The enquirer. [volume] (Richmond, Va.) 1804-1815, 1805-05-10

This iupe, intending tutho.;ty i: ought never e
REIGN to the board ol directors or of tockhold.
ers or in other WORKS, they ihouid never be
authorized to increafd the capital OF the bank
whenever they think proper. ia: Decaufe, il
the difcounts and miiiions Of the bank ihould
not increafe with its capital, it would leGcr
the profits of the f,rmer ihare .hoId~rs. Cd
Becauic If they did % increae, it would occa-
hon depreciation IN the value of money, and
a conitquent disadvantage in the operations OF
foreign trade. sdly : Becaufe fuch an ncreaie
of the banking captd, as this privilege might
| ionetimes produce, would violate the funda-
mental principle of banking inGitutions that
| there ought always to he certain ratio between
the capital that is ON of the bank, and the CAPT.
tai which is init.
AT qvbat time therefore, ought this authority
to be granted by the legiiiature' becomes the
only fnbiett of enquiry. The writer Of the Di-
aogue ieemed to think, that The BIZ? ,-gL. was to
iucrcait theCapital, whenever TIKI directors were
in the habit of refuling good negotiable paper
for any continued time: becaufe this linita-
ton would fcem to Thew that more money was
required of the bank, than it could lately lend
| with its exiting capital. Whether this or the
| 1aiae Of tbe flock in th market will furnilh the
belt data for determining the time when this
| augmentation may be authorized by the legilla-
ture, we leave to time and more mature re lec-
| tion to aicertain.
| Q. The author of the Remarks has however
| fuppofed that it would be ufclefs for the egif-
lature to grant this privilege; as.the .fockhold-
ers would never content to increafe the banking
capital. But what inducements would perfiIatle
them to decline this privileged Is it that they
would dread Giminnfiou of their own profits !?
To this we MAY anfwer, that their profits arifc
| from the dividends; that the dividends arife
| from difcounts; and that the diieounts are al
ways regulated by theproportion between the
capital of the bank and the effetlual demands
for money. Let the demand for money be 70
| much increafed as that the bank cannot conlift-
emily with its own Jste., iupply it, and new
| capital at once becomes necellary. The pro-
portion between the value of good negotiable
paper which it can fafeR difcount, and the adj
ditional capital, remains the fame as it was be-
fore or in other words, the difcounts which are
now required at the bank will as completely alb
forb its qvb0le aggregate capital, as they did
previoufly to fuch an augmentation. The d.
pidends on the flock and the preflt of the flock
holders will be therefore undminiilied. What
;rjury will their interefs consequently receive
from fuch an increaic of hares
Is it that they would rsfute their content, un-
lefs the Legislature would content on their part
to put up with fnaller political influence in the
new flares, than what they derived frcm the
old? The prefent ftoekholders however would
remain in Ratu quo. Their ihare in the directi-
on of the affairs of the bank wcald not be dimi-
nilhed, bat would remain tn fame, under this
new fyRem. Should thu; rejxls their content,
they could not expetf tc dearoy the political
ratio of influence, which was alreaay eftabliih-
ed by the chartr:-. And if they granted their
content, fl:eir ihare in the direction would not
receive the leaft diminution. We may obferve
eu paRaut, what different feelings on this fubeet
appear to have animated the autnor of the Re.
marks and of the memorial.
What motives then would the prefent ftcck-
holders have to refuie their content to increafe
the number of flares, though the fate fhoud
fill retain its propor;ionate influence in the di-
reGtion, fnce their interefs both with refpeet to
profit and Influence would be little affected by
the augmentation This is not however the
only view, which we may take of the intereRs
of the shareholders. 1t may not only be proved
that they would have no objection to this in
create, but that under certain circumstances
they would have two poftive inducements to
favour it.
1T: Whenever it is once proved, and not
furmifed, that "more banking capital is neceC-
fary," effettual exertions will be made to &C
complh this purpofe. Wealthy ard emerge
tic individuals will combine to obtain fubfcrb-
ers to their memorials / the voice Of the fate
viii! be loud in their favour. Will the legifla-
ture rcilt tnelS Calls, DIS wei as inc obvious IN
tercfts of commerce? Will they not refoutely
adopt fome fcheme for increafing the banking
capital? And yet t4vO fchemes any are before
them. ueqU bank, or an increafe of the CAPT
tai of the old one. If the legislature are fhut
out from the laft refource by the obainate pre-
JUDGES or the wanton oppoition of the prefert
ftockhoIders, will they hcftate to put up new
bank? The prefent fockholders will thus be
reduced to the dilemma; of confenting to aug
ment their capital, or Of feeling new, and per-
haps dangerous ripal, eitablifhed in their neigh
bourhood. For the confiits of intereit will ne
yer permit two banks to eo-operate with each
other, as the author of thememorial choofes to
imagine. What would they do in this diem
ma? They would certainly preferlhaying new
| flares incorporated with their prefent capital,
to feeling this new rival raifed againft them, or
even to having the fear of it continually fuf-
pended over their heads, which would lurely
produce continual nuctuation and deprecia-
ton in the value of their itock.
2. The cxpenee of conducting one bank with
large capital is fcarcely greater than that of
| conducting final one. The prefent officers &
houfes of the Virginia bank would be fuficient
to manage its affairs, ritter its capital had been
| comfortably iDcreaicd. But this expence is
paid by the eockhoders, and il is deducted out
of their dividends. When it comes to be paid
L,,, ;tai the taN, n,s 20