Chicago Daily Tribune Newspaper, April 18, 1874, Page 3

Bank Reserves and the Rate of Discount, Commeroia] Criges---Their Causes and (Consequences, ‘Lecture of Prof, Bonamy. Price, at Bristol, Enge ‘Published from the Author's Manu- soript by the New York Bulletin, The rate of dlscount is a mattor of supromo dmportance to the trade of England. Discount {o the foundation of English commerco of every Xind, or, rather, tho grand machino with which ¢ worke. Itarato, thatls, the chargo paid for «the groat sorvicos which it ronders, tolls heavily on overy part of tho industry of tho nation; it nffccts tho profits of morchants and manufac- turors, enlargea or contracts thoir oporations, influonces mightily tho quantity of wealth pro- duced, and boars with great powor on the om- ployment of tho working clossos and tho pros- yority of the wholo country. BSuch a forco, 80 poworful for good or ovil, calls for tho most oareful study; but, unhappily for tho tradors ond the workmen of England, dlscount is as ob~ soure as it is important. It is o region of dark- ness and infricacy, o jungle through which no bighway of knowledge has yet boon cut, which 1o solentific oxploror has Inid open- to tho light of dsy, which romains a myatory and s vaguo anxloty for overy trader, Honow, it is s fleld in which oxporlence imparts no wisdom: for ovents, as they roll on, are not undoratood as to thoir causes or thoir laws, and noone can fool sure that o combination which hias happened once will over occur sgain, It thus bocomes THE PREY OF THEORY. In no departmont of human lifo does theory run 80 riot, is evor throwing up such incessant, such universsal shoota of wild, rank, unaciontific doc- trine a8 in that which s called tho Monoy Mar- kot., Every man has o thoory about money; ovory practical man Linta mystoriously thnt he possosses a doctrine which the uninitiated aro incompatent to undoratand ; and welt-nigh overy banker rulos his oporations, when ho has any yules at all, by 1deas evolved out of the innor oonsciousness of the banking mind, without tak- ing the slightest trouble to teat them by those {facta which the world supposes Lim to bo the sole poesessor. On discount and its rate, confu- sion and chaos abound on evory side, and trad- ors lie at the meroy of idoas for whose truth thoy have no guarantoo whatever. Tho oauso of ali this mischiof, which often risos to national disastor, s partly to be found in the nature of the subject itself, in TUE PATAL FACILITY with which evory ono can speak about monoy and banking. It s 8o easy to omit idess about thom that scarcely any one will bo at the paina of studying the matter mothodically. Even writers on political economy are boset by the universal tomptation, and small indecd is the help which thoy here give to tho public. Political economy ought to take shome to itsolf for the statein wb%ch the subject of money is found in its tron- tines. Theirs, howevar, ia a solontific roproach 3 but for morchants this means porplexity, an often necdless and heavy loss. I trust, therefore, I may bo allowed to impressupon you the ex- tremo desirabloness of instituting G0OD METHODICAL, SYSTEMATIG EDUCATION on this vital subjoct; of sotting up schoolin, for every trader as regular and thorough as whal b recelves in arithmetic, or chomistry, or any other scientifio matter. Itia of tho utinost con= eoquenco that oxact and caroful analysos of the facta of banking and of commorcial lifo should o wigorously carried out; evory doatrine traced to its first olements ; evory principle doducod from the gronnds which warrant it. Dy such s process alone can any knowledge or opinions fit to bo deponded upon, be mcquired, and whae {8 fixad and what is necessarily variable, in the na- ture of the subject, be determined. 1 now proposo to h§ bofore you the results of such an analysis a8 I have beon ablo to make. It will be for you to judge of its acouracy. Discount i8 & fact of banking, Itsrate {s the payment given to baukera in roturn for the ns- mistance which thoy give to trade, The first question, therofore, that meots us is, what is & bank? Wo shall geb no path through the wildor- nesa tll wo accurately underatand the nature of 8 bank, and of tho thi §s ‘which it performs, To this question, I gave in my Oxford loctures on the principled of currenoy, the suswer thata bank is an INSTITUTION FOR THE EXCHANGE OF DEBTS. 1t in accurate, I fully belisve, but that is much too abatract, and too much confined to the move- ments which take place within the bouk itself. Xt leaves out the outor world—the depositor and * the borrower on their way to and from the bank. 1 profer, therofore, to give a definition which E]wca ‘moro vividly bofore the eyes the rolations otweon the banker and those with whom ho denls. I say, thon, that a bankor ia a broker, au sgent botween two prlnni!sals_—na true a broker, tliough varying in dotails, A any in Mincing Lano. Hin action consists in obtaining certain meand or rosources from one et of men and transferring thom to anothersot. Hois a trans- foror only ; and thia cardinal fact bringe out into proper prominenco tho vastly greater importanca of tho two mon betweon whom the banker stands, than the banker Lumsolf. NOW, WHAT ARE THESE MEANS thus recoived and transferred by the banker? Blonoy, I hear on all eides: bankers deal in money; who thinks of anything elso about a banlk, but money? If by monoy is meant coin and bank notes, then I answer, most assuredly the things which banks recoive and transfer aro not monoy. Bankers bave vory little to do with money—far less than railways and othor kinds of rendy-money busincss. Theory and exporionce eutablish thia fact. Long ago I estimated, in Frazer's Magazine, n bank’s recoipts in monoy =t ono in thirty, Bir John Lubbock subsequent- 1y analyzed nineteen millions rocolvod by tho banking-house of Robarts & Co., aud found that 8 per cent only woro, composed of money, and only 14 per cont of gold, That disposes of 1o anatter thoroughly ; the pith and core of bank- ing is not monoy; It is, not tho thing handled, the thing that mflnns ; and consequontly thoughts und talk shout money, will not give you accoss to tho essenco and inmoat hoort of bank- iog. %gllu, then, I ask: If monoy is not the thing that o bunk transfers as the substance ho deals in, what {8 it: PLAINLY—TROPERTY, GOODS & bank exists for the sole purposo of placin, goody in new hands. A brief oxamination Klfi £oon make this clear. In what form does a banker obtain the monns he transfers? Of what are the ninety-soven parts of his recelpts com- posed? Of dobts; of sums of money ex- pressod on pleces of paper, aoknowlodged to ba duo, and which it is the business of a banker to collect. They are money duo, and tho banker can insist on thoir boing settlod in monoy. But can thoy bo 8o paid ? Robarta & Co. answer, o: They do mot colloct them in monev. hey aro paid by being sct off against counter dobts at the Clonring-Hlouso or clse- whero, just g8 in o marchont's dobtor and croditor accounts, vast sums may be paid by ftems of single hines. Our analysis must trayol yet farthor back, and iu({ulu how theso dobts came into existence. Whataro thoy? They swera born from the sales of goods—overy ono of them, Denr in mind carefully that we a0 tracing theno debts at thoir origin—when they first entorad the banking world—not whon they were shifted nbout within it, Multitudes of checks, no doubt, are received by bankers which aro only tranafors from one bank to avother, but_these movements count for nothing in sualyizing what & baok is. Indoed, at this poiat of our subjact, all the banks had botter bo considored s8 ono ulnfila hank, and then the shiftings I apoke of will be only so many now lines written under varions rames in the univer- sal ledger, 1 eay, then, that overy receipt of & banker comes from THE BALE OF PROPERTY, whether the depositor places & oliock given in pn{ment by & buyer of wool or corn, or an intor- et warrant on connols, or a rallway dividend, or & check paying a ealary, or soy other kind of znper dooument ; in cvery caso alike the deposi- or of the papor, beit cheok, bill, or other, ob- tainod possession of it by the salo of goods. I ropgat—for it is vory important here—that I do not #poak of transters of dobts already Inscribed In banking-books, but of the first apponrance of dn];.vt a8 ono of the ninoty-seven recelpts of & ankt, We have now obtained one of the banker's {¢:noipsla, bis depositor, whom neolinve found to fo p uellad of goods, 1o takes the choak Lie o5 £ox LLioiA 1 Lhe Ranki oW, It b neied 1L THE CURRENCY QUESTION. | ‘banker, whothor at the counter, or by a new clicck drawn by him, to hand bim ovor st onco the proceods of the oheck #0 lodged, banking could not oxist, The banker would ‘becoms n moro collooting clork, It ia ossontail that tho depositor should leave a portion of the procoods in tho banker’s hands for » ponod more or loas lon§. Thie brings us to the peouliarity in the ‘broker charncter of a bauker; ho doos not, like tho broker in Mclning Lane, find tho socond prin- .clpal and charge n commission. To nots differ- ently; ho nccopta the deposlted cliock as n dobt to bo due by him, repavablo on demand, and tronta the Emcuedz a8 a fund which ho hns bor- rowod for his own purposes, earning a-profit In his own way. ‘That way consists in_finding out pomo ono who wishes to borrow, and if ho ia sat- infled with tho solvoncy, whothor soonred or not, of this borrower, ho londs him the moans ho obtained from tho depositor. Ilere we havo THE BECOND PRINCIPAL, the borrower on discount or otherwise. Thon comos tho question, In what shapo doos ho lend to tho borrower? In mionoy? Again, bankers' booka roply, No. Ho bids the borrowor draw upon bim, or, whick Ia the samoe thing, givos him o check f0r tho amount waatod on lonn or dis- count. Tho two_checks—tho check paid in by the flu{munor and tho chaok granted y the ban! —moot at the Clearing-Tlouso; thoy cancol enoh otber, and_nothing whatovor nood pass, Tho effact insido of tho bank i two linos in ite lodg- or: ono rocording s dobt due by, &scconda dobt due to, the bank. But wo hiave not yot reached 3 TIHE ESBENCE OF DANKING, the object of its oxistonce; wo must now call up the borrower on discount or loan for oxamina- tion. Why doos ho want to borrow? What docs Ti0 do with the cheok which the bankor author- izod him to draw? 'T'o buy goods with i¢, I an- swer; nono othor 18 possiblo; for checks, like coln, havo no other resson for being invested than to pass goods, to oxchangothem. Nodoubt 1t will bo snid that the borrowor's objoct is often, in times of panio, almost scloly to pay & debt that muot bo faced ; but this docs not alter the ronl facts of tho banking situntion, It only in- torposes a middlo stago, o shifting of dobt within the banking community ; that clamorous dobt was itaell created by the purchase of goods. Thus we poreeive what banking doos—tho work it actuslly and posltively acoomplishos. IT EXCHANOES GOODS § {rom goodn it takes its_beginning, and in goods it mocte with its end, Its dopositor sold_sugar, placed tho choele he got at the bank, doclined for a whilo to recove thoso othor goods to which his salo of n\:{;nr ontitled him, nnd begged hia ‘banker to find some one who desired to procura merus for buying goods, and to onablo him to obtain, sy al{k, by moans of tho sugar. This 18 gonuino, natural, actual banking—tho ond it was dovised to accomplish. Many consoquonces flow from this aualysia. First. 'Tho socret, the forco of all banking, lis not in tho banker, but in his principals. Tho bankor only distributes purchasing powar, and this purchasing powor is wholly derived from tho srlo of goods effoctod by his depositor. If, thoreforo, wo soek to loarn what is_ocourring or likely to oceur in the banking world, we must Took to what ia Imp‘puning amongst depositors and borrowors. This is tho grand losson to lenrn from our examination of banking. In the next place, we cnumerate horo, a8 wo woro bound to do, tho univorsal LAW OF SBUPPLY AND DEMAND. The depositor uugplieu; tho borrower on dis- count demands ; the price of tho article in tho ‘marlet, of the purchasing power, depends on the relation betweon the supply and tho domand. This {8 tho law of the banking markat, & of alt other mnrkets ; and you cannot grasp this truth too firmly. You will find many disturbances and commotions in it, just as tho sioge of Daris wonderfully disturbed the prices of ment and Discult, and_gavo value to rats; nay moro: I foar we shall discover violent movements in the prico of tho article in tho rate of discount, geno- ratod by causes infinitely more artificial and imaginativo than s surroundiog forco of armed men. But if we wish to judge tho motura of thore com- motions, it will boall the more nocossary to maintain our footing on the oue pilo of solid ground—tho Inw of eupply and domand. Wo must nover forget it for an instont. If doposi- tors hiove had good harvesta or Inrgo morcantilo profits, and_nre in no hurry to_omploy their gains, whilst the stato of the world offors fairly romunorative flelds for capital, the rato will tend tolower lovel. If, onthe contrary, hnrvosts Tavo boon bad, and farmers mako no doposits, or morchants havo not beon successful, whilst on tho other sido borrowors ropny tho banlk with diflionlty ; or may have boen ontirely ruined and cnannot answer to the calls of thelr bankors, then the rate will fly upward swiftly, and loans and discounts moy at laat bo almost unattainable. This brings us to THE RESERYP, THE PROTEOTIVE VUND, which tho conditions of most banking ren- ders indisponsable. The banker does not know when his dopositors will domand tha roturn of those funds which they placed in his hands, nor can bosuro thatthose to whom he has lent them will be ablo to_fulfill their engagoments with bim and rapl\[vl him loans which he ig forced to recall to moot the demands of his depositors, An infinity of motives may act on dopositors to require repayment; an infinity of commercial causos_ may disable or rumin his borrow- ors. Indeed, no small portion of Lis loaus, those mado on discount, canuot bo roclaimed by him bofore a stipulated time, T'ho action of tho spoenlative, or needy, or distressed, doposi- itor may be suddon, sharp, and poremptory. Tho solvoncy of the bank may bo at stnkos its credit, or oven its existenco, maoy bo compromised, In ordinery times it relics on tho nverago of loaus ond withdrawals ; in times of excitement it ro- quires o stock of ‘cash, proviously provided, to Hecure itsolf from danger. 'This stock is callod thio rosorvo; and tho groat point to grasp con- cerning it is that it i provided for eafety and snfoty only; that the eafoty of the banl is ita sole raisan d'ctre—tho ono golitary motivo forits oxistouce. Anolyels roveals mo other. On Whichevor sido weregard the resorvo, safoty againat stoppogo is the only fontura it diacloscs. BUT WHO 18 T0 DETERMINE the size of tho reserve to bo malntained ? Each bank itself, according to tho naturo of ita busi- ness. An agricnlturnl bauk, supportod mainly bfvn the discounts of land-owncrs or provincial shopkeepers end farmors, will bo exposed to few fluctuations ; its reservo, eovenin tho worst of timog, may bo safoly allowed to_romain exceed- ingly small. On thio other hand, a great banlk, atsuch places as Bristol or Liverpool, encounters much vaster changos in the fortuncs and tho wanta of its customers. Long eoxperionce alono can dotermine’ tho pommt of seou- rity, But tho working of Dritish commorco has mado most of the roeorves of DBritich banks to couvorge upon London. Country. bankers roly for their reserves on funds which they keep with Tondon banks; ond London bankors, in turn, ‘pour thoir unomployed balunces into’ tho Bank of England, which thus becomes the great na-~ tional resorve for tho wholo Kingdom. Very im- portant consequenced flow from this complicatod fact, of which I shall notico some presontly. Hero I will morely make the admission that the vaults of tho Bank of Eufiln\ld aro, in the main, tho magazine which holds tho spare stock of gold of all England. THE FRAME WORK OF DANKING now los open before you; its leading cloments ara plainly visible; tho principals and thelr bro- kor, their creation snd thoir relations to each other, may bo clearly discorned. Wo see that the banker is an nfieul who lends tho sparo goods of one man, to.be used by another; that his function 18 to effect oxchanges of property pie- ciscly a8 a sovereign; thalthe resources he S iolde are dorlved from one principal nad ara lont by him to another; that he lies under the obligation to restora the goods or thoir worth, to his qopositor, and to do this he must summon tho mau to whom ho has lent thom, to bring his Jomn baok to tho bank; aud that the pousibility of his debtor boing unblo to repsy his dobt may oxposo the bank to oritieal dangor. Henoco we discovered tho nocossity for a resorve, Thodom- inant power, we thus find, in hnnkln§. to bo the STortunes of tha two principala ; this 18 the forco ‘which renders tlie deposits largar or smallor, and tho demand for losus and the solvency of bor- rowors, stronger or wealier, Whilst businoss is sound and stoady, banking may be, snd gonorally is, extromoly rogular. 1t thon prosonts lit:lo matter for notico, ~ Tho law of supply aud domand thon rulos suprome, And evon whan tho supply diminishos, and with 1t tho facllity of lending on disconnt, provided tho cause bo olearly kuown, especially if known long beforebnnd, no mischiof hurpeuu in banking., Thus o grent deficlency {n the harvest, Lere or abroad, ond, s & pardenlar caso, the cotton famine in Lancashire, produces no violent com- motion, Tho rato of lonns tonds to rise be- osuse the supply is weaker, but traders are fore- warned, and ke their srrangements accord- ingly, and no calumitons result ensues. 4 CRIBES, o liave now veached tho point which confors such fiul‘pnmn% intercat on banking ; whicl royokes and bewilders ; whioh calls up into Eulng, a8 If by & maglcian's wand, countless forms of alry theorles, and covers the trading world with tiopleal wracks aud disasters, We are in presence of thoso singular convulsions whioh £nll on the moncy markat as thoir natural proy ; thoso torrible nflnulofl of tho commeralal community too familiurly known under the nminea of panies aud erises, Liko invasjons of the plagno or the cholers, they fill men's mindg wlth o vague soneo of impending calamily, aud sweop away miserable victims, for whom this wrt aP fioaling. furdished 1o rémody, Tho woll aud the mtrigkon ero pkG overwhislmod by Ky nndofinod feoling that ruin is at hand, whilo mowmory rocords with_awe, that, liko tho pon- tiloncos of the middle 'sgos, thess hankin visitntions soom to foll undor a fatal an thyatorious law of porlodicity. t 18 of osgontial importance to ascortain tholr nature and tholr cnuscs as faras thoy can bo treced. I have ondenvored, in othor places, to ux&nlnln this groat subject; but I would partion- Intly refor you to an article in tha American ournal, Tre Ontroaao Trinune, of Octobor 20, 873, entitled *'Tho Politicnl Economy of Com- morcial Orises,” whioh oxamines them with ad- mirablo clonrness and ability. What, thon, is & crigis? Not & moro riso fu tho rate of discount. It morchants and manufacturors aro able to foreaoo that thoy must not rockon on full sup- plios for advances, thoy contract their opera- tious; thoro is less trade and loss wealth pro- duced; consumors cconomizo; snd thore ia no confusion or wild alarm. A gonuine orlsls is tho offupring of TIIE, DESTRUCTION OF WEALTI { it aprings from a positive wasto of the national *eaplial.” Tho origin of tho disaster is spocula- tion In its widest monso; not that spoculation which consiats of what may bo ealled gambiing, whon ono man gains what nnotbor losos, but of that spoculation which doliboratoly decrensos tho consnmption of poods, whils fod and clothod laborera aro sup{;llod with toola and matoriale, and then finds that the consumption is not re- ‘laced by tho oreation of frosh woalth, Thus an oxcess of foroign loans muy provoko a crisis, 28 it did in 1825,~not bocause, as is vainly sup- osed, thoro is & diminution of gold in England, ut becaueo those loanaaro made by England with hor own fuuda, hor own anltnl, whathor by a di- root sonding of thom to the borrower, or indireotly by buying from other foreignors the gold or othor ‘things which the borrowing atato may ro- quire. Thua an excoss of loans to India or tho colonlos, if mado with suddonness, might briug about a crisis; for thoso loans Fo forth in iron and_other Bnglish commoditios; tho nation would bave fod tho laborora who produced theso 0ods, kud tho goods would have dlsnppesred orm Englond. But, {n theso modorn days, tho fruitful sourco of oriscs in excoss of oxpond{turo on objacts excollent in themsolvos, but boyond tho menns of tho nation to offoct them in o given time. No offendor can compare in tho guilt of gonorating crises with an undue con- struotion of railways, Tho power of this sia was conapiouous in 1847 and 1806. Tho object is 4o good—rnilways are 8o enriching; nothing can_competo with thom in the bostowal of wonlth ; speculation which promotes the pro- duction of instrumonts that spread comfort and richos over tho land scoms so inmacont, so laudablo, who shull litt his voico and eny that needod railway shall not b construoled because the country caunot afford it? Then who shall uny WHAT 18 EXCESS and at what point it commencos? 8o the pro- motion of thoss weslth-creating mnchines pro- ccods amidst univorsul applange; lnborers aro Bot to work, matoriala of evory kind aro bought, & vost consumption of capital goes on in the form of the things destroyed by the laborors to maintain their existonco; but” what doos tho notion obtain in return? Tho roproduction of tho copital dostroyod? Means for continuing our industry snd Iabor when the ratlways are comploted?” Notbing of the kind; bub holos mudo in hills, called funnels; pilos of accumu- lated carth, ftylod embankmonts; long linca of oxpensive iron, a8 worthloss till they aro at work a8 children's toys, and infinitely moro oxponsive, and a mass of Juxurions aud destructive living, carried on by workmen, high and low, from ab- normal wages and salarios and profita acquired during construction. Thus tho mation finds itsolf renlly impoverishod. Howover much, a8 years roll on, it may dorive cnormous waalth Trom their most productive works, it is as poor a8 if it had set tho Inborora to mako Lolas in tho ground, and thon fill them up agnin. It is ossontial, thereforo, that what is excoss of unproductive exponditure, whethor absolutely unproductive or for a time only, should be ascor- tained, Excoss means sponding beyond savings. TUT WIAT ARE BAVINGS ? Surplus of wealth produced aboye wealth con= summY. And where is this surplus? In what form doos it oxist? Partly inlargerstocks of all kinds in tho nation, Still mora for new ma- chinory for genorating wenith in now docks and now railways, in additional factorics, ronds, nnd tho like. When a nation makes all theso things out of envings, it is none the poorer; for savings commenco only aftor consumption; that is, the porsonal enjoymont of wenlth has been ntisficd. A ‘nation is like an individual. Whon » man finds at, the ond of tho yenr that his incomo hns Improved, whilst bis ordinary mode of lifo Lins boen lopt up, heis richor, and ho can np{fly tho incroaso ug‘inr to mota onjoymont, which is not saving, or to improving his cstnfo, which is, It is pra- cigely tho same with & nation ; it mav do what it likes with surplus woalth won, and not fool the poorer ; only if it spénds more thau the surplus, evon on works which will ultimately prove most onriching, it destroys part of itn former means ; it has mudo the now construction out of its or- dinary incomo, andif it doos not contract its ‘modo of living, muat bo. for tho time, subatau- tially and positively pooror. Lot us now considor THE EFFECTS of this over-destruction of waalth on banking. Tt makes its sppearance on the sido of tho sco- ond principal of the banking broker—an tha side of tho man who borrows from him. Crises nee- essarily Lave destruction for their arigin; thoy may piaco smallor resources at the banlk, seouri- tios mey bo bad, or profits scanty, or clvil war abrond may narrow trade, or a distant costomer of England mey bo struck with famino: but thoso events ara moro or less foroscon and pro- vided against, and, at tho worat, do lit~ tlo moro than give banks & small- or command of means. Thoy may raise discount in cortnin, or ovon important degreo, ‘bu they aro free from tho agonics and mad im- pulaos of panics and_orises. If wo wial todis- cover the #ource of these commoiions, wo must turn to the spending departments of the banking world; itis the borrowora who, through tho banks, obtain possession of the woalth which the depositors transfer to thom—it is they who direct how it ¢hatl ba used. Whon business is in ngound and normal stato, tho ordinary con- sumption of wealth is roplaced by industry ; and if now instrumonts for incrensiug tho national riches aro constructed long before the loss caused by making them can bo mado good, this oxcess of consumption is limited to the savings of tho country, and brings trouble on ne ono, Dut_human naturo cannot be wise at all times, Trado lins boon prosperous aud profils largo; capital has secumulated, not monoy, but stocks of goods of all kinds, which seelk to bo applied to production; now investments aro ranlly wantod, and the keon eyo of speculation rosms over the world for spote to scizo upon. Nor is speculstion blamabla or uscless; on tho con- trary, within the limits of tho supply of capital unused, it is most legitimate and Loneficial, Tho ‘modera device of JOINT STOOR COMPANIES groatly enlarges tho range of speculation—for good, cortainly, but also for ovil; and_to fall into the evil is ofttimos fatally easy. Who can tell how much solid foundation thoro is forspec- ulation ? Tho entorprigos, whether of individual tradora or of compsnics, como out singly ; tholr action, whon for misabiof, tnrns upon tho aggro- grato of thair oporations ; and who has knowl- odge, calmnoss, and observation equal to cnat- ing up that aggregato, and placing it ido by side with the eavings of tho country? Confi- deonce and oxcitoment oxpand; banltera catoh the provailing sontiment, and part with somo of their usual caution ; a multitude of porsons, un- conuccted with trade, aro drawn into the vortox, nand the vislon of fortuncs to bo rapidly won fas- cinates imaginations on every sido. But, as yet, little harm {8 dono, 80 long a8 nothing but ups and downs of the sharo lists have beon produced. Tho mischicf commencos when tho destruction of capitnl,—and remomber that it i tho dostina- tion of all capital ta bo dostroyod,—is 8ot in mo- tion by the speculation, Laborers aro fod, tools and olothing are worn out, matorials aro mado away with, and thore is no raturn of new wealth oreated to ropair the loss. Capital doatroyed by a manufncturer in making cotton-yarn roap- [mmi in the bale of gonds supplicd as wealth to ho world ; Ina crlsig, tho consumption of wealth has been accomplished, nnd nothlng romaing— for an unfinishied or unworked roilway is noth- ing.. Presently this fatal fact isdiscovored ; gonds or loane advanced on credit are recluimed, DUT TIHE WEALTIL ITAS DEPARTED, and has not roturned in & now form, Dobts are not paid, and then tho charactoristic ufimplumu of & bankors' pania como to light, Tho truth suddenly flaghos on the banking and commareial minds that moans fail to J’B{ daobts. The econom- ical truth i not perceived, that wenlth haa been dostroyed nud not replaced by new goods mado 5 but it is soon that tha whorewithal to meot obli- ations does not exiat, Debtors are driven to hirow thelr merchandiso on tho market, and they are unsalablo or sold nt rulnous prices. ‘I'hén comes the torrible fooling, who is safo? who bas gone boyond his meausd? What groat liouscs have {aunched freoly on the speculation, and aro ingolveut at the coro? Dankers draw in tholr dobte, in mauy cases, in vain, Then domes the turn of tho banka thomeelves to bo siia- Bnolnfl—mld tho pauip reachen itu climax,. Thd ost and strongost banka fall under mml’lflim\l and 150 banlk, wo know, can meot ovory olaim o o given momont. Bueh 18 £ TIE CAUSZ OF OUN ENGLIBH ORISIA; and suoh was that of tho last Amorican, when the great house of .'m’y Qooko & Co. found thnt it was full of unealabfo bonds of rallways, oone withotéd and Lnlf gomploted in the wildomous, THE CHICAGO DAILY TRIBUNE: SATWRDAY, APRIL 18, 1874, 'glu:y woro tho Ovorend & Gurnoys of the United taten. ‘Wo soe, then, that tho day of crisia is the day of tho sottlomont of losses, Tho lonsics havo Dboeon incurred—the wealth is gono, for tha goods have porishod and are unroplacad,” o convul« slons of a panio are tho pushings of a orowd, onoh not to bo tha loser ; doposltors rush for tholr dopusit—for.tho bauk may be lianging over tho proctico, THE ROOT OF A PANIQ in want of knowlodgo—ignorance of who hns spaculated or grantod Joans boyond his moans; ignoranco of whother tho nation has consumad moro than its savings, Indoed tho thought ocours fo moono. Tivan at an_earlior mingo, whon tho inquiry might have givon mafoty, no ona thinks of Pumn tho question, Then thore in ignoranca of what onch Dbank or moroantile house hns been doing; how many rash loans Linvo boon grantod; whother a gront respectability may bo trnsted for solvenoy, Tha anxioty bacomes greatly aggravatod in rango and intonrity by tho vaat oxpanso of English trade and tho monoy-mnrkets of tho world contoriny T London. _ For who In to sxy how capital inid out in Indin and the far East, in tho United Btates and tho groat Wont, in tho Colonies and in_ Chinn, hos prosporod ? whothor it is yiolding roturng or hme beon annmibilatad, whethor by netual loss or consumption, or works to bo pro- ductive in s distant future?” Thoso are all olo- monts of vast influonce over English bankora. Yot thoy are most difficult to lonrn ncourataly ; atill more, aro llkely to bo not thought of at al by thosa who nct, whother a8 londoers or borrow- ors, in the monoy market, Thoy contain tho socret of the rato of discount, of crisos and pan- ics, But how hard are they to track out and :vul{;h‘ acourately in the vast oconn of British rado Ono conclusion is frresistible. Thore is an FLEMENT OF UNOERTAINTY in mscertaining tho actual situation of trade at givon timo, which may wax greator or less, but which nover can bo got rid of. It is’ of im- monse importance to bankors and to borrowers on discount, to forecnst the futuro of commerce. But thoy onn nover thoroughly master tho problem.” This uncertainty, morcover, is dis- tributed Into two different rogions, There is, first, tho flold of capital—what is going on with ita dostruction and roproduction; nnd thera s, secondly, tho fleld of banking within itaolt— what {8 taking placoin tho shiftings of dobta and loans botwoon ledger and ledger, bobweon couniry and country. Ivery resource of bank- lns wo havo soen onters nt point A, creating n debt to n dopositor; and It disappears finally, 8av, 8t point Z, whon Ronds aro bought in ox- chakgo for those sold at A. But botweon A and Z ondless movements muy tako placo; and thero oan casily sprimi‘up botween A, when the bank was sound, fnd the final Z, n numbor of mova- monts by cheoks and papor, which may create much loss and_confusion in tho money market, and yot not touch the quantily of pronorty originating nnd ending the transaction. Theso intornal moyemonta muy causo anxioty and ag- gravato panica; but thoy nover creato ons. If thero i8 no waste of wealth, more account were deciding who wing and who losos in tho hnzard, may altor tho fortunes of individunls, but con- stitute no diminution of tha waesalth available, though banking for loans. ‘Wo now pass on to the second theory,—~which 18 gaining ground oven in tho nowspapers,—that tho truo point to look to I8 THE PROFORTION. OF THE RESERVES to the linbilities of tho bank, Whea that pro- portion incronses, tho bank ia eafor; whon it decronaes, {t is woaker, and the Directors must ‘bo more paralmonious in grauting loans. Now, this proposition in itself is truo, It is something thurmx;i'hlv difforent in kind from naked quota- tions of tho mero stock of gold in the bank, It 18 in harmony with what wo liave seon to be the fundamental principlo of banking,—tha T of supply and demand. If the supply oxceeds the domand of funds to ho (ransferrod through the ‘bank, the difforence must nocersarily nocumulato ot the bank in the form of gold. ‘Cho converso, or an oxcoss of loans, will diminish the bullion. The question then bocomes this: How do those who advocate the proportion of gold to lnbilitios, as the rule which should govern the action of tho bank, proposo_to apply Ly prac- tico? We know that the sole object of a rosorve is enfoty; aro the Diroctor to fix upon o certain ratio, eioh as one-third, as tho point of stablo safoty, and raiso and lowor tho rate of discount according as the bullion “falls below or rises above this point ? It that is 8o, if that is tho grlnclplo and tho rulo, thon tho action of tho nnk comes into violont collicion with it. Tho Iate semi-crisis would be brought out by this rulo as an arbitraty, artificisl, and unjustifiable commotion exoited in tho money mnrket, and n heavy infliction of loss and contraction of in- duntry imposod npon trade by Dircetors ignorant of tho ecience of their business. ‘The rato of dis- count was raised on HBopt, 2% from 3 per cant, when the proportion of reservo to lia- bilities stood at the supor-safety point of 44 per cent ; it was rngldly pushed on to 9, and the dis~ turbnnce coased on Deo. 11, whon tho ratio was atill at the full snfety lavel of 86 porcent. Thus the violent loaps of the rato, up and down, oo- carrod whilst the rosorve was woll above the line of enfoty ; itis impoasiblo, thorafore, toadopt tho theory that idons of safoty, a8 basod on tho ratio of reserve to liabilitlos, guided the conduot of tho Divectors; and this principle canuot bo ac- cn[fl.nd 08 the gavornor of tho rate of discount without involving the Directors in tho charge of having harassed trado and injured merchants, upon puroly wild and fancifitl ‘notions, in direct violation of right dootrine. The ratio of rosorve, compared with linbilities, clearly furnishos no explanntion, much less justification of their conduct. ‘Again, in the gront crisis of 1806 the bank went on'Iending much and swiftly loug after TIE LEVEL OF SBAYETY had boen passed. Tha reserva of the banlk fall to n flzure considerably below n million, and its linbilities surpassed tho gigantic sum of £33« 000,000, Xt did not run up tho rate to 20 or 80— it never moved above 10—and atill tho bank went on lending. Aro we then to infor that tho Directora of the bank willfully violatod the rulo of a fixad proportion betwaen debtsand roserves, and reoldossly imporiled the enfoty of tho bank by paying no. heod to_the signal fy- ing_ on the spob whoro dsngor bogan ? Nothing of the kind, I am firmly porsuad- ed. The bank, ovon with this * wondorful mengroness of tho reserve, was porfoctly safo. Inover heard that any ono thought it to be in dangor, or blamed it for its vast advancos ; nay, the advocates of coloseal roserves urgoit to lend without censing iu the day of orisis, And what is the inference that thouo facta teach? That the law of o fixed proportion of reserve to linbilitios, though offending against no principle of tho notion of banking, is not, in practical lifo, tho imposer of the rate of discount ; but somo other forco is at work which ever tonds to compel tho Lank to give no heod to thia fixity of ratio, and that if merchants aud traders seck to lonvn how .| discount is likely to move, they must think of somelbiug olso. ‘Tho real force which DETERMINES TIIE BATE is tho state of tho supply and domand, but not understood in tue form of o dofinite figure of proportion batweon the two. What ocoms in other markets will illustrate tho aotion of this lnw in baoking. It is woll known that s vory small deficloncy in thio price of & commodity ur- gontly neoded, and of limited supply, such ns wheat, for oxnm*:lo, may produce an onormous offact'on its prico, whilst the supply of other commoditios may vary largoly, and_ yet their prices may suffer littlo disturbance, It is clear that reforonces to the much-talked of proportion of debts and reserve will not explain tho rapid and most unexpeoted rise of discount to 9 per cent; butif wesuposo, as T boliovo was the actunl fact, that a suddon domand for lonus sprang up in the Stook Exulmn{;u, tho rate™would swiltly spring upwards, whotlior tho resorvo was great orsmall, Tho bank advauces wore in urgent demand ; it could solt it loans at almost fanoy pricas, 1t profitad by tho_stato of tho market : and who ean find fault ? It did as atl tradors do under like circumstauces. So agaln, In 1866 and in 1865, the demand for hoip from the bruk wag immeonse, The trado of tho kingdom was in grout peril, The bank lent nway almost evory- thing it had, and cortainly did not exact prices which tho market would bave borno, how- over elovated, ‘I'here is no need to think of- the ovor-talied-of nostrum of the ra- servo, and its adventurcs, to undoratand tho sation of tho bank and its rato of discount at theso momentous periods, What oceurs to the rosorvo is similar to the waves of tho soa, The storm-billows rago within o fow foob of the wator's surfaco. Whether the deop water is incroasod by 1,000 feet or by 10,000, tho surg- Ing wators strike with equal violonce, The dopths below are unmovod, and have nothing to do with tho waves of tha surfaco. o with tho roservo, It is not its dopth, its sizo, which aots on tho solliug prico 6f loans and discount, but the waves of oxcited or slack demand, which roll amongst a vory fow millions of tho gold "ot it “summit, A Jarge pY lication for loams, unoting suddenly, will ratso the rato of disoount, whatever tho slza of tho rosorve; a faint dosire to bLorrow will lm\vob dlgcount low, howover slonder the rosorve oy bo, . Oie mighty power comes forilh pro-ominont out of this discussion, Tho law of supply sud domand I4 . . 'TIIE KING OF THE MONEY MABKET. 1Wlint lossons aro wo to derivo from this groat central truth? What, in othor words, Is tho practioal value of our diwoussion ? Tiiet, Womust thuow awey to tha wiudy sho ompty Aud ompids onl thoorlos of the practionl man; wo must have nothing to do with them, Thoso who shane tho futuro "of tho money market by thoorlzing olthar tho quantity of gold in thio anica atora, or tho proportion of roserve to_liabilities, aro building on the fands, The flood may, or may not como; but the building orectod, tho cstimate mndo of teansncting discount will furnish no guarantoo whatover For anlely ogainst loss; and this i no trifling galn, To bo rid of illusive and falso boliof s n grent atop won ; for cousclons- ness of Iguoranco s immensurably safor than folf-imposed dolusions, The farmor. who takos tho wontlier as it comes {s far mioro likely to Ro- cura bis hay than ho who has crotchots that por- tleulnr drya of the woolk ara always fine. Secondly—Wo now know what to search for and atudy whon wo nock to lonrn the trito stato of tho monoy market, Wo must try to discovor whnt forces aro at work in dotormining the sup- ply and demand of DANXING TESOUROES. Ta business steady? That is, is tho consumption and roproduction of woalth procoeding nt a regu- lar rate? 11 8o, thon tho variations In tho rato of lonns will bo slight. In tho harvest likely to turn out_well, or will thoro bo a groat duflclunu{ of food gnthorod In? If the latter caso, the nation will hiave to pay for most of its food twice ovor 3 first, {n the cost of tho year's tillage; sccondly, in the loas of wealth sont abrond to purchaso tho rain or mont which was not_obtainod at home n roturn for tho oxponse of cultivation. ‘That socond inatallmont of wonlth sacrificed to pro- curo the food that in indispensablo muat come from tho funds from which bankers derive thoir powors of lending; dlsconnt must inovitably tond to bacome dear, Has the nation sont away too much of its wonlth, its capital availablo for industry, In the form of foreign lonna? Then it is tho pooror, nnd will have loss to givo to bor- rowers, Aro too many railways.being mado, comparod with the anvlnss of tho country? too muny oporations oarried on_in transforming forclgn towns? too many dooks and hathora commenced ? _Ara workmen boing fod, elothod, and supplied with tools wnd matordals, nnd no wealth produced that roplaces: this consumption ? Then look out, ns in 1857 and 1860, for crises and panies. Or, ogain, are foreign conntrios losing thelr power to buy English goods through aivil war or famino? ‘Thon ox- Ennt a diminution of profits, reduced deposits at nnks, failuros amongst thoso who borrowed from them, and a tighter condition of tho monoy markot. Theso are hard things to study, bank- ers and morchants will ery; who can suffice for such a task? Not bankers, ono of their own number, Mr, Bagohot, assurcs us; they have quito onough to do in attending to tho busincss of the hour, In cxnmining files ; in watching, not tho stato of the trade, but the bauking taik of the dny. Morchonts can scarcoly plend the same exouso, for they are accustomed to long von- turos, And have some practica in computing dis- tant chanoes, But, in any cage, it {e idle to in- veigh against the inovitable condition of human lifo, 080 aro the tnfluences which govern tho rato of discount. Tho only question is, whather tradors shall turn fatalists, and accept the for- tuncs that may befell them, without taking any forothought to underatand and guide tho course of events, . . . . Many will now say to mo—I am well aware— wo want something moro practical than all this ; wo rarlnlru 2 cloar rulo to steor by—suro signs, Dy which wo may learn what is about to bappon, and not_gonoral instructions, which leave us all tho trouble and difficuity of JUDOING FOR OURSELVES, My answer s onsy and_short, Tho nnture of limnn life and of trade ronders it impossiblo that you should obtain, what you desiro, and if any ono says that you will find an unerring gnide- poat in tha quantity of gold at the bank, or the ]unnortiun of resorvo to linbilitics, as the circu- ation, he is delndiug you with what is nothin but fiction. Tho seasons, war, nnd politics, local prosperity or misfortune ; tho lotting in or shutting out of now countries from the monoy markot of England, foroign oxtravagance or foreign thrift, civil strife, tho conversion of Tinrd-working cotton or angar-makiug slavos into idlers ; lonns, whetlior to strangors or to colo- nics,—theso, and a hundred similar influoncos, aro ever telling on the banking of Evglond, and will make its rato fluctuate, whother with gentle motions or violent convulsions. It is practical to warn you ngainst rinning off on falso scents, to urgo you to study theso causenand ovents to the beat of your ability, and o Yncticnl gain s suro to be renped by the intellizont observer, oven though he should bo unablo to uravel all the caprices of what the heathon called fortuno. One remark more in conclusion. Though the ACTUAL QUANTITY OF DULLION at the bank is not the regulator of discount, ita flucluations arc important to watch, for they in- dicate movement, and movement may make nignificant revelations. But the grost mattor is the caugo of the movoment, for the caudes of o riso or fall may vary exceedingly and their ef- tects may bo oxtromoly divorso. Thus s large diminution of tha gold may disclose heavy spoc- ulative purchages of foreign goods, and thoso purchases may compel urgont applications for nid from banks, A riso of intorest would then bo inevitablo. On tho othor haud, gold may flowin or out of & bank in largo quantitics without producing any offect on tho rato, un- less the Dircctors chooso to act under the inflience of & gold theory. ~The mor- chants of Australin or ‘Californin may deposit millions of their metal at the bank, or a Gorman Government may sond over s heap of goldon tronsuro, how can this act on discount ? The gold cannot bo and is not lont, What can it do for borrowers ? On tho opposito side, it Ing nlways scomed to be marvelous that tho an- nual dimmnution of the gold roserve for pur- posos of summer traveling and tho horvest should bo put forth, as it constantly is, by the pross, 08 a roason for o riso of discount. The causos of this diminution are porfoclly well known. They do notinvolve ono particle of danger to the bank or the money market. They aro funds not taken away from the loans and discountings of tho bunk, but from a_cellar in which thoy were dolng nothing. The sbatracted gold is sure to return in o month or two; yot tho trade of England, wo are told, ought to bo visted with a heavy change for 8o extraordinary and empty o reason, 80 ngain, wo aro assured on many sides, that if the Germans purchase some six or sovon mill- fons of English gold, tho dworder in the monoy ‘markot is bound to be immenso. Tho idens of tho persons who sny such things to mo aro in- comprohensiblo. ‘hoy wonld, I imagino, main- tnin that a sole of English goods abroad for soven millious of gold, to bo lodged in the bauk vaults, would bo & huggo gain for England and the money market, and o certain reducor of the rato of discount. Alns! ADAM BMITIL HAB LIVED IN VAIN. The mercantilo _thoory, that it is good to soli for gold, lives on with unabated vitality! In such n caso Bngland would loge soven millions® worth of capital of the finuflu needod for sustaining industry and producing wenlth, and_ sho would got back no _othor capital to roplace it the gold won would be mo capital to tho nalion, B8till, wo ara are informed the oporation would bo splendid and England richor than ever. To Thoard Is the grand secrot of national woalth, To ma it invery cloar that England and the mono; ‘marlket would bo the poorer b{, $7,000,000. If. on tho contrary, tho Gormans bought 87,000,000 of the bank gold with German goods, England would clenrly bo the richer by tho goods, and nona_the poorer by tho loss of tho gold. It would be a case of vesurrection 3 the gold wonld riso from tho collar and take the material and ecuriching form of food, nluthiufi, and matorials for creating woalth ; it would bo convertod into truo richos, A bauk is only anexchange of {;m erty, and $7,000,000 worth of goods acquired y England, st no practical cost, would bo this vast nmount of praperty acqnired for thoso who goek to borraw gold in order to obtain goods. e Doath of a Milllonnire. The DTaris papors announco that ¢ DMme, Teuoir Joussernu,” who has just diod at her mansion in Paris, has loft her fortuno—10,000,- 000f—to tho Pacle hospitals. Mme. Lonoir was the widow or a vory romarkable mau, who had boen propriotor of tho Cafo do Foy, in the Palais, TRoyal, from 1815 to 1830. Whon tho nllies on- tored Paris aftar Watorloo, and for many years aftor that, tho Cafe de Foy was par excollenco tho ono fashionable cafe in Paris. Bluchor took coffos thoro, and it was the favorito u{ml. Bona- partint officors used to rosort to to challeugo the oficors of tho alliod srmios, _Tho Cafo de Foy consod to oxist yeavs ngos; but M, Lenolr bad ra- tired in time, and enjoyed his fortuno for many yoars, 1o was a mnn of artistio tnstes in spito of Lis humble baihmlngfl and was honored with the friandship of Horaco Vornot and Ary Bohoffar, o hind formed g splondid colloction of works of art andtarticles of virtu, romarkablo un“ncully for its snuff-boxos, ‘U'ho wholo of tho colloction 18 Ioft to the Louvro, wibot, Tho bones of John Talbot, flrst Earl of Slirowsbury, have beou discoverod in the parish churoh of that town, where an urn, said to con- tain the ombulmod ' hoart of the grent soldior, was already known to exist. While somo work- mon wero repairing the monument bearing tho recumbent fignra of Laibot, in_the south alulo, the romnins of the colin wero discovered, with s number of bones, Tho Ohurch-\Wardous wero informod of tho discovery, and carefully remov- ed tho hones, which wero wrapped in coroment, and in a wonderful stuto of presorvation, an they found that ouly o fow of tho vertebral bornies woro misaing, At tho back of the skull was the opening mado by n battlo-ax while Tal- Dot wad In o reoumbent position, which wae the oaued of hia doatli ( SPOILS. The Scramble in the Congres- sional Districts. How the Dear People Are Bamboozled by the Politicians. Impossibility of Reforming a Corrupt Party in Power, The politiclans in the various Oongressional Distriots aro stirring from tholr wintor-quar- tora. 'Tho Unitod Biates Assessor in one county mnkes & visit to the Colloctor in another, and Toth conbult with prominent Postmusters, and ‘malo propatations to take an nccount of politienl slock., Now 18 the timoe to make an invontory of tho dobris of blasted partios and broken poli- ticlans, nnd, if possible, bring order out of chaos, and orgenizo for futuro contosts. TUIS ONGANIZING POWEN ia very grent, nnd ono must admire the skill with which it s distributed. Howevor groat mny bo tho patronage of a Congressman, ho nover has oftices enough to go around, but thoso at his disposal aro woll distributed. ‘The Collector and tho Asgossor aro novor both in the samo county, and usually noither livos in the county in which tha Congrossmsn residos. This organize ing powor, g0 well distributoed, can work syste- matically. The morchant who eolls goods can rofor to books and sco which of lis customors are marked A 1 or other- wiso; but this kuowledgo on the part of the merchant can hmdly compare with tho knowlodga of the political organizer. Collectors ond Postmastors, who have learnod thoroughly tho science of political organization and caucus- management, know not only the political ro- sponsibility of their men, but their disposition, character, influence, the local ofiices thoy have filled, the conventions to which they have béon delogatos, how often they have bolted, how many times they have boon candidates, tho posi- tionn to which they sspiro, aud many other things, This advantnge of knowing ovorything i8 nvaluablo in o political contest, and explning how political power is long retained by mon whom every ono donounces, They can’ strike the wenk spots. It ia impossiblo for any oppo- sition to bo organized against theso mon without their knowledge. Thoy can find out the wholo ‘mattor, and play-upon tho wealmoss of human nature until the combination is broken up. The enloulations of politicians aro somatimos complicated by THE YOUNG MFN who are growing up and becoming votors. Tho young man who attempts to oxert political influ- ence has a novel experionce. His charnoter is woll known, and he is used for that kind of po- litical worl for which his qualitios fit him, But, it o Is indopendent, his path is thorny, Gov- | ornment officers do not directly oppose him, but thoy quietly overlook him, andactasif ho had no oxistence. Ho finds that, notwithstanding all of his exertions, poople soem to bo utterly ob- tivious to the fact of his prosonco. If he attonds a caucus or a convention, he finds himself sim- ply ono of tho multitnde, and ean influonco only ono vote,—his own. Hois nover sont as a dolo- gata anywhore, nor can he find out anything, The political atmosphers is mado chilly, and ho is frozon out. Ho is then protty sure to lot politics nlono, or fo play into the hunds_of Post- masters. Tho Nation 8ays that Gon, Butler hag corrupted o whole generation of young mon in Magsachusotts, by teaching thom that politieal influonce is to be gained by moaus which honor- able mon condomn. In doing this, Gen. Butlor is simply showing haw tho prosont ‘Civil-Sorvice canbe used ; and that, undor this system, the succoesful politician i# the ono who actively seramblos for spoils. Young mon naturally take lessons from tho successful men around {hum. Whon the young man, fresh from the olassio phnades of bis Alma Mater, his imagination fired by the deeds of ancient horoes, tnites his firet plunge into political lifo, the old politicinus pat him_on the head kindly, but give him to un- derstand that be is_yot somewhat verdant, but that, if ho takes their advico, some hopes may bo ontertained of his moving in nn vlovated spharo nnd exorciging great political nfluence. Iig conacientious scruplos are mot with & smile, and an intimation that, ono of thoeo days, he will bo fres from such oxhibitions of verdanoy. No ono ‘but an ambitious young man knows the power of such a hint. How long does Lio then romember his oarly toschings? Whore is tho galaxy of horoes to whom spectacled Professors bave pointed lim? What kind of a figure does ho 1magine thoso old fellows would makhe at a can- eus? Young men liko to bo considored smart, and the teacuings of Sundny-school Superfntond- onts and wiso Professors count for littlo when 311] politicians toll ambitious youth not to be vor- ant., In tho various Congressionel Districts, it will be found that o larpo proportion of the Tawn, County, and Distriot Committees for calling couventions, are Govornmont officors. The time of calling caucuses and conventions, sud their arganization, are in tho hands of thess men ;_all of which socures their hold on the party. In- dood, 80 powerful nre the Governmont officora in the various districts, that it is sometimes o quostion betweon them and the Congressmen as to which are the mastors, Ono of tho sharpost ‘men to distribute patronage was MR. E. B. WASHIURNE. His appointoes wore' sharp-oyed, quick-sighted men, aud he could make a little patronazo go o loug way. If any opposition was atartod, hi appointees would brank up caucuses snd bring double-headed delegations into conventions; and 8o porsistont and active woro thoy that all thought of_opposition to him vanished. Whon ho resigned his seat in Congress, his appointeos were strong cnough to golect his Buccossor ; and, sinco then, it hag boen a little doubtful in that diatrict whother the Congressman controlled tho patronnge, or tho patronaga controlled the Con- grossmnn. The promises of patronage in the various dis- triots somotimoa bocome inflated, after the man- nor of the curroncy, Moro promises are made than can bo oagily rodoomod, It may bo that no timo is specifiod for their redemption, and it is indofinitoly postponed. Tho gentleman to whom thosp irredeemablo promiscs aro made do not soom so plonsod s some pooplo think they will be with an inconvertible curroncy. Fow Cou- gressmon havo onough patronago to rodeom dholr promisos ‘and they aro, thoraforo, anxious to multiply positions of profit for thair crontures, This makes it dificult, if not impossibto, to car- 1y out any oxtouded mearurc of rotrenchmont, It is woll known that the Govesnmont cannot transact any businoss whatovor as cconomicully n8 o privato aitizen wounld conduct his affairs, It cannot bitild a Custom-Touce, or avon hire the digging of & diteh, without oxtravagant oxpendi- ture. Tu making calenlations wpon political mattors in thoe Congrassional Districts, the coudition of THY RURAL PAITIBAN PRESS must be borne in mind. Tho publishers of coun- try-papers do not realize much from their busi- wosk, and a large majority of thono belonging to tho dominant purty aro thought to binye & poit- niary claim on it, "This claim is usually paid by officers of the Government or enndidates for oftice, Its offact upon tho indopendonce of the preks neods no oxplanation. The eriticism to bo made upon this i, that tho pocuniary claim s not oxelusivoly confined to papors published in tho cauntry, It may ho obscrved, too, that, in in the solcotion of Government ofticlals, editors and publishers aro not by any moans overlooked. It would be thought, perhaps, that the dear coplo, whom politicians worship, wonld not al- ow such proccedings, and would wolcomo & ro- form movoment, _Whoevor dislies the way things ara managed can start o roform movement whonevor ho chooses; but, if anything cau {llus- trato the yanity and vosntlon of spiriy incidont to lifo, it Is an attompt to reform n corrupt puxty, ‘Whoover tries it will seo moro tricks thun have over boen publishad in the papor, His motives will bo sesniled, to commonce with, o will bo chargoed with the posscssion of insane ambi- tion, and with harboring porsonal spite, I ho {rios to lave mon wsoleatod for offico without referonco to the nlmflu, he will himself bo charged . with bolng o worker for spolls, Ilow, thon, arc the donr poo- plo, who vainly fmuglno that thoy aro_of much consequenco, to decldo tho matier? But the roformor lins a saddor oxperionce than this: The onemica with whom ho has to contend are thoso who wish to retaiu possossion of the spolls; but, when hé takes an ncoouirt of his tollowors, he is shocked to thid that many of them are thomselves contonding for tho spoils of tho encmy. Thon, indeed, 18 there yexption of epirlt, such as nover was known lo the Drophets, 1Is oan nover roform such follawers, [Ho wsy pronch to thend with all tho eloquenco of Poter the Iormit It thoy woro kopt in n“'llul{fl“ taprort? ENBING POLITIOIANA' HONE :2{“:1 l‘l'xnfimu, thelr political virtuo would novor As on offack to tho offorta of roforme apollors thomaolves often ralse tho 0::;! for ro- form, and their pathotic appeals for horosty nnd good govornment ara s honrironding as tha wall of hired mournors, Amid the confusion, tho sharp men know whera to strike the wenk spots, and have mattors their own way. Buch are tho results of an attompt to roforin a party corrupt- od by Congrosalonal patronngo. In apito of nil offorts, tho struggle bocomes simply a seramblo for spolls, 1t in hiard to convince pooplo that the romedy for this {a tho doing away with Congressional patronage, Onco a yoar, large masses of pooplo uro collacted togother for hiho purposo of listen- iog to the frantio spocches of Iourth-of-July orators, Gront crowds stand nwo-stricken as tho sponkers deseant_on tho wisdom of tho Fathors who foundod tho Republie. 'hic orators gestic. ulato from tho northeast to tho southwest, and brok again, n they toll how tho Fathors, witls transcondant political sagncity, Inid down the vrhmlplu that tho Logislative, Executivo, and Judiolnl branclios of the Governmont should ba kopt soparato; but bardly one of (he poopla, dronms that thia means that o Congrossman BIOULD NOT CONTROL the nppointmont of & Pontmaster. Bearcoly any ono thinks that the sad condition of political mntters is duo to tho fact that poople wn‘k right over the principles lnid down by the Fathera. "Tho Fathors had o Loalthy suspicion of human naturo, and know that, if the Logislative branch of Govornmant could intorforo with tho working of tho Exacutive, the lattor would injure tho former, and vice verss, If n Cougrossman np- poluts tho ofticors in hi district, and_powor comas to him thoroby, he {8 influenced to &0 logiulato as to Incroato the numbor and valuo of the nx)pnmtmlmtn.- Tho result of “ Lhis iy Aeon in tho laws. Whoover looks caro- fully over the rovenuo laws will observe that thoy havo a great many neat littlo swindles snugly tucked away, Sombo of theso aro seon ta bo ropealed in a“hsuanont rovenuo laws, but #oma aro yot in forco. Ono of theso Ig the famona clnuge undor which tho Sanborn contracts wera made. Thoso lnwa camo into being bocnuse mom= bers of Congross have crestures to provide for, and ara allowed to control n}mulntmunls. Tha imaginatiori can handly concelve of the thousand villainous capors of the croatures provided for by Congrossmon, Some yoarsgo,n, ‘;enuemnn aspirod to Congrensionnl Lonors, in defiance of the pro- tests of Collectors, Assossors, nnd Postmunstors ; and was oatonishied to find that tha paoplo reslly ULeliovod that he Lad boen guilty of stealing sheep. In tho rurnl districts, tho person who stenls shaop is somewhat injured in his social standing! The sentimont in favor of raform is very atrong, but it isbard for it to take practical shape. Tho people cannot ba certain that any reform proposed s what they need, and are, thorofore, not enthusinstio ovor suy 'particular measuro. Tho strongth of the movement for CIVIL-SERVICE REFORY is pretty well indicated by tho offect it had on tho mind of tho President. Prosident Grantis remarkable for his ability to judgo of force. This in ona of the qualitics which ‘made him great Gonoral. o appreciated tho feoling in favor of Civil-Sorvico roform, and partially yiclded to it ; ‘but tho sentiment of the peoplo {n its favor was not strong enough to over-balanco the contrary influonce, Paoplo rofused to gpenk oncouraging words for it, and it camo to notling. Tf fs some- times astonishing to observe how much peopla will talkin favor of nbetract geedness, without allowing_ their sentimonts to tako practical form. _Hoscn Bigolow says that wrong in the abstract is “allers unpoplar;” hut it is bard to show elearly tne partiotlar mfluencoe which austaing tho cloven foot. If people could gco that their incomo diminished directly becauso of Congrossional patronage, the reform would be brought about within twenty-four honra, But, when 1t i3 necesenry to explain that, by meansof this patronage, Congressmen aro induced to pasa rovonuo laws which allow blackmailing, and 80 raigo the coat of importing Eznofla that people pay more for what thoy uso, tho minds of mon refuso to follow tho matter to its conclusion. The effeot i8 8o far romoved from the cause that their minds aro not 1mpressed. Poople can ace very onsily that good men are crowded from of- fice and responsible stntion ; but, whon it issaid that this is beenuso Congressmen uso their pat- ronnge to stimulate the efforts of nnprincipled mon, poople do not insiat that the patronago shall bo romoved. Thoy eay, '* Send honestmen to Congross;" but, whon _election-day comes, peoplo cannot always distinguish the falsa prophats from tho truo. The carnest prayer shonld be, that T CONGRESSMEN DE NOT LED INTO TEMPTATION, It tho Civil Service is ovor reformed, it will bo ‘bacause peoplo speak up loudly and unmistaka- bly. Itroquired astrong public sontiment to bring about tho roposl of tho Salary-Grab, Tho Princos of Buropo lovo their authority, and Con= grossmen love their patronago. Whoever obsorvos the impossibility of roform- ing n.corrupt purty In powor, andscos how steadily its numbers dwindlo, must ho convinced that the present spoila-syatom will bronk down the strongest political organization. No body of mon can stand continual temptation, Though a party may come into power with littlo stain’ on its garmonts, tho men who worked for it on principle, and led it to victory, will find thom- sotves gradually crowded back, while tho spoil- ers como to the front. The party caunot stand this forover, for the doar poopls, whom demn~ gogues praise and fear, at lnst bocome aroused, and nnotlior party comes into power, Tho spoila~ Bystom is tho ront of political evil, It can novor Lo purified, nor tho apples of Sodom be sweat« oued. v J.D. B. s MISCELLANEOUS ITEMS. The Rev. Henry Ward Beccher's grandohil Busan 8, Beechor, has just died at Brooklyn. —John Tailoy, Dolegato in_Congrass from Tdato, had 10,000'sheep whon the winter st m, aud lins lost many, but not 8,000 hoad, ag bag boon reportod. ~—Later particularsof tho death of Liout, T, P, Tls, son of Tifth Auditor Ein, of Wnshington, lonve no doubt that ho committed suicide during o temporary aberration of mind, —Tho Fhiladelphin ladies are confident that they have conquored Congress, and tuat n pre- liminary donation of ©3,000,000 will soon bo mado for an intorational exhibition.—* Perley” 1o Boston Journal. —Jnsper Packard, M. 0., has writton to politi- enl friends in Rensseluer that hois convinied tho votera of this district desire to have nnothor person to ropresont them in Congress, thoere~ fore ho will not bo a candidato for ro-oldotion.— Rensselacr (Ind.) Union. —Victor Dupont, who has been portistently talkod of, ngninst his wishes, ns s possibla Domooratio candidate for Governor of Doluwaro, publishes » card stating positively that e ig not and will not be a candidate. —Gov. Carpontot, of Towa, haa appalntod the following Fish Commissionors under the Inw on- acted in the lass Logislature : B. 1% Shaw, af Anawosn; Charles S, {Tnines, of Watorloo, and Samuel B. Evaus, of Ottumwa. ~—1'ho Indies of Manistae, Mich,, recontly un- dortook the project of orocting a buildiug for the benefit of tho laboring men of tho place, and wenb at ik with o will. " The result is, that monoy and lnmbor enough have boen scoured to ncconiplish the worls, and ercet w building 43 by 100 foot, two storios high, witn ronding nud Writing rooms on the first floor aud n hall nbove. —Migs Bossie Stowart, the No-nda Senator's daughter, drives a modost basket phactou, with n livoriod tiger, and a palo groen Gtrosmor flont- ing from hor whip, in admirable contrast to hor piqunut bravatto fage, It s sald thut tho con- dition of her marrisgo is, that slio shall not ba taken away from lomo. —Judge Dlonsants, at Rock Island, 1ll., has docided thint citios caunot chargo over £300 = year. for snloon-liconso,—this being the Hmit fixed by Stato lay, This mnkos Bloline back down, ond loso 8100 a yeur on bLor saloons Lo- sidos,—uunless the Supreme Court roverses the docision. W —T'he following anagram is nmong the curios- itles of the Tichborno caso: 'Tlio lutttors form- ing tho words, .“Siv Roger Charles Doughty Tichborne, Baronet,” muey bo transposed, with- out addition or omission, iuto the sentonce, l“ Yuu’ horrid butehor, Orton, biggost rascal horo," —A gentloman, nomed Btodman, writes to the Talrmont (Minn.) Chain, ordering his pupor dis- continuod, giving o8 one roasan that lis wifo Biys *16 wou't ovon cloan lnmp-chimnoys,” To this, among otlier things, tho editor answers, that tho withdiawing subscribor may be a man of influguce, bt he i no gontlewan, and has Yno right to betray what his wife lold him in cone 4!«11:1’15:;‘, and wo prosuino sho will not thanl him or It —The new boot in Paris Is the Pompelian, is of black volvot, and vory high, thaI;ugg!ng }x& front all Vouotinn cut-work, embroldored. with silver vord; and s pink or Pompelinn red silic stocking is thuy seon through the open oloyor or dinmfindmhnpfi%fl deulmx|. 3 —1'he new 20-cant coin has just boon e from tho l’hllmdol&vhln Mint. Bt it is 1ntn:‘«}?-.:‘l for Lho uso of that favored and exclusive portion of tho pooplo of onr common gountry who dwoll on tho Taolflo Const, For the miilions of the Last tho papor-rags of the Government must #orvo an curronoy, Tho inflation of tho frros 1 ho resumption of spoolo-pa) sl darrishurg (Pa.) l‘nlrmx Ll , tho