The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1837-09-19

come efficient agents in the business Of exchanges,
have suggested the policy Of dispensing with all the
existing State Banks that have lately suspended specie
letting the few that have not denied specie
for their notes. live the legislative grant OF their cor
porae existence, but no longerof establishing new
bank, as speedily may be, and with small capital
stock at FIRST in each Of the States in which all the Old
banks have denied specie for their notes, or OF retaining
one Of the old banks If in any case may be consider.
stely DONE each Of the States in which any OF the old
banks have denied specie for their notes. and OF en-
srgng the capital stock Of the new one, or OF the ex-
peced old one the may be, IN each State pro
iaaio the CONDEMNED old retire. or al least TO an
amount commensurate with the serene and consderae
calls Of unexeited commerce"
As, in the course OF years, the number OF
banks being thus reduced, the demands OF
commerce in any State may actually require
an augmentation of banking capital, let It be
given TO the existing bank and IFS branches, IN
such State, or to new branch, II new
branch be necessary, instead Of establishing
a new or independent bank, and thereby null
tiplying the distinctive appellatives OF paper
money.
With this reference TO what has already
been submitted TO the public on the subject,
conten, myself, and proceed to reply to some
of the exceptions which have been taken TO
the proposed plan.
lst. In the first place, will reply to the
objection, that the establishment of the one
bank system would be scheme Of monopoly,
most favorable TO the encouragement and Sc
curity of favoritism in the matter of loans and
discounts at bank. This would be an insuper-
able objection, if allowed to have for its
foundation, the present indefiniteness of bank
charters, as framed in most Of ,he States.
They who urge this objection to the one bank
system, assume that the management OF the
bank is to remain unchanged, and identical
with that of the existing banks. This as
sumption is necessary to give plausibiity 10
the objection 1t has been resorted to. not
withstanding it has been declared that the
management of the bank must be made by the
charter essentially different in variety of
important items, from the management of the
existing banks. For instance, that the same
persons to be directors of the bank, shall en-
10Y only short and fixed term of consecutive
years of eligibility to the office that the
directors be paid a moderate salary, TO be
fixed by the charter of the bank that no d.
rector, during his term Of service, shall bor-
row of the bank, in his own name, or that of
another, larger sum, at any one time, than
$4,000; that the Indebtedness or liabilities to
the bank, of any body whatever, whether an
individual, or partnership, or chartered COM
pany, for himself or itself, or for another, shall
not, at any one time, exceed moderate
amount, TO be fixed by the charter Of the bank;
that the loans and discounts of the mother bank
and branches, shall be SO regulated as never to
exceed twice the amount of the capital stock
actually paid in; and that the branches be
made by the charter as independent as prac-
ticabe, Of the mother bank. And notwith
standing they who are acquainted with the
secrets of bank management, say little re-
lance is to be placed on the statements of
their affairs, will add, that the charter should
be carefully framed to secure the greatest
possible publicity in its management, and to
forbid that the bank be conducted with view
to the largest possible profits. Its manage
ment should be such, within the provisions of
the charter, as to show il was established for
the public good, and not for the exclusive
benefit of the stockholders. The publicity of
its management should tell, whenever and to
what extent, it had ventured to transgress the
limits of its defined authority.
I'd. But, say the directors, if one bank may
be so restricted, and if so restricted, would
answer the purposes Of its creation why may
not many banks be so restricted effectively;
and would not many be more consistent than
one, with the principles democracy! Now,
let whatever this objection fairly means, be
granted 1t must be granted on the other side.
that one of the important faculties of State
Bank notes is, that they shall have credit be-
yond the borders of the State in which they
are issued that the citizen who starts from
II. IL. Il l.
his pocket, may travel in other States, and in
any direction, without being put to the blush
Of wounded State pride, and TO the more Sc
rious inconvenience Of finding his money dis
credited in the ratio of his distance from
home. Under the State Bank system, COM
posing a multitude of them in each State,
their notes cannot have this faculty, although
when in the State in which issued, they are
at any time convertible into coin. Men who
make it their business and daily study, can
scarcely tell, when the bank notes of dis
tant State are offered to them in their ordi-
nary transactions, whether they are converti-
BILE into coin, or current at home. Money
changers frequently cannot tell. Of course,
the notes are rejected in the ordinary eX-
changes of other commodities for money, in
the usual course of trade-rejected, not be-
cause they are not convertible into coin, but
because they are not known to be SO Gin dis
tant parts" 1t would be otherwise, necessa-
rily, to great extent, under the one bank
system. Every man having sense enough,
and the sagacity of interest is quick, to de-
cline receiving bank note not known to him
to be current at home, would very soon be-
come acquainted with the fact Of the exist
Il
of this fact, he would argue, that the people
of the State depend on their bank for their
circulating medium. Arguing thus he would