Southern Argus. [volume] (Columbus, Miss.) 1834-1842, 1841-12-14
From The Louispille journal.

EXCHANGE, SPECIE PAYMENTS UsURY,
&c. The increasing rates ofexchange, and
the rapid depreciation of tie paper cut
rency, ought 10 open the eves of the peo-
pie to the tremendous evils of the State
bank system. The excuse offered for the
suspension of the banks west and south
of New York was the insu fficiency of the
supply of Eastern exchange; trade be-
ing out Of balance. The excuse was a
good one, at least so far as the banks in
the Western States were concerned. They
could only have continued to pay specie
by great and sudden contraction of their
circulation, which would have been disas'
trous to the debtor class. They were
suffered to suspend in order that they
might, by a process gradual AMI not IN
iurous 10 the community come back to
specie standard. Their approach TO that
specie standard would be indicated, if they
were properly managed, by the gradual
fall Of exchange on the specie paying
points. At first, the rate might be very
high; but gradulIy and constantly it would
decline, until it reached point OF virtual
resumption-say premium of one per
cent, in the West or New York funds.
Instead of this gradual approximation
to the specie standard, we behold, as we
have said, constant departure from it.
Exchange between Cincinnati and New
York has got up to i IL per cent, and
the rate of NJ York exchange is near about
the same in all the Western States, ex-
cept Kentucky. In Kentucky the rate
has heen growing worse, and it may now
be rated at from to 8; the banks selling
when they do sell, at Z, and the mass Of
purchasers being compelled to take Phla-
delphia exchange at 3 l'3 and 4 for re-
mitIances in New York, between which
city and Philadelphia the rate is is now s
to 8.
Now what does all this shew Eth
er that the paper of the banks is really
depreciating every day, or that they are
exacting enormous usury I'm der the pre-
text of charging exchange. When the
banks are in a state of suspension, there
is no measure of the value of their notes
but the rate of exchange on the specie
paying points: and there is no other STAN
dard by which the community or them.
selves can judge of their station. There
is, in such case, no safe rule of conduct
for bank but resoIute!y TO reduce the
rate of exchange every day, If she sui
fers it constantly to rise, there is no check
upon her, and her circulation constantly
tends to increase. If she goes on reduc-
ing the rates, her notes will flow in, until
when exchange is sufficiently reduced,
she is virtually a specie-paying bank,
without the formalty Of announcing the
fact. A bank, if she means to act hon.
estly, vii! not avoid any check, not even
the check of paying specie, as long as
II can be done consistently with the public
safety.
Look at the conduct OF the Bank of In
diana. The Kentucky bank took her pa
per as loug as she would settle balances
IN exchange at the rate of the Kentucky
banks. She refused TO do this, and reioi-
ces IN freedom from all restraint; The
Cincinnati banks receive the money of
the bank of Indiana, and thus exchange
~ A"oI"t'o obu CnlO - dt tue enOFlnOuS
rate of III a12 per cent on New York
This state ofthings cadhot be much lon
ger endured.
No bank, while in a state Of suspension.
should be allowed TO make dividends.-
10 do so, Is a monstrous fraud. If they
made no, dividends, the enormous rates
oil interest they exact might be excused,
lnasmuch as they would be strengthening
The banks for the day OF resumption; but
It IS neiarious that they decline redeeming
their notes at any reasonable rate, and
divide amongst the stockholders the prof
It's OF usury and imposition. The whole
subject is one which needs to be probed,
and we shall endeavor to do it thoroughly,
as we have time and occasion.