Southern Argus. [volume] (Columbus, Miss.) 1834-1842, 1837-09-05
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perlence has taught us that the prlncl'
pie Of retaining a certain amount Of
coin or bullion in the vaults OF bank,
is not an absolute security to the hol-
ders of notes and depositors, nor to the
public, against the dangers of exces-
sive issues. In Scotland, the public,
not looking to a metallic fund for pro-
lection, finds its security in the number,
character, and wealth of the partners
ofthe bank. These are the guaran-
ties presented by the Scotch JOINT
Stock Banks, without which, it is obvi-
Gus, their shares would not be in de-
mind, nor their notes obtain currency.
1t is apparent that this system presents
more dangers to the owners Ofthe
bank than to the public. 1t is this, in
deed, which constitutes its chief secu-
rity, by insuring the adoption of pru-
dent, vigilant, and moderate policy on
the part of the banks.
A salutary CONTROLS exercised up
on their operations by various checks.
In the first place, the directors are cho-
sen from among the largest and most
respectable of the shareholders, who
have every inducement of character
and interest to act with fairness and dis
cretion. An open balance sheet is
kept by the officers of the bank, which
is frequently scrutinzed by the dlrec-
tors, who inform themselves, by actual
inspection, whether the cash, bills on
hand, assets, &C., correspond with its
statements. There is, besides, an open
propriety court, composed Of a large
BODY of the shareholders, which meets
at stated intervals, and after the &C
counts of the bank, as audited by the d.
rectors, are carefully verified, and the
whole subject has been elucidated by
the maturest deliberation, proceeds to
declare the dividend, reserving gener-
ally a portion of The profits as sur
plus fund, to meet the contingency of
unforeseen losses. Another powerful
check is the control exercised by public
opinion. as expressed in the public esti-
mate Of the value Of the shares. 1t is
scarcely possible to deceive the world,
IN this regard, as the concerns of the
banks are intimately known to so many
persons, and the numerous share hOl-
ders are naturally among the compe-
titors for purchase. Another guaran-
tee, and perhaps one Of the greatest,
consists in the mutual surveillance
which these banks necessarily exercise.
1t is scarcely probable that they would
continue to receive each others notes,
unless convinced of mutual solvency,
and they are thus compelled to stand
as vigilant sentinels upon each other.
With regard to the profits of this
system, it is stated that the majority of
he joint stock banks regularly divided
Or the last hair century, profit including
,onuses, of from l2 to Is per cent.
The result of one joint stock bank in
Scotland would scarcely be credited,
we're it not derived from indunabIe tes-
lmony. The Aberdeen Joint Stock
Bank, it is stated, commenced a con-
siderable number Of years ago, with a
nominal capital of 200 shares of $500
ZACH; but only $50 per share or
E3O, 1000 in all was called up at the time
t commenced business, and no future
;alls were ever found necessary, from
he quantity of deposite money poured
n upon the company.-Their average
dividends have been eight per cent, be-
tides occasional bonuses; and for some
ate years successfully, they divided
$50 per share, besides placing $4,000
10 the account of undivided profits.
from which account they laid aside
$3.50 per share, or Gl7O,0OO, to form
an addition to their original paid up
capital of 100000. They had at one
time G55,OOO deposite money lodged
with them; which, with an extended
circulation, enabled them to advance
100000 on credit accounts, GI5O.OO
on current bills, an equal sum in exche-
quer bills, and to hold $4,000 in Bank
OF England stock, besides laree invest
ments in the funds. Their shares Al.
though opposed by three other respect
able banks and bank branches, were
sold at Gl400, being Gl25O of premi-
UNI of profit beyond the original cost
The above is the history of this bank nm
to !S2l:-At late period, the share
winch IN 1921 was selling for Gl4OO
Drought, In the open market, the enor.
nous price Of 1880; and at the mo.
ment when the publication, from, which
this account is taken, appeared, each or.
lglnal share was valued at 5000 o,1;n.
cas-. SIN
hwOuld be absurd to suppose that
the foregoing statement represents the
general history and condition Of the
banks in Scotland.-Shll i ro,st ~
conceded, that this system. which bos
now been established nearly halfa cen'
Jury has been exceedingly Profitable to
the shareholders, and equally safe 10 ~
the public. So great howeyar @ : ,b -
responsibility of the partners. that until nil
lately, few noblemen or gentlemen Of
large landed estate were wiIl;no - a,ol
bark in these adventures. 4 late n
novatlon, however, according = which
It IS stipulated, in the deed If settle sl.
ment, that in case OF loss Of t,ven r