178 HISTORY OP THE GRANGE MOVEMENT; OR, 



In 1868, the Comptroller of the Currency, in his 

 annual report, thus referred to the danger which even 

 then threatened the country from this cause : 



"It is scarcely possible to avoid the inference that 

 nearly one half of the available resources of the 

 national banks in the city of New York are used in 

 the operations of the stock and gold exchange; that 

 they are loaned upon the security of stocks which are 

 bought and sold largely on speculation, and which are 

 manipulated by cliques and combinations, according as 

 the bulls or bears are for the moment in the ascen- 

 dency Taking advantage of an active demand 



for money to move the crops West and South, shrewd 

 operators form their combination to depress the market 

 by 'locking up' money, withdrawing all they can 

 control or borrow from the common fund; money 

 becomes scarce, the rate of .interest advances, and 

 stocks decline. The legitimate demand for money 

 continues; and, fearful of trenching on their reserve, 

 the banks are strained for means. They dare not call 

 in their demand loans, for that would compel their 

 customers to sell securities on a falling market, which 

 would make matters worse. Habitually lending their 

 means to the utmost limit of prudence, and their credit 

 much beyond that limit, to brokers and speculators, 

 they are powerless to afford relief; their customers 

 by the force of circumstances become their masters. 

 The banks cannot hold back or withdraw from the 

 dilemma in which their mode of doing business has 

 placed them. They must carry the load to save their 

 margins. A panic which should greatly reduce the 

 price of securities would occasion serious, if not fatal, 

 results to the banks most extensively engaged in such 



