Richmond daily times. [volume] (Richmond [Va.]) 1850-1853, 1852-02-03
THE DAILY TIMES.
REPORT OF THE BOARD oFPUBLIc WORKS

REPORT OF THE BOARD OF PUBLIC WORKS
(CoNCiUpED)
In order that the Legislature may fully under
stand the critical condition from which the ne
gotia,ious of the Board have rescued the State,
it may now be stated that in July last, before the
new bonds could he prepared there were drafts
upon the table for immediate payment amount
ing TO four hundred thousand dollars; 10 hquldate
which there was not dollar in the treasury
Previously to this state of affairs, namely, In the
baginning of April, the Board, upon consultation
amongst themselves, concluded that the indica-
tions of the commercial world portented an APP
preaching financial pressure, This conviction
rendered them doubly anxious to secure, at as
early date as possible, whilst money was abund-
ant all the means requisite for public purposes
during the year. The result has shown the cor
rectness of these suggestions, and that their
promptness was fortunate even beyond whatthey
themselves anticipated. The pressure now pre-
vailing has oeeasioned considerable embarrass-
ment in the commercial affairs of the country
1t has imposed upon the banks the necessity both
of refusing to q great extent discounts upon pa
per offered at their counters, and OF curtailing
their discounts already granted, more rapidly
than is customary. In the midst of this fnan-
cial embarrassment came large demands upon the
treasury for the liquidation OF interest upon our
State debt. The law has set aside no specific sum
of money for this purpose, but made 1t simply
charge upon the treasury. The moneys in the
treasury were insufficient to pay off the interest,
and other means were to be resorted to. In case
of any temporary want of money, the law direc
ted the treasurer, with the sanction OF the Gov
ernor, to borrow for short time from the banks
such means as were necessary for the absolute
purposes of government. But such was the pres
sure, that the banks found it extremely inconve-
ent to advance even comparatively small sums,
and would have been compelled either to refuse
the State the very large sums she required or
else to have granted the accommodation at the
IF ap16
mess men of the community. The arrangements
hereafter stated, which were entered into by the
Board, enabled them to pay the interest upon
the State debt, and thus to relieve the banks
from the necessity of ademand upon them, which
it would have been hurtful to the State to refuse
and disastrous to their customers to grant. The
negotiation whichwas made by the Board placed
the State stocks at once above par value, and has
ever since furnished full supply offunds to meet
all the demands upon them.
In their negotiations of the coupon bonds, the
Board have been fortunate in procuring the SER
vices of banking house in Washington city as
their agent. Some of the members of the firm of
Selden, Withers & Co., were known to the Board;
and whilst they were capitalists of undoubted
means, the long experience of the principal part
ner. Mr.. Selden, in the finances ofthe country, as
treasurer of the U. States together with his lofty
character for honor and integrity, seemed to in
dictate that better selection could not be made.
The energy, activity and efficiency with which
the agency have conducted the negotiations have
fully repaid the confidence of the Board.
The Board determined to make the interest
upon the coupon bonds payable in New York,
considering, from all the information they could
obtain that this was indispensable to giving them
full currency in the markets beyond our own bor-
ders. Our stocks have now, for the first time
within our history market value permanently
above par beyond the limits of the Common
wealth. This is attributable to the fact that the
bonds are conformed to the views of commercial
men, by being readily transferable from one hOl-
der to another, thus constituting commodity in
all markets where money is seeking safe invest
ment. 1t has turned public attention abroad to
Virginia, her means and her resources. And it
is now beginning to be understood beyond our
limits, what we have always known at home, that
this Commonwealth deserves as high credit az
any State in the Union.
The inducements to the adoption of the coupon
form of bond was the want of a sufficient home
demand to absorb the large issues of State stocks
required for the prosecution of our public works.
Coupon bonds meet the requirements of foreign
purchasers in manner in which those Of the old
form entirely fail to do, and the adoption of that
form by the State has greatly extended the sales
of her stock in markets beyond her limits. Pru-
dence and economy, however, forbid the creation
of too large foreign debt by this any other,
means. Theinterest annually payable upon such a
debit yearly cash balance against our commerce,
and its amount should be kept down by every
means within power. The coupon form of
bond ought to be adhered to- as charging the
market for our stocks, and the only adequate
means Of maintaining their prices at the highest
standard; but, at the same time, proper measures
ought not to be omitted to enlarge, much as
possible, the home demand for these securities.
This is doubly important, because, unless the
homo demand be supported and maintained, the
demand abroad cannot long continue firm and
healthy.
The Board are decidedly Of opinion that the
most certain and efectual means of accomplish
ing this object that is to say; of reviving and
strengthening the demand ecithim the Common
wealth for her bonds, is to require the circulation
of her banks to be based upon these stocks. The
furnishing of currency to the community is one
of the functions of political sovereignty, and is
prerogative which belongs to government alone
This prerogatve is usually in our country dele
gated to banks, government imposing such con
ditions upon the exercise of the privilege as the
public safety and interests require. In Virginia
one of the conditions of this privilege is the pay
ment by the banks of a semi-amuai bomus of one
fourth per cent. of their capital stock into the
public treasury. In Massachusetts, where thu
capital employed in banking is nearly four time
as great as that of Virginia, the bonus charged i
one per cent. per annum, and produces revenue
to the treasury of nearly half million OF dollars
In many of the States of the Union, New Yorl
and Massachusetts for example, the further con
dition imposed upon banking Institutions, for thu
privilege of exercising the sovereign function il
question, is to require that notes of circulation
shall not be issued unless public stocks to al
equal amount be deposited with the treasurer o
the State as security for their redemption, tina
officer being also required to countersign sucl
notes as certificate of such deposit. Bank note
are thus invested, not only with the credit of tn
banking corporations by which they are issued
but also of the States whose bonds are pledges
to secure them. Along with the responsibility o
the bank itself, they bear the imyrimatur OF tn
State.
;akequring the circulation of the banks OF this STAT
10 be based upon her stocks would not only add
new element 10 the security OF that circulation as
currency but would create home demand tor ne
bonds equivalent to the amount OF her banking cir