The North-Carolina standard., 1843-02-22

small and the paper abundant. Again, the enor-
nous frauds of which the banks had been guilty, de-
privedthem ofmuch oftheir former credit and hence
the necessity of boarding larger amount of spe-
Gle to meet the payment oftheir notes which loss
OF credit will ever cause people to present 1t
was not then an actual want of specie which orr
ginally induced suspension in 1887, but the sus-
pension itself and the necessary consequence of
that act-the abandonment of specie as curren-
Icy-forced the latter elsewhere; to wit: to those
places where it might supply a currency for the
population. This position admits not question !;
suppose the circulation of Raleigh to consist of ir=
redeemable bank paper 25 per ct. below par, that
is below the market price of gold or silver and
then imagine one to possess specie. Will he pay
with it? By no means He will sell his specie
for the per CT and pay and purchase with the ire
deemable paper that answers every purpose, and
the specie would thus silently work its way to
some specie country where it would perform the
functions of currency. Thus those States which
encourage bank suspensions are continually drain
ed of the precious metals which flow where they
can act as a currency. Now what are the only
ways by which these institutions can return to the
honest payment of their debts2 First answer,
by the purchase of additional specie; secondly, by
contracting the amount of their paper circulation
Now have our banks endeavored to do the lat
ter2 By no means At any rate if they dimn-
ished their loans, they did not them altogeh-
er when in state of suspension.
Have they attempted the former? Quite the
contrary. Instead of purchasing, our banks have
been actually selling specie for notes made by
themselves which by their own suspension had
become deprecated in value. And l venture to
say that from this source much the greatest profits
of the banks have lately been derived. 1t must
be admitted on all hands that they have been in
the habit of selling checks on New York while
in state ofsuspenson, and these checks being pay
able in specie it is the same as if the bank sold the
specie itself But perhaps may be here remind
ed that it would be too troublesome and expensive
to transport the specie hither for resumption. In
answer we should recolIcct that the note-holder
who demands specie here would in nine cases out
of ten, prefer draft on New York. Extortion
and usury are generally also concomtants of these
suspensions. Suppose for illustration the depreci-
alton to be per CT and man borrow 500 for g
months. Here the bank obtains for six months
legal interest So and the borrower loses per Ct.
by depreciation or pays for 800 for months 8
per CT or 10 per ct, per annum. Banks should
never loan to director or to any one in any way
connected with them. They should never issue
the note of a suspended bank and on refusal to
pay should be prevented from further issue even
of their own notes in the way ofloans or discounts
And this is reasonable because the permission to
discount was granted on the express understand
ing that it should redeem its paper in coin; be-
cause also each stockholder and every man inter-
ested would then find it to his advantage to return
to specie paying state. 1t is the and ration
al cure and one which would test the solvency of
the institution and If it be solvent enable and all
in similar situation to resume forthwith. One
of the most usual and at the same time shallow ar
tihces urged by the opposition is that if the bank
calls IN Its notes curtals its circulation its debt
must be pressed and these again will press those
who shall owe them and so on until the property
of every debtor would be sold for one-half its real
value. This argument is falacious, for the sound
and solvent debtor wond not be pressed by the
payment ofa dt BIT for which he must be prepared,
having previously known the precise time it would
become due; and hence the insolvent debtor alone
would be straightened and probably less so now
than at a future day when he may and probably
will have become more embarrassed and insolved.
The question is, did our banks have the means
and if so, ought they to have continued specie pay
ments. am told that they ought not because
they would have been drained of all their coin,
ven supposng they had dollar for dollar, which
would have left neither paper nor coin circu-
Iation. But this, MIR Speaker, supposes that all
the notes of our banks were held by brokers and
northern banks; which is not true as the amount
on the contrary was but small Besides, if an at
tempt had been made by brokers and adjoining
States 10 collect pap and demand our specie,
we could have prevented them from so doing by
rapidly curtalllng the debt due to our own banks
anil demanding specie or their notes for debt
and sueng the foreign banks for IL per ct. But
| am told that such course would have prevent
ed the circulation of their paper in State be-
cause dishonored at bank. If bank in another
State dishonor its own paper by failure to pay,
it seems uncommonIy strange sympathy in our
banks to refuse to dishonor 1t too. And again, l
am told that such course would have prevented
our own bank paper from circulation out of our
own State because by the rapid collection of debt
it would have been in great demand at home
Now this is entirely inconsistent with the other
Of the bank opoIogists who support sus-
pension because, say they, our notes will be col
lected by brokers and broken banks in other
States and sent J:ere for redemption to carry off
specie. But in the next breath am informed that
our banks can pursue such course as will pre-
vent our notes from leaving the State and conse-
quenty brokers and broken banks cannot get them
and hence specie will remain with our own cit-
zens Another reason assigned by the Senator
from Guford for the long protracted and often de-
erred return to specie payment by the banks ofthis
State is that "the Banks north Of ooOuLd not
resume" The Senator from Caswell in reply to
this argument Of the Senator from Guilford says
that "we ought to have more pride than to be gov
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