The Caledonian. [volume] (St. Johnsbury, Vt.) 1837-1867, 1838-12-04

banking corporation hereafter TO be chartered OF
rec chartered shall, by their act of incorporation
make the private property Of the stock hoiders
:olden TO redeem tho bills by them issued, il shall
OF be required TO comply with the conditions OF
is act"
Now sir, however lightly gentlemen may profess
think Of the safety fund system, regard its pro.
visions as eminenty calculated TO afford security to
the public against losses by those banks which it
embraces. True this fund is not large, but it is
continually increasing, Could the banks petition
ing for new charters be added, the fund would be
increased some $4,000, and ultimately il would
be sufficient guaranty against any probable failure
But the public derives its greatest security under
this system from the fhc that il is AIDE the interest
Of the Banks to watch the operations OF each 9TH
er. The amount contributed by each, is held by
the treasurer or the state contigent fund TO be
appropriated only for the redemption of the bills Of
such banks, connected Herewith as may become
bankrupt and if not thus required each bank on
closing its concers 10 entitled to receive the amount
It has contributed TO the fund Hence each bank,
having reslduary Interest in the fund, is interest
ed in its preservation. Those EMPLOYED in the
management of banks are shrewd in discovering
the Encouragement of other banks and the first
TO suspect and to discover any symptom Of nsov-
ency and 1t would seom impossible that u safety
fund bank should become bankrupt before its stu
"t'on would thus be discovered, and its assets
cured by the commissioner
This system has been sufficiently md happily
tested in the State Of New-York. During the sus
pension OF specie payments and the pressure of
1887 not dollar is believed TO have been lost II,
'nat state by the failure Of safety fund bank. The
affairs Of two of the Buffalo banks were early sus
pected as being deranged and an injunction was
promptly prayed for and granted. The concerns
were closed under the management of the cons,itu-
ted officer, while portion of the fety fund was
applied Tor the purpose of taking up their Sircua
ton Tho public suffered loss. Their bills
were promptly redeemed, long before it posi-
ole 10 convert their assets into cash
And here, sir, allow me to enquire what Wo ud
nave been the situation of the bilholders if instead
OF this cas- fund the commissioner had been in pos
ses5 ION only of The kind Of security proposed by
the amendment we are discussing? The bills, up
on their face might read ''rea estate pledged" -
but who would know the fact! Irresponsible com
panles have resorted to this artifce But suppose
the holders are satisfied Of the facr, still they are
not money, nor can they pass currency. The
time when they are to be redeemed is distant and
uncerfan and they necessarily depreciae. SpecuIa
tors purchase them at discount and the commu-
nifty suffer.
Since therefore The operation of the proposed a.
mendmeni, If adopted, will be to absolve the banks
from the provisions of the safety fund act, it clear
~ appears that far from adding the security of
the public II takes from them Of the strongest
guards now existing. 1t cannot be sound legisla-
uon;; 1t is ven,uring not merely upon untred,
But dangerous ground-ground which we cannot
occupy while wo have in view the best interests oil
the Slate.
Sir, it doos appear to mo tina, further measures
OF reform are uncalled for thai under tho provs-
io,s W. na'e dIIeauy ADOPTED, our banks must DO
safely conducted In every bank failure hereto
tore Known 1t has transpired that large had
been abstracted by tho directors for the purpose of
private speculation. This practice IS prohibited,
as we have seen, by the bill now on its passage
Ihat bill, we have also seen, prohibits the pedg-
ing the stock as security for loans. This practice,
so far as it prevailed, went TO diminish the capita
stock, and thus lessen the security of the holders
OF bills. But under the provisions now adopted,
The stockholders are required TO give the same Sc
cuilty Tor loans other borrowers, and their notes
are collateral for paying the debts of the bank
Again, your bauk commissioner is required to make
frequent and thorough Investigations, examining
under oath tho officers of tho bank and publishing
his reports. Corruption in the management OF
banks is made highly penal, and in addition, all
are subject to the safety fund system The expe-
renee OF another year may indicate that further
CORRECTNESS are required but if so, the right is fully
reserved to the next legislature to apply them 1t
may alter, amend or repeal the charters in pro-
gress, or subject them 10 the provisions Of any gen.
eral banking law. With these guards and checks,
md with the reserved right to increase them here
liter, as the public good may require, the commu
'ity will be safe, and, believe, fully satisfied |
ammo! believe that this House are prepared at this
ime to impose upon the banks requisiou which, !
n oil probability, will result IN the destruction OF
he system.
Had the Bank of Windsor been subject to the
PROVISIONS of the safety fund act, such immen Sc
sums could never have been distracted for the pur-
pose Of speculation, without citing the suspicion
Of other safety fund banks. It's affairs would have
been investigated, and its assets secured for the
benefit Of The bill holders
-
g a horse n horse