If there was an error in the issuing of paper, it was not on the side of
the banks; it was the public itself that was chiefly in fault.

We find the causes of the panic in the issues of railway obligations and
shares, which had chiefly been placed in European markets, and whose
gross amount was estimated at L1,000,000. The speculation in land and
railroads had been carried on either with borrowed money or by open
credits, and by accommodation notes, back of which there was no second
party.

The mistake of the banks was in trying to conduct their whole business
by their note circulation and to concentrate their capital in the bank
offices, and meanwhile, as they refused to loan to the stockholders of
the banks, discounts in New York fell off $10,000,000. Finally the
capital could not be entrusted to the disposal of the banks and it was
necessary to compel them to make a deposit of $100,000 for each
association, and $50,000 for each banker.

Such were the final advices given by the inspector-general of the banks
of New York at the close of his report, dealing with how to prevent the
recurrence of panics. To have confidence in their efficacy, it was
necessary to forget the past and its lessons.

The reforms already made and those still asked for in the bank system
could yield no remedy for those abuses lying beyond legislative action.
The American newspapers did not hesitate to demand them, well aware that
they would produce no effect; however, they congratulated themselves
with having drawn away from effete Europe one million sterling now
realized upon the soil of the United States without any equivalent given
for it to the foreign lenders.