The Rhode-Island Republican. [volume] (Newport, R.I.) 1809-1841, 1837-10-04

New York-being the shortest passage ever
known.
GFThe fall races in New York COM
menced yesterday.
MERCHANTS BANK, PRovIDENcR.-The
Cashier and Directors of this institution
were summoned before the Supreme Ju-
dicial Court, last week, on complaint of the
Bank Commissioners, in pursuance of the
authority vested in them for that purpose
by the Assembly, to shew cause why an in
junction should not issue against said Bank
We copy from the Providence Courier,
and Herald the following statement of the
case.
From the Providence Courier.
The first ground Of complaint was that
the Indebtedness of the Bank exceeded the
amount of its capital stock paid IN, contra
ry to the provision of the third section of
" An Act to regulate Process against Banks
&c" The excess, if any, was small, ard
the counsel for the complainants did not
appear to lay great stress upon this point
OF the case, stating that as difference of
opinion had existed upon the construction
OF the I'D section aforesaid, it was thought
desirable that a judicial Interpretation of it
should be mad.
The second and principal charge was,
that the Bank had extended itself by the is
sue of its bills beyond the bounds of discre-
ton, contrary to the advice of the Commits
sioners, and to degree that endangered
the public, the amount of bills in circulation
and other Indebtedness, being TO the specie
on hand in the proportion of about eleren 10
one, and an example being thus set, which.
IT this bank were not rebuked, would be fol-
lowed by others, and render the resumption
of specie payments, IN every respect so de-
sirable by the community, impossible, or
productive of he most ruinous consequences.
sFrom the Providence Herald.
AT the time of the suspension of specie
payments, in May last the bank had a cir
cuation of only about 10000, and specie
to the amocnt of 10000. The Commits
sioners directed that the banks should keep
themselves within proper limits, and endea-
vor to prepare themselves for the resump-
tion of specie payments. This bank ac-
cordingly, through all the worst or heaviest
part of the pressure, kept It's circulation
down; to the middle of July, never exceed
ing $4,000, and some weeks as low as
10000, and, one week, down to 5000.
But, on visiting the bank on the 18th OF
August, the Commissioners found, to their
utter astonishment, that the issues had in
creased to Sl56,O00 in four weeks; while
the specie on hand had actually diminished.
1t is true that this amount was reduced to
$1,000, as stated in the Journal; but not
by meaEs of redemption. The excess over
that amount, was merely deposited on in
terest, and therefore continued a portion of
its unredeemed issues, as much as though
the bills had still been in circulation. Yet
on the 25th Sept, five days afterwards, the
circulation had again increased to 1922,
600; though, on Wednesday, it was down
again to Sl09, 900, in consequences ofanoth-
er deposite of its bills, or interest. 1t will be
seen, by this statement, that its actually un-
redeemed bills amounted, on the last named
DAY, to more than 10000.
The only available means for the imme-
diate redemption of this circulation. is S29,-
2l4 in specie.-True, the bank had bills OF
other banks, to the amount of SO, ,500,74 /;
and due from other banks, SOS, ,2I4; max
ing, in all, SI7S,744. But not one dollar
of this is specie, or in the bills of specie
paying banks; and even if the whole were,
the Merchants Bank owed other banks
$500, ,3S9; so that, were balances to be
paid in specie, the Merchants Bank had
not half enough to pay the balances due
from it, to other banks. Thus stands the
case then-the entire circulation of the
bank is based on paper credit, with the ex-
ception of less than 10000 in specie and
to that circulation is also to be added $780,
l55 in deposites, and $ll1 ,645, the balance
due other hanks.
While the commissioners frankly ac-
knowledged that the Merchants Bank was,
in all human probability, able to discharge
all its liabilities they contended that the bank
had no right, under existing circumstances
to extend itself to such an enormuus amount
on mere paper basis, and on that basis to
flood the State with an irredeemable paper
currency. Though they did not charge the
bank with any attempt at fraud they con-
sidered the precedent dangerous one,
which, il allowed, would probably lead all
the other banks in the state to follow it, and
finally reduce the baHk paper to n standard
of utter worthlessness. This is a true
though brief statement of the case.
The Providence Courier of yesterday,
contains the Decision Of the Court on the
above case. 1t occupies over two columns
in that paper. After giving an able expo
sition ofihe Bank Law, and mildly censure-
ing the Directors OF the Bank, for heving
too zealously devoted themselves to the pro-
motion of the acquisitions of the bank. with
out fully considering their coleraiire duties
IL ....I.l.. - q.