Herald of the times. [volume] (Newport, R.I.) 1830-1846, 1837-10-05

they be judged. What under existing cir
cumstances shall be the standard? Unqncs.
rionah'y specie or its equivalent nffords the
only definite and certain standard-but this
has been lost. The capital of this bank in
common with all others has taken form chief.
ly in discounts. Shall discounts aff,rd tho
standard? Certainly not.-for by making
discounts standard the circulation might be
increased without limit; and surely the depo-
sits Of hank cannot be regarded as n stand
ard, for they are the property Of the deposI-
tors.
Then it IL most certainly true, that at pre-
sent this bank, in common with all other hanks
IN this state, is without any certain and de-
finite standard whereby TO graduate the
amount Of it's circulation. We are therefore
under the necessity of adopting an ideal rule
or standard, as the best that circumstances
will admit of; and this rule should he one that
looks not only to the present security Of the
public, but to the speedy resumption Of spe-
Gle payments.
We recognize the recommendation Of the
commissioners, rs a rule presented TO the
banks by the force of circumstances, by the
condition in which they arc placed in refer
ence to the pubic-not as an arbitrary rule
originating in the will Of the Commissioners,
but as a rule of reason and sound policy, first
announced by them. And that rule is. that
no hank should extend its issues beyond the
ordinary amount issued by upon its actual
available means in sound business times; or
in other words, that no bapk in consequence
Of suspending specie payments, increase its
Liabilities TO the public to an extent beyond
which it would have been deemed prudent, III
the suspension had not taken place. This is
n rnla ich nj
enforce in all cases brought b, fore il by the
Commissioners, and in the present case, ifI
the Merchants Bank has trnnsgrcssed it, it is
equally its duty to enforce its observance
Has then the Merchants Bank transgresscd
this rule?
Upon examining the returns Of this bank
made between the lth May and the 9th of
September 1897, it appears that its amount
Ofspecie was at no time more than s30i379
38, nor less than S29,I06 That at the time
of suspending specie payments, its crcula-
tion was SlO,619. 1t not having been shown
that this was an unusually small circulation,
il must be presumed that it was the ordinary
circulation prior to the suspension of specie
payments. During the months of May and
June, the circulation ranged between $9,0l5I
and Sl7.l3. But shortly after the June
session of the General Assembly to wit. on
the 9TH July, we find its issues suddenly
rising TO the sum Of S42928. It increases
in each return from that time to the Ist Sep
ternber, when its circulation amounted to
:l56.25S. On the 18th September, it was
sl09.566 25. On the 25tli September, it was
Sl22,622 25.
We cannot believe that issues to such an
extent with corresponding liabilities would
have been made by the Merchants Bank in
sound business times without corresponding
increase OF present means. Such course
Of Issues does not look to the speedy resump-
tion Of specie payments, and however able
the bank may be To meet its present demands
in current paper, such management, if persis-
ted in, must tend to reduce the value Of all
paper directly by the over issue itself, aud
indirectly by the example which it will hold
out to others, much less cautious and con-
siderate than the Directors of this bank. .!
We have here then, violation Of the
above rule imposed upon the banks by the
necessity Of the times. The question then
is, shall the writ of Injunction at this time is
sue and the effects of the bank without fur
ther delay pass into the hands Of receivers?
70 answer this question we inquire whether
this false step can be retrieved. Can tho
issues Of the bank be brought within the rule
prescribed? No one can doubt it. II can
be done by the increase of the specie of the
bank, or by n reduction Of its circulation
without increasing its other liabilities. Shall
the duty Of cffectng this reduction be con-
fided to its present Directors?
The honesty and uprghtness Of the Di.
rectors is conceded by the Commissioners,
and is nnques,ioned by the Court. And
though the concerns of the bank have been
m Ucd hat pphl lic Ion tall ~ in
danger of being defrauded thereby in the
manner above described, we are satisfied
that it is not in consequence Of any dishonest
intent on the part Of the Directors. Their
error lies in having too zealously devoted
themselves to the promotion Of the acqnisit-
ions Of the bank, without fully considering
their corelative duties to the public a, large.
A large banking institution, forming centre
for no inconsiderable portion Of the banking
interest Of this state, owes to the public, not
only the duty of refraining from an excess of
issues which may eventuate to the Injury Of
the public, but also the duty of good ex-
ample in that particular to all like institutions,
upon whom such an example could produce
an effect. We are satisfied that any depar-
turc from these duties manifested in the
transactions Of the bank, has resulted rather
from inattention than wiful neglect; and that
now these duties being pointed out, md the
rule by which the circulation is to be regn-
lated during the suspension of specie pay.
ments being hereby recognized, we will not
permit ourselves to doubt, that the Directors
will, with as little delay as practicable, cheer.
fully bring their circulation, without increas-
ing their liabilities, within the rule prescribed.
We find proof of this disposition in the re-
turn of the 25th of September. BY that re-
turn it appears that the liabilities OF the bank
...,=o 1d hot u o1,r, tI,n 9Th md Clih hy