The banks lent out their notes to speculators.
They were paid to the receivers and immediately returned to the banks,
to be lent out again and again, being mere instruments to transfer to
speculators the most valuable public land and pay the Government by a
credit on the books of the banks. Those credits on the books of some of
the Western banks, usually called deposits, were already greatly beyond
their immediate means of payment, and were rapidly increasing. Indeed,
each speculation furnished means for another; for no sooner had one
individual or company paid in the notes than they were immediately
lent to another for a like purpose, and the banks were extending their
business and their issues so largely as to alarm considerate men and
render it doubtful whether these bank credits if permitted to accumulate
would ultimately be of the least value to the Government. The spirit of
expansion and speculation was not confined to the deposit banks, but
pervaded the whole multitude of banks throughout the Union and was
giving rise to new institutions to aggravate the evil.
The safety of the public funds and the interest of the people generally
required that these operations should be checked; and it became the duty
of every branch of the General and State Governments to adopt all
legitimate and proper means to produce that salutary effect.
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