As I cried, "Accurst! abhorred!
Get thee behind me! for thou
Art Satan, and not my Lord!"
He vanished before the spell
Of the Sacred Name I named,
And I lay in my darkened cell
Smitten, astonied, shamed.
Thenceforth, whatever the dress
That a seeming duty wear,
I knew 'twas a wile, unless
The print of the nail was there!

    MARGARET J. PRESTON.

THE LONG FELLOW OF TI

Colman put down his book and looked about the parlors and piazzas of the hotel, and went and spoke to the barkeeper: "Have you seen Mr. Field lately?"

"No: he hasn't been in here since supper."