Virginia Argus. [volume] (Richmond, Va.) 1796-1816, 1816-01-17
VIRGINIA LEGISLATURE,
REPORT ON BANKS.
Submitted to the Horse of Deiegates on
Friday, Jan. the 5th, 1916.
= # f,n,r1,<JaJ 4
Concluded J

orr committee cannot close this i'm
portant branch of their enquiry, without
noticing 4 prevalent opinion that the Gre
dit, which a Bank affords TO its customers.
is applicable only to the pursuits of com
merce, s the inference which may thence
be drawn, that they cannst subsist beyond
the limits OF large commercial towns, and
are not calculated for the country. from
which the petitions under consideration,
have been presented. This opinion seems
to be confirmed by a very high authority,
on every question relative to political G.
economy, an authority which has been fre.
quently consulted III the preliminary part
of this Report, IL for which your Commit
tee entertain the highest respect.
The prevalence of the opinion itself. is
perhaps, solely ascribable to the circum-
stance, that it has place in the admirable
freatise, entituleds. The Wealth of Ma
fions." It's foundation will, therefore. be
best ascertained, by recurrence to the
language in which 1t is there expressed:
:" What Bank can with propriety adj
vance to merchant or undertaken, of any
kind, Is not either the whole capital with
which he trades, or even any cunsidera-
bic part of that capital but that part of it
only, which he would otherwise be obliged
TO keep by him. unemployed, and in ready
'aoney, for answering occasional! de-
niands."
But your Committee can most confident
" affirm thatthis authority is contradict
ed and reluted by the experience Of every
bankin America, and they believe it 10
have been long since exploded, in TIE very
country il which it originated.
La England, however, where much
wealth had been previously amassed. a
sufficient capital may have existed to car
ny on the commerce Of the nation before
the creation OF any bank whatever, il may
have been elpeeient tn rive to such capi-
tai, no other aid than the increased facili-
ty OF operation which bank so limited In
its dealings, would be calculated to afford.
And in England and Scotland, where a
crowded and stationary population render
ed it somewhat difhcg.t to discover new
employments for stock, the uncertainty of
returns would augment the hazard of lend.
lag at all.
In America. however, where compare
lively speaking, very little commercial Gu
pltai exists, the uses for it are so name-
rCus as to ensure success to almost every
mercantile enterprise. The Banks which
draw this capital from the country, to the
towns, may not only with safety, but are
compelledby necessity to extend It's use
TO objects which, ifthey warrant, do not
perhaps require it in Great Britain.
Ii the accounts Of any American Bank
be examined, it Will be seen that more
than one hall Gifts outstanding debts are
founded on. what Is called, its standing
accommodations that is, on the discount
ed notes which the Bank may, but IL is I'M
derstOOd, 1CitlROt call in at the end OF six
ty days. Much of that debt will be found
to have arisen from an assurance on tine
part OF the Bank, that the actual payment
OF it will not be required for many months.
and some part of it for several years.
The proportion OF the business which
any bank could do, to that which it does.
would be small, indeed, if its loans were,
in fact, as they are almost universally in
FORM; for The short period Of sixty days on
~.
1t is believed, indeed, known by your
committee, to he true, that the capitals Of
the Banks in America, constitute not only
part,' but a very large part" Of the
6 mercantile capital" of the nation. That
it is employed in commercial adventures.
the returns of which can rarely be expect
ed in sixty days, most Of which exceed
tour months, very many SIX, and some a
twelve month.
Nor IS II perceived by your committee,
wherein the danger of this indulgence con-
sists, il the bank retainsa sufficient con
troll over so much Oi is pccie capital as is
necessary to keep up the value and circu-
lation of its paper.
The capital adventured, is usually insur-
ed against the accidents of the VOYAGE in
which it is invested the payment oi the
mite or bond, on whichit IS obtained, is
endorsed by approved securit and new
indorsers may be required, every sixty
days, should change Ut fortune be disco
vered or suspected by the bank in the cir
cumstances Of the drawer, or endorser.
Ia America, Bank dividenss which h.ye
exceeded twenty have seldom fallen short
of eight per cent they are punctuaily
pad, carefully preserved, securely trans
mitted without delay or the exDence Of
commission TO The stockholders entitled to
receive them, and the stock which Yields
tins revenue can geusraliyb be converted Dy
assignment, into specie, at or above par
Hence the effect OF such bank in draHiuc
together al the floating capital of such a
country !; and il that capital were to be az
terwaUIs withheld from all the various
uses to which it was belore applied, the
creation Of any bank would occasion. TO
such cOuntrysa most serious calamity