Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1838-01-02
COMMUNICATIONS.
BANKS.-TNo. s.
A. Christmas Gif for hs Conserratii

BANKS.-[No.5 81
A Christmas Gift for The Conservatives.
uIf two individuals SHOULD trade with one another on the same
principle thu. tho banks trade with the community, it would soon
o oe s on all On ,b s9 no. ssi he s a s's sni iaonr the notes themselves, with
his own wealth, AS loss aud rs gain would be m proportion 20 u
"Thi, 10 the exac, principle of American banking operations; but
owing to the multitude Of Petsons concerned, the nature re o, Inc , ram
action is not discovered BY the public. Regard tho whole banking
interest as one body corporate aud the whole ofthc rest of the COM
maoi.y a, one body polite and i. win BE- BE- Seen ice s 1"I, the OOHy p q ,Gc
notes received. while the body corporate finally satisfies the demands
it IL. , e.eS iSaSS p0'"' ny transferring nc '''' eoass, part T., q. 3.
Amongst other popular fallacies, it is said, that the
existence of banks in a country is q mark OF lis freedom.
This idea is generally received by those who, to save the
opinions at second hand The existence Of banks an
evidence of freedom! 1t would be a sufficient reply to
so vague 4 proposition to state one prominent fact from
the history of banks, namely. that the FIST bank that
monium Of tyranny. But the proposition admits of a
more particular answer. The system may be proven to
be an engine Of taxation, a device by which ~stockhold'
es are enabled 10 multiply The profits Of capital at the
peoples expense. Bearing in mind what has been said
in former numbers, the following statement will not ap-
pear strained beyond the evidence Of facts: II possess
500 and lend it out us n private citizen, ! gel Sc at the
end Of the year. Now, suppose use TINS money as a
siockholder. | subscribe for FIVE shares al 100 dollars
each, in some bank, upon each OF which pay an
ins,almen. OF 20 dollars. which is sufficient 10 put the
bank into operation. For one hundred dollars, then,
l have STOCK to the amount Of 500. To keep my.
Ell sun NllllI tUC iuhSS w pl'euoi''J wa '"
that this bank issues only three TO one upon its stock.
My $500 in stock then would serve rs the basis to 4 cir
culalion Of Sl509. The interest of this at S per cert.
per annum (Which Col. Taylor says is The bank inlerest)
would be SI20. Suppose $50 Of This sum appropriated
10 bank expenses, | shnuld have MADE just 100 per cent.
on my in put, whereas, leud;ng in the usual way, | should
have made but 6. Such are the e%xorbitant profits which
banks enable their proprietors to reap. These plentiful
issues, even If they were permanent, would produce no.
thing more $50 far as the public is concerned) than a rise
in prices. But if il causes Us to receive more for what
we sell, and to pay propor.ionab!y more for what we buy,
it is manifest that we gain no real advantage by it.
But it will be said, if the hank paper is deprecated in
the hands If the people it is equally so in the hands Of
spivs saeh hsasv c. T,ns%l,- a. And tny II! in!paia as fr to
over balance the usual depreciation Of The medium
Avarice itself could not plead the depreciation in miti-
CATION of profits, if it received at the end Of the year
800 of bank paper for 100 of specie paid in BY way Of
instalment.
Again-if banks expand thei, issues to a great degree
it enables debtors 70 pay their liabilities in a diluted cur.
rency. This is a tax upon creditors. 1t they should
contract them, it forces debtors 10 pay in q currency pro.
portionably appreciated. This Is a tax upon themselves.
II they stop specie payments, the consequent deprecia-
ton Of their notes is a tax upon depnsitors aud note
holders, and upon creditors, who are virtually obliged to
receive it at par. This is taxation with a vengeance
And notwithstanding all this, The friends OF banks still
perseyere in assuring Us, that such institutions are the
indicia of liberty. Charles LIST, asserting bis right 10
ship-money, might, with as much color Of reason, be up
held as the patron of popular rights. The taxation of
BANKS, ike tnal OF the EnSilSn monarch, is imposed IN
many cases without the consent of the payers, and is
altogether arbitrary in its amount. 'Tis astonishing
through what different media we view The same object.
Those may be correct in their opinions who regard these
excrescences as symptoms Of robust health; but to my
mind they resemble so many pestient lulnours, which
absorb the juices of The body polite 10 4 few puin,s, while
the rest Of it is left to languish in a state Of ~alrophy.
When q charter is asked for constructing n railroad or
canal, or for establishing a literary institu: ion, il is grant.
ed without difficulty; at least without price. But when q
bank charter is asked, the petition is always backed by
a douceur. Now, why is this discrimination made? The
charters for which no bonus 10 required, contemplate pur-
poses compatible with or conducive TO the public good
1t would therefore SAVIOR of ex,ortion to demand a price
tor Incorporating 4 company, which, in striving 10 pro.
mote their own interests, were at the same time benefit.
ting the community at large. A bank charter seems 10
be regarded as creating L monopoly OF a very different
complexion, Hence it is, that Legislatures cannot be
persuaded 10 cree; these establishments gratuitously; in
short, they virtually admit, that they are evils, and there.
fore take care to secure an indemnify for the inHiction,
in the shape OF q bonus to be paid into the public trea.
sury. Gaming houses are not beneficial, and therefore
Legislatures have required a heavy sum Of every pro.
pretor of such an establishment, before he is authorized
to open doors. Drinking shops are in this Stale placed
upon the same footing. | do not use these illustrations
in any uncharitable spirit, but merely to show, that LIE.
gislaturcs themselves, in requiring n bonus before they
will permit the erection OF q bank, pay but 4 poor com
pliment 10 The character Of such establishments that
they deal with them as with evils they would fain pre-.
vent, by afixing q heavy fine to their creation. If they
should be established, Notwithstanding this drawback,
the answer is ready-"bad as they are, the State extracts
q profit from them" This is FalstafT' philosophy over
again, though it has rather an odd sound from the mouth
OF a statesman. Consoling himself for his infrmilies
as ~affording q good claim for 4 pension, he says, ia good
wit will make use of any thing. l viii turn diseases
into commodity No matter how many are inflicted
on the State, SO they yield a profit. Lueri odor STARTS
eL Teguati6ct.
If banks were benefits, then their charters would be
granted for nothing; but, if they be evils, no sum Of
money which a company could offer, should tempt the
Onh}lc servants TO authorize their creation, Huyinp and
and selling laws! What a strange phraseology one ma.
turally falls into in discoursing upon these institutions!
Or, if they be called contracts, what right have repre-.
mental law under which they act' The fourth section
Of the Bill of Rights is here alluded to. This buying
and selling Of charters, unlocks at once the nature Of
the banking system. We may rely upon it as a true pro
position, that a taso schieh costs money, is ,oorM meaey TO
The purchasers.
But there is one species of taxation exercised by banks,
which, as /! is rarely adverted to, seems 10 be generally
overlooked. ] mean the fact, that the bank reim5urses
itself the amount Of the bonus paid for its charter. Even
if the stockholders of banks did pay the bonus out Of
their own private fortunes. a sum Of money, howe yer
large, would be 4 most pitful compensation to n spirited
people, for the civil inmunilies given in exchange
Such a bargain, would resemble those which the abort
gines Of America made with the crafty adpenturers of
Europe-parling with territories of fertile domain, and
receiving in exchange, a handful of %glittering trinkets.
Such q people, one would suppose, would kindle with
indignation, at the bare etfer Of a purse, the accept.
ance Of which would lift a privileged order over their
heads. But, Insignificant as the bonus is, compared TO
the privileges it purchases, even that is not Soma fd