Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1851-03-14
RICHMOND ENQUIRER.
FRIDAY MORNING, MABCH II. 1851.

THE So.CALLED "FRER-BANKlNG" BILLS.
Wa have word TO say to the Senate of Virginia. upon
very important subject. 1t embraces no less A ''
financial system of the State 1t concerns Tue peounay
welfare Of all classes and comes home 70 the pocA' Oh
~ individual citizen
lis known that necessity exists IN some oes'ee io az
of thu banking capital of the State The large Is
os s,., hond, which have been made during recent
have absorbed the capital that has heretofore been
Mia tho country In private hands for loan at six per cent
., The large subscriptions which have been lately
made by private individuals railroad companies have In
creased this scarcity and completed the exhaustion OF b"
Der cent capital New employments for capitai nave ~
been created in the State, by the opening OF Puohc
tending still further increase the demand ana 's'e m
.trineency for money Consequently no sources are now
open 10 borrowers but the banks, unless they suoh - ~
1unoss exactions of "shavers" Inc oanAihs p a 200
virginia containing 4OO 900 inhabitants is but
,h. &c M,ssachusetts containing 1894 O00 Inhabitants IS
s2a SAX OoO II plain therefore, that our banking caPa
i. ncommensurute hough by no means 50 much 30 aS m
hovs contrast would indicate) with tho industry CON-
merce and business Of the State
~, o,. our whole commercial and industrial interests
Go, This want of capital and the occasion Is selzed oy
.s,,hy individuals different quarters OF the Stae "
make coup dc upon the Legislature for new ouoe
of banking charters. Those individuals VINO nave
,h.,r surplus capital in bonds not content with inc ok
-. ., ;,.r.., which tbe Commonwealth annually pays
h arr among the persons who at the bottom OF TINS
,novsmen, There is admirable system Oh banking M
opeation In the of New YORK. one Of the eauies
which permits banking corporation which deposi'' oa
bonds with the Comptroller security to issue It's notes Oh
circulation 70 the amount of the bonds deposited BY this
operation the Bank only receives from the STATE the an
nua interest accrng upon its pledged bonds but also
banking interest upon its notes issued upon inc ah Oh
those bonds and thus derives thirteen Instead OF SIX per
npifa
Nav York system ia counterbaanced in that State BY sum
rv res,rcons and conditions imposed upon banks intend
d for tha public good and the public security which, IN
We have not time present to explain wne GOWN
their thirteen per centage Of profits very materially
r Virginia holders of scrip pray for charters EN-.
sracup the thirteen per cent feature only and by way Oh
enlstinp support their bills now before the Legislature
spesk of them bills for FREE BANKS modelled alter the
sys,em of New York There another interest in the State
petonnp for these charters namely prominent landhoid
era and land spectators in the vcines from which the Pc
,ions come whose plan deposit with the Auditor, in
.tead Of State bonds mortgages Of real estate as security TOR
the bank notes they desire PIT in circulation New YORK
REQUIRES State bonds DO pledged for her bank clrcuaon
because they the most convertible security known In
commerce always commanding ready sale ana premium
prices and exhibiting their value upon their face IL Is
known TO every who has any knowledge OF proper
~ that real the contrary s the most unconver
fibIe OF I'LL species Of property, 40
INV two men in the community be found to agrees and
.h., such security as this would therefore be fruitful of end
Lass frauds upon the Auditor and through him. upon the
holders of bank notes bank based upon real estate fails
10 redeem its circulation and forced into quidation some
FIVE hundred thousand dollars of real estate Tor the amount
of Its capital whatever thrown at one dash upon
the market Purchasers for the whole would have to be found
before Its obligations could be paid and notehoders would
think themselves Fortunate under the circumstances they
received in the dollar for their claims The
advocates of these banks speak of their
also a modelled upon the admirable system OF
New York; whereas real estate securities are utterly u-
known to the banking system of that State.
The fac, is that not of the bills that have just passed
The House of Delegates embraces the principle Of
ine; and if those bills become laws that admirable system
will forever be excluded from this State.
What is this banking system about which SO much 10
sadf principle found in the following section OF tho
Constitution Of New York:
mThe Legislature shall have power 10 pass any act
granting any special charter for banking purposes but cor
associations may be formed for such purposes
under general laws"
This provision grew Of the popular hatred of monopo
lies in that and the clause designed to substitute
free banks operating under general for monopoly banks
operating under special charters such those of Virginia
II fobids passage of any special law granting special
charter for banking any seal corporation II provides
that there shall be general law opening the business OF
banking oil rather than favored few. The general
law of New York authorizes any set Of men, upon comply
ing with the conditions and restrictions which imposes
and which, nfaiby the community, as well from
losses by corrupt banking from the runous consequences
Of over-banking become by compliance with it's terms
ipso taco a banking corporation 1t provides that no
notes shall bss.sysd unit, State bonds for the amount
are depastd with the Comptroller that their notes shall
III be countersigned blythe Comptroller and that the
,a,e. unon which these otes struck shall be de-
os,ed with the Same State cer provides that the
stockholders OF banks shall irresponsible for their debts
not only 10 the extent ofths securities pledged with
,he COMPTROLLER ddtional amount equal to the
.hares of capital stock win they own contains an nun
dred other but ,rtan PROVISIONS equally as essen
ta to the safety Of theommunisy and conservative OF the
soundness of cury, which the experience of years
has taught be nessary but which can only be learned
and bu careful study Of the act ITSELF Having
ALI the, wise and sautary conditions upon bankers
fr the securj of the community it throws open the bust
pea. Of barng a and thus provides to the community
the benz competition in banking which is as essential
20 hne and health of trade competition in any other
buch of business When there freedom in banking bank
will spring whenever the wants OF the COM
unty and operation when those wants SUBJ
aide The business left exclusively TO specially ncor
porated companies whose close directories may build up one
man and strike down another pleasure; who WILL during
Zines of pressure discount the large OF the wealthy
and throw out the small paper of the honest but poor mere
" because il is small and they poor who will expand
their discounts when the market and money plentiful
and them only when the market Is and tina ma
eessities Of urgent In BRIEF freedom In banking He
freedom In other commercial pursuits will leave this ou'
ness to the control Of the laws Of trade and expand and
contract now according to the interest Of capitalists
but with the GIBBS flows Of demand and supply in the mo-
ney markets The system strikes at the root Of banking mo-
nopoy opens tho business to ALL and secures system OF
dealings founded upon equal competition and fair profits
General legislation confined in New York only to
banking The spirit Of legislation in that State is to COM
pei applicants for corporate powers suited to their own
wants and emergencies to apply for general laws under
which all persons who shall desire obtain the cor
uora,e organization Under this principle Of legislation
when any man shall find that general law in the statute
book is adapted TO his wants. he will be compelled to seek
.he Of some general law suitable to all
like his own thus making each mans interest tend to the
promotion Of the interests of all similarly situated and
allowing all citizens enjoy the legal facilities that are ac-
corded any citizen Such principle would prevent the