Page:A History of Banking in the United States.djvu/436

 

 

PERIOD V.—1843-5 TO 1863.

Under the Independent Treasury System, the Regulation of Banking and Currency is left entirely to the States. The Federal Government Handles only Coin. Banks Organized under General Joint Stock Laws gradually, and to a great extent supersede Chartered Banks. In the Ohio Valley and the Northwest, Banks of the new kind run to great extravagance and abuse. By the development of new Institutions of Finance, Commerce, Transportation, and General Industry, Banks lose Comparative Importance.

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CHAPTER XVI.

The Local Bank System. The Gold Discoveries and Consequent Expansion. The Commercial Crises of 1854 and 1857. The Aid Given by the Banks to the Federal Government at the Beginning of the Civil War.

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§ 1.—The Local Banks, by States; 1845 to 1860.

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HE banking capital of the country reached its lowest ebb in 1846, $196.8 millions. The bank note currency was at its lowest in 1843, $58.5 millions. It cannot be doubted, therefore, that the liquidation of this period went far below the normal line before the financial system of the country could be started again in its regular activity. From this time until the civil war the country depended entirely upon the local banks. After the re-enactment of the sub-treasury system, in 1846, the federal government went its own way, using specie in all its transactions, and giving up all responsibility for the currency used by the people. No solution of all the great currency controversies of the last fifteen years had been reached, but this state of things was brought about by a deadlock between all the factions which had been developed by those controversies. No one of them could carry its point.