Lynchburg Virginian. [volume] (Lynchburg [Va.]) 1829-185?, 1851-03-03

of !" The ues:Nnfs BuNk Of Lynchbxxg, :
ON what j. generally called the free 5tssk-
Ivy principle, was ordered to It's cngross-
ment in the House Of Delegates, on Mon
day last, BY vote Of 50 to 81. This is 4
quivalent to the success of the bill which, it
is said, may bcrcgardcd as indicativeof sew
eral similar schemes now beforcthe Legisla-
mre.
We regard the free banking system as
the safest and soundest which has yet
been devised The great and leading prin-
ciple is, security TO the biA-Aolder against
the possibility Of loss. As the system
Ids fair to be adopted TO some extent in
Virginia, and as some Of our readers may
not have clear understanding Of the prin-
ciple, we viii endcavor very briefly to ex-
plain il.
II is proposed 70 organize, for instance,
the Mechanics Bank Of Luxembourg, on
the free banking system, with capitalism,
Of 100000. Before the Company can go
into operation, il is required to deposit with
the State Treasurer, or other officer desig-
maud by law, good government securities,
sucl, for instance as is. Bonds, or Vir-
gini. State Bonds, or undoubted dividend
paying stocks, equal to the amount of
the capital, 100000. This deposit then
constitutes the capital of the bank, which,
aswe have seen, is necessarily sound and is
placed beyond the reach and control Of
the Bank, to-wit IN the hands Of "a sworn
State officer. 1t is likewise the duty Of
this officer to keep the plates with which
the notes of the Bank are printed, and also
to countersign each note he delivers to it
for it circulation. In addition TO these safe
guards, the Bank itselfis always required
to keep certain amount of specie on hand
for the redemption of its notes so that it
is obvious the danger of an over-issue of
notes is avoided, because the State officer
has the notes in his own keeping and only
delivers them as they may be needed; and
security against their possible depreciation,
is found IN the deposit which this same Of
fcer has in his keeping. IF the bank were
to make bad debts equal to the whole a.
mount of its circulation, which can never
exceed the amount of Its capital, still the
bill-holder is secure, because the State has
then only to sell the securities deposited,
and redeem the notes of the bank with the
proceeds. Thus it is seen that it is ncces-
sailiy the best paper money the publican
have.
The advantages to the corporators to be
derived from such system, may not be so
obvious to those who have given but little
reflection to the subject. Promising that,
all companies operating with a large cash
capital and dealing exclusively in interest
and erchanges, viii always realize good
profits unless there be palpablc misInanage-
ment and a total disregard of the laws of
trade, we may, without entering into the
minutiR ofthe subject, show, by "a very sim
,,,le illustration, how such Bank us we
have described may not lose, if it fail to
make money. The capital, 100000, we
have seen is an interest bearing fund and
yields say $4,000
Surprising the bank to be author
lied to issue notes only to the
amount of $4,000 the ordina-
ry interest on which will be-. 1900
The net income then is 1o,50O.
But we have seen the Bank is re-
CURED to keep on hand cer-
tain amount Of specie (say
one third Of the amount Of its
circulation,) the interest on
which is a charge to the bank,
amounting to -----.--..- j 800
Expenses, Salaries ofoHicers, &c, 5000
Z Total expenses Of the Bank $500
which leaves balance still in its favour of
just six thousand dollars, the interest on the
deposit.
Our object has been to show there nerd
no loss; but in fact there mW be large
profits. We have taken no estimate ofthe
difference between common and banking
of the profits arising from dealing
in exchanges, nor of various other advan-
which necessarily result from
combination of capital. We are decidedly
in favour of this principle Of banking, for
the reasons stated, and should not regret to
see it become cralthroughoutth State
Indeed we are inclined to the opinion that
thisisa result to which events arc fast hurry
ing us; for we should not wonder, nor can
we say that we should much regret, ifthe
present banks were all required to wind
up their business, on the expiration of their
present charters We have no.hostility to
Banks themselves, on the contrary we re-
gard them as necessary and useful institu-
tons; but like individuals, they can never
know theirrealcondition, until they square
up" their accounts with all tie world.
-
Wheeling Bridge.
The Pittsburg Gazette publishes des-
patch to the effect that Chancellor Wal
worth has decided that the bridge at
Wheeling must be elevated, the cos. of
which elevation he estimates at two hun
bred and eight thousand dollars. If this
opinion of Commissioner Walworth who
was simply appointed to take evidence in