Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1838-10-26
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TrgSrS ppnDEI'Is
FREE BANKING.

~
We perceive that New York CapItli!s!s are frning
establishments with rnpdty under the recently crad
banking law Of that State. Many Of the other States
seem Inclined 10 follow its example in throwing open
/, competition the business Of banking gencraiy THIS,
it appears to us, must lead 10 evil It has its in
the misappicail"H Of sound principle. banking, so
far as consists in iG0EjDg cJcd is an xcrP"n 10 the
rules Of unrestricted Osn y IN trade. Un'iancd free
dom in all The OF real capital NAV be properly
mitted But unsafe generalization Of this prncI.
pie allow lis extension 10 hat are called loans OF crc-
dit, consisting Of Tie Ssnrs OF paper money by Banks
Banks OF Dcp1site contain within themselves sell rrgu
aljnr principle. They aggregation oil real monte
means They will moi oe iancd ,unirss there Isn hole
some demand lar m"n!cd resources and the exPansbii.
~ Of their credI! is invnr1Gy r"guahd by iaa profits
which can be made the legitimate employment OF
CAPITAL Banks If Circulation, the contrary, have
40 self restraining c, ck: tu Whist a." found IN very
remote risks The only rule I" regulate credit by banks
of issue is the demand for their paper and their only
rule of security The amount and quality Of their assets.
This is a guarantee for S"tdY. certainly, h" II ~
nancc for sisada,SS the circulation y HE
note holder and deposition from d"es not guar
anr.r the community against insti5ty aud tHctud'iGn
in the currpncr The great body of the people must lie
protected from loss arising from unstcadness OF prices
or one Of the conditions OF sound currency Is anirI
filled.
The above are important Distinctions frequently
lost sight Of IN banking They are disrcgarGrd III the
lately created New York law. Each OF the banks Csa
bishrd under that Law sI"Id Comp'cte security To
all who deal with against Bankruptcy eventual loss
and yet the people q, large may be Subjected, wr
have said the evils o fucuatlng medium OF value
to the losses which incidental to the imitation End
contraction Of tie circulation 10 IIsrae tins dsIIne-
ton let us suppose that millions OK cnhrS constitute
the true amount OF circulating medium for the city OF
New York. so as 10 preserve due evr! Of prices lie.
tween that and other places drmand tor money,
we will imagine TO arise, connected with speculation -
The facility of forming private establishments Tor The
loan of credit would thence induce the formation of
| an additional number Of these establishments The
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dualiy until reaches The AMOUNT, We will suppose,
oG fifteen millions II the aggregate capital OF these
banks amounts ten millions and their lonns should not
exceed fifty per cent Of their capital, they would be
within the safe rule of banking. The total amount Of
,hrr issues may be secnrsd by pledge Of stock or
mortgages on real estate al moderate valuation so
u p.otcct the holder aud deposition against the pos
sb:lty of eventual loss YET how IS the community Be-
cured against fuctuatIon H;dsr such system? Traces
are expanded in the ratio thnt the whole amount Of The
circulating medium exceeds the required for lsgti
mate purposes and subsequently contracted on 'e
duc,on of prices One Of the two c"nGi'r"ns there
fore of n sound system Of currency uninIhcd on the
New York plan. The NeGd'sess or s's5H"y Of The CIR
culaling medium. which the people gentTa''y are 50
I largely Interested is not secured
Tins is not then, question simply between the Gre.
d,urs nC b,nks-O wit their note b"lGrrs and deposit.
ors-snd the banks lhcnsrlrrs-but between the com
,uri,v at LARGE and those institutions There can be no
possibility nf bankruptcy even loss as we have sad
IN those y no stand Ihe relation If CREDITORS Ia banks,
If The amount and chTac'eI"' 'nf ass's nr such Of,
.iih ample collateral security IN State Stocks and
Nr,aaes for their issues those assets ne readily
! realised Each Bank formed on the New York Plan,
| irving sccur,y lr lis ISSUES, by the iodgmcnt with
npblc officer Of eqnai smGanl III public stocks anf
ror,cares may act within the safe principle Of banking,
noknr to lis safely and that of It's creditors, by
never permitting s loans 10 exceed fifty per cent OF lis
capital and regarding also The character and amount 6"
s assets Bul # instead Of there being banks IN "
York each with capital Of mIli9n. and zach WIN
. uIlfOu aud hall. '!fTf snohIH b'
twenty banks each with one million rapi"i ana 'a'H
making loans To- the extent as the ten oahh- the
loan Of capital u The former would be ten millions
Ia, or .,,;,,l IN The latter case would he twenty MIL
lions and of capital and credit together thirty millions
Ncy there NAV b. security enough ~ the nature and
extent Of banks sssrts fully I" protect i'S strckhoid'
cs and IN The amour! Of Stale CLOCKS i"f'.'s Oh