of  October,  the  loans  had  fallen  to  $97,000,000,  and  the  depo-
Bit3  to  $52,000,000.     Thus  the  banks  were  obliged  to  with-
draw from  the  public  $66,000,000  of  paper  currency,  to  keep
$12,000,000   of  gold  in  their  vaults.     This  was  withholding
$1,000,000  daily,  of  the  customary  bank  facilities,  for  sixty-six
days.     So  long  as  the  banks  could,  by  this  extraordinary  con-
traction, keep  their  average  of  specie  to  nearly  the  amount  of
$12,000,000,  they  continued  it.     About  the  middle  of  October,
even  this  terrible  expedient  failed.     The  patience  of  the  public
gave  way;  the  people  stepped  into  the  banks  and  took  oat
$4,000,000  of  specie,  and  the  banks  stopped.     But  the  conse-
quences and  operation  of  this  contraction  are  not  shown  by  the
fact  of  the  withdrawal  of  $66,000,000  of  currency  in  as  many
days.     The  amount  of  currency  at  any  particular  time  never
exhibits  the  amount  of  payments  which  that  currency  can  effect^
in  a  single  day ;  its  power  or  efficiency  must  bo  estimated  by  the
sum  of  the  payments  which  can  be  accomplished  within  a  given
time.     The  real  contraction  or  diminution  of  payments  would  be
shown  by  a  comparison  of  the  actual  transactions  of  the  banks
for  a  day  or  week  at  the  different  periods  compared.     As  it  has
not  been  customary  to  report  the  whole  movement  of  the  funds
in  the  banks,  we  must  resort  to  the  Clearing-house  for  the  best
approximation.     The  average  clearings  in  New  York  exceeded
$700,000,000  each  month,  from  January  to  August,  1857 ;  in
September   they   were   $481,000,000;   in   October   they  were
reduced  to   $308,000,000,  much  less  than  half  the  monthly
average  from  January  to  August.     Here  is  an  actual  falling
off,  in  the  monthly  payments  of  the  Clearing-house  alone,  of
$350,000,000,  or  more  than  $12,000,000  daily:  that  is,  the
effort  of  the  banks  to  keep  less  than  $12,000,000  of  specie,  in-
volved a  diminution  of  the  payments  of  the  city  of  $12,000,000
daily.     The  whole  sum  of  the  payments  made  in  the  Clearing-
house, in  the  months  of  September,  October,  November  and  De-
cember, 1857,  were  less,  by  $1,428,000,000,  than  the  amount
paid  the  preceding  four  months.     The  severity  of  this  contrac-
tion was  further  shown  by  the  advance  of  interest,  from  eight  to


SPECIAL    FUNCTION    OP    THE    BANKS.  477

ten  per  cent,  in  July,  to  twenty-four  and  thirty-six  per  cent,  in
October.
