The pilot and transcript. [volume] (Baltimore, Md.) 1840-1841, 1840-06-09
COMMUNICATIONS.
FOR THE PILOT.
THE RANK s.,

derstood, and requires but common sense and
honesty to manage it, II is created by the con-
tribution of suc' IS by individuals, as they can
| Some can contribute twenty dollars, some fifty,
some one hundred, and others more. These
sums, small as they may be, when scattered
among the multitudes who put them in, or sub
scribe them, form large mass when united to-
gether In the pockets of their owners, they are
of little use, and generally wasted. But,
placed in a common fund, they are rendered pro-
ductive to the proprietor, efcial to the public,
and are preserved from waste.
We will suppose, then, bank with capital
of one hundred thousand dollars, made up IN this
way Here, then, is so much money, which,
otherwise, would have been unproductive, made
to be productive. This capital is in specie, and
forms the fouNdation of the future operations OF
the bank The sole object is to lend money, and
to get in return a fair compensation, unaccom-
panied by the spirit of usury. 1t not only lends
out its capital, but from the confidence which the
community reposes in its stability, and in the dis
erection of the persons to whom its management
is entrusted, it is enabled to lend more than its
capital. Thus, a bank with capital of one
hundred thousand dollars, may lend with safety,
three hundred thousand, And here is another,
indeed, paramount advantage in these institu-
tions, FOR, in this way, they in fact elaborate
so much additional capital But itmay be urged,
that this addition is entirely fictitious; that it has
no reality, and is nothing more than naked
promise to pay, without fund wherewith to
| pay. This is by no means the fact 1t is ON the
contrary, real, substantial capital, and in every
sense as much so, as the original subscription in
specie It's also quite as available, and quite as
secure.
| The bank issues its notes of various amounts,
redeemable in specie, at its counter. These notes
are, in effect, the same as specie, and answer
every purpose of buying and selling They are
nothing more nor less, than the representatives
of so much property, held by, or at the command
of the bank The first hundred thousand dollars
lent out by the bank, we will suppose, to repre-
sent the original hundred thousand dollars, put
in by the stockholders. The remaining two hum
bred thousand dollars, represent the property OF
the persons who have borrowed that amount
from the bank. Here then is the substantial ba-
sis on which it firmly stands; the specie of the
stockholders, and the property, real and personal
of the borrowers or customers. So that, for the
three hundred thousand dollars of notes, which
: the bank has thrown into circulation, by means
of its loans, it has, for the redemption of these
notes, the specie capital of its subscribers, and
the property capital OF its customers. The result
is not only perfect security to the public, but az
addition Of so much, to the active capital of the
, tcountry. For the specie part il made operative
by being saved from waste, and by the gathering
into one mass, small sums, which by themselves
nearly useless to the public; and, the property
part, if not brought into action, in this way,
would have been lifcless and Improbable.
A man engaged in business of any sort, may
own a house worth five thousand dollars. With
out the facilities afforded by banks, it will be o.
no further use to him, than to protect him from
the weather, or perhaps, to yield him rent. II
is in no other respect useful to him, and answer:
no purpose, as an agent wherewith to create
capital. But he stands in need of active means
of cash capital. The bank knows his worth, and
what he is doing, and will lend him third or
hall of the value of his house, or, in banking
language, will discount his note, in proportion
to his worth, taking due care not to exceed it,
Here then, his house comes in to assist him, and
supplies the two-fold purpose of shielding him
from the weather, yielding rent, and of fur
nishing him with the means of giving full scope
to his exertions. This is but one of the many
bountiful effects OF these now illuminated insti-
tutions, and which the administration have de-
termined to destroy
The healthful influence OF bank is direct and
indirect. The mocha mic, for example, who has
worked out his apprenticeship and his journey
manship, sets up on his own account. He pos
sesses skill, integrity, and industry, but lacks
capital. If he be boot-maker, he goes to the
dealer in leather, and buys on credit given
quantity of leather. For this purchase he gives
his note, at sixty or ninety days, or longer. The
leatherdealer takes the note but soon after wants
money cash himself, to buy hides, or to pay
his hands. What Is he TO do2 If there be nc
banks, he must go to the Insurer, and be turned
OF with scorn; or be made to pay ruinous rate
of interest for the loan he solicits. Whereas, il
he can have recourse to bank, he delivers to il
the note of his new customer, and receives in
exchange the money he wanted, at legal interest
In this instance, the boot-rnaker and the work
men of the leather-dealer, receive the indirect
benefit; and the latter the direct one from the
bank. In time, the former, as their wealth in
) creases, under this fostering-this truly demo
cratic influence, will receive the direct benefit
that is, when they sell to the factor, to new be
ginners in trade, or TO the exporter And this
the simple refund traversed by all trades or pur
suits, where the banking system aourishes. Ant
thus it is, that banks are the poor mans friend
Without their aid, he might linger out his day