Rutland herald. [volume] (Rutland, Vt.) 1823-1847, 1839-10-29
REPORT OF COMMITTEES on BANKS.

hisfohI VI tOMMII ZEE On BANKS.
10 THE HOUSE OF REPREsENrAriyEs. NOW IN SESSION
Tnr committee to whom was referred the resolu-
uon insruong them 80 enquire whether IL is expe-
oicnt to charter or recharer any banks without,
KING The private property OF the stockholders liable
for all the debts of the bank, or without making the
stockholders give ample security for the debts of the
bank, and to report by bill or otherwise" beg leave
respectfully TO make the following report
While the losses sustained by the community have
as yet been from but few ofthe banks in this state
the events of the last year. and especially some of
very recent date, admonsh us that in the granting or
renewal OF charters for such institutions, a watchiul
vigilance tor the security of the bill holder is only
required 10y public SENTIMENT but is just and
able IN Itself, and is the only way continue that
confidence without which paper money loses all
claims TO public favor.
All must agree that is incumbent on the govern
mcnt which grants to individuals the exclusive privi-
iege OF substituting paper for coin as a circulating
medium, TO provide for the community who are to
receive such paper, the best security that may be
practicable, that such paper should all times be
convertible into gold and silver And while the
cearest principles of justice demand this for the
safety OF the public, the highest considerations of
policy as it regards the banks, require that every
effort should be made to place them such foot
ing OF STABILITY and permanencc will inspire
reasonable and necessary confidence in their soldy
and strength. Pancs and pressures, though neces-
sarly attendant on extensive system of paper
circulation, are greatly aggravated, and their calam
itous effects are mainly Produced by the feeling that
there Is Tor the bill holder positive and certain ul-
innate security. Hence it would seem that banks
themselves, that design to do a fair and legitimate
business upon actual capital, are equally with the
community interested in their being established upon,
as already stated, grounds which may be the best
calculated TO inspire mistaken confidence in their
ability and safety.
Taking counsel of experience, a far safer guide
than imposing theories or confident asscrtions--we
ought to conclude that those provisions intended
safeguards, which have heretofore been found inef
ectual, will, with probability if not certainty,
prove so hereafter. The history of banking in this
country demonstrates that ne ,rly all bank failures
arise either from want of actual capital paid in,
from fraudulent PRACTICES, or from neglect mis-
management of the directors.
! Failures of banks, chartered under the existing
laws of this sta e, can scarcely take place for the
want of capital paid in, if those laws faithfully
aud rigdly enforced. If the fraudulent conduct of
/ bank directors should be made highly penal the
| committee believe that failures from that source
would be much less likely to occur. And failures
from the neglect msrnanagemeni of the directors,
would, believed be most likely TO be checked,
by requiring from them and the stockholders, high
or degree OF responsibility TO the community thus
awakening that vigilance, and inducing that caution
which waichfu and prudent men exhibit IN the man
4 aeement OF their own private affairs.
With regard to the mode OF accomplishing the
great object in view, the committee aware that
some diversity olopinion may exist. But they have
seem with regret, that while the opponents of reform
are constrained 10 submit that ''wisdom would seem
TO dictate, that adopt and incorporate into our
system, such additional securities and guards; as Will
efiociualy ensure the safety ofcommunity, they, a,
iAe same Time, enleayor destroy the effect OF this
admission, by attempting TO throw discredit upon
the opposition, 1t has been termed, the cry a
gainsl bank monopoly, and by insnuaiions, tending
10 dsparage the means conceived 10 be necessary to
remedy the existing evils, well as the motive OF
those who desire the adoption Of such means. We
are iod that banks were created expressly for pub
lie convenience" If this is true we believe It 10 be
tie imporous duty ufthe Legislature 20 charter them
only on such conditions, as well ultimately secure
Tie bin holder against loss and, notwithstanding
the party IN power have seen at 10 publish 10 the
world, that 'nany visionary proposition on this sub
icci, have bee D, AMI doubtless VIII continue 10 DC
submitted, from yaIious motives, which, though
r s-,ecious in theory. viii bc found, examination
z npYa ciicable and unsafe in their operation SIN
your committee behave that II these visionary mea
sures ofTeiorm, as they have been called by some
had en incorporated into bank charters OF this state
p that ihe honest bill holders would not have suffered
chose severe losses which the pres eni unsafe bank
& inc system has brought upon taem Assuming 'he'
tbs, the present banking system is unsafe, your com
mitee believe that the interest OF community re
ouirss that the Legislature, without distinction
Marty should Immediately bring about reform, not
& ,.staniing we have been admonished 10 embrace
. with caution any new and unirlcd me assures
As respects the manner Of obtaining inriher Sc
r curity le making the stockholders liable, IN thei
. private capacity appears 20 be satisfactory 70 some
While others consider that nothing saou OF smp'
i,ols with cool security, real or personal 10 Ia
trcaSlrcr ofthe state county, ought 20 be Fegafae
a. sgfiirient Your committee sFedecdedly "a isso
III tie latter method believing Il will be ioond Z
e mite lie greatest advantages with tho least iheon
} vcuifnce.
ne committee are fully convinced, that no char
tor or renewal ola charter, ought TO be granted
d. without slopiiag the last mentioned mode OF seeu
. fiiv- And. a. sill further security TO the Puoe
they arc Of thc opiaion that the Legislature shoal'
p rcssr.e ss power ana eonIfol over al banking 10
. siliuiio8s that may be established,
q re oousni.tc.. tl,ernfsre concluded, hy recon
nee iing 70 &c House the following resolutions