The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1850-01-07

Tex ABOVE statement, Is VIZ:
balance aninvssssd, after dsdss:siiiin;s sA''OA
the interest due lat May and LIST -. 49,
Ne'' ioAS' '.''..'............... S72o "a SSSO n
Excess over the a''rgins interested ss!' IS
THE RANKING SYSTEM
Among the varied public interests to be affected by
legislative action there is more complex In
ture, portsnt in its bearing upon the gene
raj prosperity, than the currency cresed by bank
Ing Institutions The subject is Intimately connected
with the trade property aud business pursuits Of the
people and citizen ectly concerned In hav
Ing the circulating medium established on solid basis
and regulated by correct principles OF haance Our
has attracted larger share of attention public opa-
ion in regard to It has been uarly conflicting aud
fnanciers have advocated theories the most dsimsr;
the experience Of every county has been adduced
In support of favorte systems; but yet, has
been presented which commands universal assent. To
create a circulating medium sufficient sustain aud
facilitate the legitimate business OF the commanity
and the time to insure its safety and yerti
biity amid all the fluctuations OF trade tina uni
form motive Of our changing state policy the sub.
Jee OF banking IL was believed for series OF years
that this result had been attained by the successful
working OF the Safety Fund system. But the Safety
Fund was exhausted including its future revenues by
lev disastrous failures Ten banks. In addition to the
entire loss of their pitGl amounting $4,000 0O0
imposed further loss upon the fund Of than two
and half millions. The degree OF bankruptcy exhi-
bitsd BY these institutions was astounding aud almost
Uncomfortable Yet it has be shown that the SAFETY
kund woula have proved sufficient TO fulfil the orgi
nal design Of nsuring the redemption Of the bank note
circulation II IL had been devoted exclusively to that
purpose. The obstruction of the fund should b. at
trbuted to the tact that all the liabilities OF the banks
however Legitimate or extraordinary, were made
cbsrgeabe upon it, and unnatural reair there
by gwen TO unsound aud speculative intitutons which
enabled them to expand their affairs to an nordiuate
extent without reference their intrinsic
The Safety tnnd system was virtually abandoned by
tns creation OF Tree banking system which has grown
up under the act ii 1888.
The distinguishing feature Of this system. its
require Of productive and available securities to
be pledged with State officer as guarantee for the re-
den piun Of the whole circulation This priEcipe has
been tested by nearly twelve years experiences
he'd Ina on
he estin alton the basis OF all future legislation
the subject of banking The plan originally introduced
by the general banking law OF 1885, defective in
many Of its details, and legislation has been
quired from ear 10 year to reconstruct
aud perfect IT, The Legislature aimed at the outset
10 require sufficient and unquestioaabl security for
the entire circulation. 1t then conceived i'm poss-
Die that any American State would repudiats its obi
cations and one suspected that any OF the States
would isl IN the prompt payment Of interest. The
basis OF circulation. This proved disastrous aud
was almost fatal TO the sysIem, durios the earlier Pc
In the frst year several States whose bonds had been
deposited with TIE Comptroller for the protection of
the bn holders, suspended the payment Of INTEREST,"
their stocks deprecated TO point almost nominal;
and the result wks in the failure Of many the
banks, in the years 1889 end 1870
The public sustained heavy loss aud stockholders
we're iHvol'sdin irretievsable ruth 1t has been
tidered matter OF wonder that the shock thus given
10 the expeIime ut OF free bankipg did result
entire overthrow and abandonment. Such must have
been the effect but for the elastic energy aud capacity
which cur people display in retrieving transient
verses, ana guarding against their recurrence The
the stocks Of other states after that period and requr
Ing the banks TO depoete stocks Of this State rhs
basis has been improved by successive acts OF essa-
ton, until the security demanded By law IL OF the
highest Character In point Of value and availability. liz
is true, that one half Of the amount pledged
may consist in bonds and mortgages; but these
must be On productive property, for an amount not
exceeding two hiths the appraised value for
than 30 700 each and bearing cent interest
whilst these securities not prom pity convertible
stocks IL is impossible that considerable loss
should occur ON mortgages Of the description nov
exacted sind II is believed they viii prove sufficient
reliance so loEg as proper vigilance is exercised In
fptct 10 the value and title Of the premises Tue
naming half q the rcGlaton must be secured by
stocks Of this state or Ga EQUAL proportion Of this
State and the Unit States, aud this aust bear be
ade equal 10, at least six per cent interest Govern
Bent stocks Of this character command and there is
reason to doubt they will eontiuue 90 command
high premium In the money market Indeed the rapid
advance in the value Of New orb and United states
ttCckt, renders IL difficult for the banks to
furnh the requisite depoite without Investment OF
funds which mary regard a. advantageous. This
the supply Of these stocks market and the steady
1neFtass IN the demand for banking purposes. The
financial policy estabiished by the eonstituon com.
pels annual reduction Of the State debt and II s
he virtually extngushed before tue last Fl the Safety
bund charters VIA expire TAee Is no reason % doubt
that the debt OF the federal government will by
gradual reductions in the fifteen t~eny years
serious quesonis therefore presented, which cannot
be org cesrrei to the species OF security which
shall form the basis q our c.rc aatng medium Ia place
Of the stocks nov required aud hioa OF necessity
not feel called upon, or authorized, TO advance an
opinion although t has been minated to him that the
sion lie eoncs.yss IL to be his duty. however 10 ex-
PRES sstrone conviction that the public interest aud
safety require the exercise Of raid aud cautious
Grimm alton In providing substitute for the superior
eisss a securities toE dePosted u the door l. TO be
opened u should be done with extreme circum pee
ton No new form Of Investment should be adnitted
~hieh will not readily and certainly command the par
valae, In aiyvrf, state Of ncal affairs The
Law Of 1872 which Authorzes the safety Fund banks
Organize ss their charters eN fire aud avail thea
selves Of the privileges created By the general banking
Law by gradual opposite Of securities for three years
will greatly facilitate the transition nom the sys
TEN TO the other et 1t IL not % be disguised ths;
The tendency cf this change is 90 dimash materially
tie banding facilities enjoyed by the community. To
IN, eStent that the chartered banks required 70
tan,Orm their present capital Toto permanent secar
ties pledge tor the redo ption OF their bills they
must deprive Themselves OF the means now employed
in the regular operations Of banking But II hopsd
that this rocuu may bs supplied without serious de-
rangsms Mt or eEbafIassmsst by the gradual aecunu.
lstion 81 surplus capital smoog tbs people Which vail
tiers q four q the Safety und banks expire with the
pT,ieut year and e l. understood that the
of three 81 ttte iusiitutous will continue busiasss
under the general bansi9g lac The act Of last win.
TER INTENDED 20 aive elect 90 the eops,itutops pro-
yiiun, suhsctiug thafeho!1ers TO pcrsoual liability
In % failure after the present year adds new ele.
ment Of strength and safety 90 our banking system ls
O. cevtd that the limited liability thus imposed 80
far from being detrimental will prove bcaeGcial TO tbs
interests CT the sioohhslders th.msese, Its effect
NUT be % induce more yisaat supervision OF the
AFFAIR." q the banks BY these NA1 deeply inter
'ted Ia their prudent management. Greater care will
LGtufaJ be exercised In TIE ceoice Of directors and on
ere, accompanied by more fisi accountability Of
sgents 1be wifiom Of this Amendment will u is con.
=
vii prove sfcaclous, well TO the gropetots OF the
tanks 20 the public u tails principle hal been in
force the last ten yeas who doub. that SOME Il
The most nsEraut nEd disastrous failgies Of banks
would have been averted
s1sunexsd TO isrepCrt Is COPY q circulA- fnark.
"a " adGrssstd By the Con- ptroller g the several
bsnk,n relation 60 the tuo acts OF the last session
above sferrFd TO.
Abe pucirle q the general bankingla having been
sftAbthet ~ tbs deliberate approbaon q the public
a. The setss policy Of The state provisions ought
not % be tngratd upon % without mature oonsldea.
ton Bot some snendments have been aud may con-
nne 10 befound cesssry, frem year 30 year. q
uhtteitcn cthilnlel Giles % prevent abuses, aud
tHihy the practical operations % the measure The
Cempfnsr y a opioiou. that essential alteration
81 Tie law u Ictdtd az the present tina Yet he
fets his dul q call the Alteration 81 TIRE IesislA.
ture TO bianeh - which T. bsiavcd 20 re.
quire cone further sctcn. The urft action 81 ne
act Tasfsd Apil ~ Us. requires that ell btnknr a.