## September 28, 1867. N. 1257.

### Further Failures of the National Banks in New York State.

2, mit paid up Capital of about 100,000l., Liability to depositors and customers about 450,000l. more. Farmers’ National Bank, of Brooklyn (New York) und the First National Bank, of Kingston (New York.)

„The Farmers’ Bank of Brooklyn“, organised 1852, State Bank; with a nominal capital of $500,000, the capital stock being divided into 25,000 shares of$20 each. High place, under prudent management, in the public confidence; large profits; its dividends, paid semi-annually, about 8% of the capital stock. Its shares quoted 118 to 120, and were practically out of the market. It sustained the storm of 1857, when the Banks were tumbling by 100nds, and was thenceforward looked upon as perfectly sound. In 1865 transformed into Ntl. Bank. A settlement was made, its assets were divided, converted into the „Farmers’ Nl. Bank[“], with a capital stock of $300,000, represented by 15,000 shares at$20 each. The shares appropriated by the stockholder of the old State Bank. Its affairs proceeded without interruption, its stocks being quoted in Wallstreet at 108 to 110. A Branch Bk. at Green Point, a suburb of Brooklyn, was established. People were induced to make the Brooklyn Bk. a sort of Savings’ Bank, and two Savings’ Banksthe Germania and the Dime [–] deposited large sums in its vaults. Nach official statement on 1st July 1867 its deposits: $1,156,135. These deposits made by the Savings Banks aforesaid, small tradesmen, farmers and market gardeners living in Long Island, by speculators, manufacturers, private gentlemen, and mechanics – the largest deposit by one individual probably not exceeding$15,000. The President of the Bank and others connected with its management used these individual deposits for the purpose of speculation.|

166

The nature of these speculations shown by list of the offices filled by the President, who was treasurer of the Tionesta and Sugar Greek Oil Comp., treasurer of the Beaurehoff Run Oil Co., treasurer of the Challenge Gold and Silver Mining Co., director of the Trust River Navigation Co., president of a Company of Divers and Wreckers, and director of a Co. for making „whisky“ by a cheap „patent“ process. Upon all these bubble cos., the manager of the Bk. wasted the funds of depositors, and the capital of the Bank. They squandered so much that on 1st July 1867 they were unable to show to the Gvt. Inspector the Currency Reserve (of 15% of deposits and circulation) required by law to be kept in hand by every Nl. Bank. They were duly warned by the Gvt. Officer. The prescribed 30 days granted to Nl. bankers as a time for complying with the requirements of law expired, and, the Currency reserve not being shown, the Comptroller of the Currency appointed a receiver, who entered upon his duty on Saturday. The liabilities of the Bank were: (on 1st July 1867): $1,851,307, but since that time, the amount has been swollen by speculation to at least 2 Mill.$. The available assets: Real estate, valued at $26,000; cheques on solvent Banks,$49,524; U. St. Bonds, deposited as a basis of circulation $285,500; U. States Bonds, on hand,$3,300; bonds and mortgages $1,900; city certificates$800; cash on hand in Circulating Notes of other Banks, about $27,000; legal tender notes, compound interest notes, fractional currency, specie, and cash in an Albany Bank, to redeem the outstanding Circulation of the Old State Bank, about$100,000; or in all, something less than $500,000. Other assets mentioned, but not available or at least doubtful; probably 1/2 mill.$ is a liberal estimate of the assets; 25% on the Liabilities. This is equivalent to the ruin of 100nds of small tradesmen, poor depositors, farmers etc[.] The effect of the failure was seen in the mob that besieged the doors of the Bk. on Saturday – a weeping, cursing, howling, distracted mob of old men and young men, old women and young women, Yankees, Germans, Irishmen – representatives of the Cosmopolitan population of an American seaport city. The creditors of the Germania and Williamsburgh City Dime Savings’ Bank – whose failure probably involved in that of the „Farmers’ Bk.[“] – surrounded the latter’s doors with frantic demands for their „money“, the Directors of the Savings’ Bk. being unable to afford them any relief. It is unnecessary to dwell on these scenes – being the inevitable concomitants of all Bank failures in all lands.

The Kingston Nl. Bank failed durch speculations on the part of its officers. It was organised under the National System, capital $200,000. The cashier has sunk his own private capital of$130,000, and $70,000 to$80,000 of the money of the Bank; i.e. money of depositors, and the President has withdrawn not less than \$90,000 from the Bk. of deposits or currency. The Federal Gvt. is responsible only for the Circulation Notes of the Collapsed Banks, welche secured sind by Federal bonds deposited in Washington. Aber die depositors must look to the humbug mining and stock Cos. for their money. Result: widespread ruin among small traders (shopkeepers) etc and farmers.

The Comptroller of the Currency has made „a black list“, in which appears the names of all Nl. Bks. suspected of unsoundness. It is not exposed to public inspection. Not less than 7 Nl. Bks. – 2 of them New York banks – are in this list described as „shaky“, as most fit to be watched.|

### Mulholland’s (Irish man of Business) Remarks On the Currency at the Belfast Social Congress.

Any person who contracts a debt comes under an obligation to pay money. … A bill or note may have the effect of postponing the payment of the debtor, while, at the same time, enabling the creditor to anticipate the effect of payment. But the creditor can only realise in the present by the possession of a bill or note the effect of a future payment, by finding some one who has loanable capital at command. When trade is in a natural condition, the supply of this floating uninvested capital is usually equal to the demand, and the interest for loans at its normal state. Aber when a period of speculation and excitement, with inflated prices, had led to a general extension of transactions, there is, necessarily, an increase in the amount of indebtedness. When this indebtedness has to be liquidated, it is found that there has been no corresponding increase in the supply of unemployed capital. In fact, the supply in such cases is generally smaller; for many who formerly preferred the small but sure return from interests to the risk of speculation may have been induced by the contagion of such excitement, and the example of large gains, to withdraw their capital from its accustomed employment, and to embark it in the ventures of the day. The demands for loans having increased, and the supply to meet it diminished, advance nothwendig in the rates of interest demanded by holders and offered by borrowers? Such an advance in the rate of interest is simply an indication that enterprise and speculation have exceeded the limits beyond which they cannot pass with safety. … At last the amount of debt so far exceeds the amount of available loanable capital that a money crisis or panic ensues.

Where trade is „International“ as well as domestic „money[“] must have a real, an intrinsic, an international value. It must not only be the measure of the value of other commodities, and the medium of their payment, but absolutely their equivalent. Gold and Silver alone combine all the necessary conditions.

In the we had the first symptoms of the financial pressure that continued with but slight intermissions until its culmination on the 11. May, 1866.

The high rates given for deposits have proved so attractive, that the amount deposited at call, or short notice, in the London Joint Stock Banks alone, now amounts to about 100 millions. Für diese immense liability they keep a small reserve of money in the B. o. England. Diese Bank proceeds to do with them what the bankers who lodged them felt could not be done with safety – it uses them for the discount of mercantile paper, or it includes them with its own reserve. Now, the same money cannot be a reserve for the joint stock Banks and a reserve for the B.o.E. also. It is, in fact, no reserve for the Bk. of England at all, and it ought not to appear as such in their weekly statements, but be noted as „cash held on account of bankers“. In May, 1866, the total reserve shown in those statements seemed at first sight not to be unsatisfactory, but it was in reality less than the balance held on account of other bankers, so that at that time the B.o.E. had no reserve of its own whatever.

We see in the recent history and present position of the commerce of the U. St. a striking example of the effects of an inconvertible currency. Deprived of the healthy check of convertibility, it was certain to become redundant. There had been in that country all the symptoms of a fictitious prosperity – the feeling of an universal increase of wealth. This apparent increase in the value of |168 all property from the inflation of prices was so deceptive, that it misled a leading statesman so far as to make him declare publicly that the war had not only enriched the nation, but added to the wealth of every individual in it. … An artificial level of prices stimulated importations, but it destroyed their export trade, and a heavy balance, due to foreign countries, accumulated against them. To pay this, the money by which they had measured values was found useless, and fell to a heavy discount. A complete collapse must have occurred before this time had not their Government bonds been received in Europe instead of gold.

### Correspondent. Paris. 26 Sept. 1867.

#### Pereires.

Abtritt der Pereire vom Credit Mobilier. Vermögen von 4 to 6 Mill. £ St. gemacht. »In success the Pereires were worshipped.« Jezt fällt alles über sie her. Sie haben railways in Frankreich established, a service of no small magnitude, considering the lack of enterprise in this revolution-tossed country. They have, too, had no inconsiderable part in promoting the remarkable extension of material prosperity in France after the Coup d’état.

### Mortality in England in 1865.

490,909 persons died (1865) in England. Davon 199,843 oder 40%, under 5 years of age. 70 in a 1000 of children under 5 years died in the course of the year. The deaths between 5 and 10 years only 19,733, less than 1/10 of the deaths of the first 5 years, and about 1/8 in 1000 living. The third quinquennial period, 10 to 15, is the least mortal of all our lifetime; 10,420, less than 5 in 1000 of the living boys and girls of that age. In an equal number of children under 5 and of children between 10 and 15, 14 of the former die when only 1 of the latter [dies]. From the age of 15 upwards the ratio of mortality never ceases to increase. Von 15 to 20 were 13,484; von 20–65, the working time of life, 155,051, the ratio increasing from less than 1/8 per thousand of that age living in the first decennial to more than 32 in the last. After 65, the ratio increases very rapidly.