Virginia Argus. [volume] (Richmond, Va.) 1796-1816, 1816-01-13
But if a bank loaned, at legal interest,

tnan sue: interest, by the annual expen-
ces OF the bank. the insurance repairs, and
interest OF the fixed capital, vested in its
bindings and furniture, and the salaries
0f its officers and servants.
Even if it extended its loans, to a part
ofits deposits, unless they were very con-
siderable. the additional revenue, thnee a.
rising, would not supply this annual ex-
penditure.
Under such restraint, banks could ex-
lst only in very large cities, or commercial
countries, where great capitals had been
previously accumulated.
But the actual profits of those institute
| ons lin America have been greater i'm terri
tories interspersed with small villages, and
with very little foreign trade, than in the
most populous and wealthy cities. Some
of the banks in America have divided a.
mong their Stockholders an annual reve-
nue. exceeding twenty per cent upon their
capital. The price of the Stock OF the
lirst bank Incorporated in this Common
wealth rose, not long after its existence,
to one hundred per cent above par. This
effect results from the authority with which
they have been invested of issuing their
own notes payable to bearer. The sum,
which this authority enables Bank to
lend, may exceed its specie capital, in the
proportion in which the demand for cir
culating medium in the country whose cu,- :
rency it supplies, exceeded the quantity of
gold and silver coin in circulation before
the creation of the Bank, and in which
that de ma nd is. itself, subsequently aug
entcd by the loans of the Bank.
Whatever power the laws may confer on a.
Bank to issue its own notes the extent to which
1t can carry that emission must depend also upon
the public confidence in the.r value.
While a bank remains faithful to its engage.
ment' to redeem its notes, whenever required, by
the payment of the gold or silver com, which
on their face they purport to represent those
notes cannot depreciate below the value of both
speces of coin. On the contrary, they will of en-
possess higher value than either from the SUI.
peror facility which attends their transportation
Before the late war; the notes of the Eastern
Banks, commanded, in the Western States, pre-
MUM of, from two to three per cent. The war
which, in its prtge,s, occasoned so many re
| mitiances 20 the West, speedily reduced this
premium; and finally created to the East, a
greater premium N favor of the notes ofthe Yves
| tern Banks. These effects appear TO differ. but
their cause was the same; the greater facility of
| transmitting paper, than even the prec Gus me
| tals.-Since the peace, the balance has settled
4 hpNh w iS COidlllon DGlOfe the war Nothing
can destroy the operation OF the cause.-its eli.
feet would, undoubtedly be Diminished, by An
| extension of the nav CATION of the Eastern and
| western waters, and good roads across the noun
| tains which divide them.
So long as bank continues to fulfil its oblipa-
tons, the perm iss;onwhich it has to issue ,jape
instead of specie, vii! be, alike attended WI IN
| public advantage of no inconsiderable impor.
lance. BY supplying substitute for CON- il pre-
vents that reduction of the weig Int of its pieces
| by constant use, which requires, and a,igmen,s
| the expense offs periodical recoinage or subjects
the nation, whose currency is gradually wors out
| and debased, to an unfavorable exchange abroad.
and to all the Inconvenience at home of a slow.
though certain fiucluation in the value of its cir.
culiating medium.
| The institution of bands has another valuable
effect IN inc easing the facility of obtaining 70.
reign capital, for domestic use There has been
singular prejudice in the United S ates, againts
the employment of foreign cap tai as if, IT'S use,
did not sufficiently prove its vaiu,.
If it be the policy of nation, IN time of war.
\ to borrow money, which constitutes its sinews
from its foe, IT cannot be less It's interest IN peace
to employ the capital of other nations for domes-
l tic improvement.
| The establishment of banks affords the facility
| above mentioned, because the mode of herr 90
vernment, rende 5 the distance between their ca
Pital and the residence Of ITS pr9pr etors, wholly
c,
the seat OF their operations, a sufficient number
OF competent persons interested in their @ cd
conduct, to prevent the abuse of power by those,
| to whom their direction is confided. a very con-
| siderable part of the stock of tho banks of the
District ofColumbia, is now held by inhabitants
OF Virginia; as the greater part of the stock of
| the laie Bank of the United States was held by
| foreigners.
| Where there are many banks in a country, the
mot YES of strangers, for investing their capital
IN any particular one, will doubtless depend up.
on the comparative profits afforded by such bank,
and the comparative security which il offers IN
the terms of its charter, and the respect enter
tanned for that charter, bv the legislature which
grants IT, that those profits will continue, aud
that capital De preserved from was or destruc-
ton. 1t is remarkable fci, that While the con-
hdence of the people of Virginia, in the benefits
secured to them by the charters of the existing
banks has induced them TO pay for those char.
tiers bonus OF twenty per cent. upon the sum
which they subscribed to their stock: To pur-
| chase that stock encumbered with this premium
of the commonwealth, at seven, and of each other,
at seventeen per cen there were, few years
ago but two foreign holders of Virginia bank
stock, and notwithstanding the subsequent ex.
tension OF the banking capital Of this common
wealth, that number does not exceed ten. Yet
c2mpar son OF the price oftIis stock with tie an
nual dividends upon t,and of those asain,ri;h tl,
price and dividends Of the stock Of other banks
IN America, afford abundsnt proof, that cap tal.
thus vested in Virginia, is more productive than
that, which is similarly employed in tie Atlantic
states, to the North or East.
Your committee believe, that a prejudice has
gone abroad, which, they confidently trust, ex.
Perence will prove to be unfomded, even to the