172 TRANSACTIONS OF THE 



But the croakers, doubters and holdbacks of societ} 7 , although fewer 

 here than elsewhere, are yet not entirely unknown among us, and I hear 

 the significant questions with which they foreshadow the reverses that, 

 whether intending it or not, they do all in their power to create. l< How 

 long is all this going to last ?" " Everything is too high already — when 

 will the bubble burst?" It will last as long as these birds of ill omen 

 are allowed to croak, without injuring anyone but themselves. Nothing 

 that is measured and weighed with gold in the other scale is too high. 

 The bubble will never burst, because it does not exist ; but the good ship 

 may sink, if these enemies, in the guise of friends, are allowed to scuttle 

 her, to see if she is not hollow and empty. They will not let out wind, 

 but they may let in water. 



Some of you have experienced, all have read about, the recent severe 

 pressure in the money market throughout the State. Because it has fur- 

 nished a more striking illustration of the sound basis upon which our 

 prosperity rests than any other that I have met with, I will detain you 

 to give it a moment's consideration. 



I)o you remember a pith}' little editorial in the San Francisco Evenimj 

 Bulletin, calling attention to the fact that the National, State and City Gov- 

 ernments had, by the operation of circumstances that it seems to me ordi- 

 nary financial wisdom would have averted, withdrawn from circulation 

 and locked up about fourteen million dollars ? The calculation was then 

 made that it was equal to fourteen dollars each for every person this 

 side of the Bocky Mountains, and that the same pro rata withdrawn on 

 the other side would amount to at least five hundred million dollars. 

 No lano-uao-e that I can use can add to the enormitv of that statement. 

 We have already seen the effect produced by the withdrawal of ten mil- 

 lion dollars in greenbacks from circulation in New York. Panic comes 

 treading in its train, and more than one tall fabric of credit topples 

 down before it. And yet that is but twenty-five cents each for forty millions 

 of people. Our Government takes from us fifty-six times as much, pro- 

 portionally, and not one house failed in San Francisco that could show 

 that it was solvent and ought not to fail. Here was the test of the two 

 systems: Substance against shadow ; cash opposed to credit; pa^-ment 

 rather than promises to pay; gold in place of paper that promises gold 

 but could not keep its promise. 



See, also, how our banks and bankers were affected by it. In New 

 York they had exchanged their own promises with their customers for 

 theirs when they discounted their notes; no money had passed, but the 

 bank had increased its own indebtedness by being a lender. Pressure 

 sends its promises home for payment, and it cannot extend the bor- 

 rower's note, though it may ultimately be as good as its own. Self-pro- 

 tection is the first law of nature, and they act on it remorselessly. Who 

 shall blame them ? It is the system and not the bank that it is in fault. 



But the banker in California has loaned money and not promises. He 

 had it, or he could not lend it; and it needs no redemption, for the world 

 knows of nothing more valuable with which to redeem it. As he has 

 no debt rolling in upon him to call for all his resources, he can carry 

 along eveiy borrower that deserves it, until he can, without sacrifice, 

 make his resources available. Thus the community are bound together 

 by mutual interest, and present a front that can never be successfully 

 assailed until they undermine and put it upon a credit foundation them- 

 selves. I have had the opportunity to know something of the course 

 pursued by the banks and bankers of California during the late pressure, 

 and severe as it was, I do not believe that any great emergency in 



