The Athens post. [volume] (Athens, Tenn.) 1848-1917, 1854-10-06
LIABILITIES OF BANKS.

The attention of Bankers and Bank Dlrcc
} tor, Is invited to the following article from
the Charleston Evening News
The opinion that banks have only one
species Of liability, and 4 single duty to per-
form, that of making rs large dividends as
possible iDr their shareholders, arises from
confouniin9 very different functions Of bank
inc. If A., b., c. and d. put their funds into
a common stock, for the purpose Of discount.
ing mercantile and other paper, of dealing in
exchange and receiving deposits, mithoW the
prirHcge oj issuing notes, the public at large
have no right Of Interference with the dispo.
stion OF capital so constituted, even it the
! operations are conducted under Il chartcr-
| The community would have no more right TO
question in what mode n bank, simply of dis.
, count and deposit, disposcs Of its funds, than
| they would have with the conduct, in this
| respect, Of the partners Of Il mercantile con-
Germ Their fund. are their own or on trust
from depositors, to apply in their discretion.
Whether they make unusual rates Of interest,
or charge excessive rates Of exchange. are
matters that must be adjusted by private in
tcrest and by competition.
But the case is essentially different when
the privilege is given Of issuing notes, winch
circulate as currency. This is Il prcrogativc
of sovereignty as much so in theory rs TO
coin gold and silver and far more potential i.
practice. 1t is impossible for bank of dis
count and deposit to enlarge or contract the
volume Of the currcncy-t 10 elevate or depress
prices. But this can be done and is done
daily by hunks of issue. Can It be contcndcd,
that currency, in which every one deals who
buys and sells, is TO be regulated by no rule
but sc!f!ntcrcat, with no check from public
opinion, no inquiry or what principles it is
managed, no discussion whether the public
interest is regarded in 50 important 4 matter
rs currency and credit iudiasvlubIy united!
For it will be recolccted that these are in
separately blended in the emission Of paper
money. II there were 10 effect produced on
prices by expansions and contracticns, still
bank credits are founded, in n great degree,
on bank isaIlG5. 70 cnarge or contract these
issues is to expand OF nbridge credit. II credit
given through loans and discounts were made
with the capital and deposits Of banks, which
are not Issuing banks, no one, rs we have
said, would have the right to question the
mode in which the privilege was exercised
But the credit which banks give, through this
particular form Of emissions, is precisely the
same description Of credit as is given bv the
public to these very notes put into circulation
by banks. In assuming the shape OF currcn.
cv, they also put on that of credit. They are
so inscparaby blended rs TO have received the
name Of crcdit-currcncy or circulating credit
To conicLd, therefore, that the public has
no right 10 make nquioiiion into the manner
by which the currency is administered, in
which every man is necessarily dealer, and
which, by expansion and contraction, renders
his labor higher or lower, his power Of pur-
chase greater or less, his credit damaged or
not, i, one Of the most extraordinary positions
ever taken in economical discus ions The
RIGHT to make LARGE dydcnd, for shareholders
OF banks, in Whatever mode within the scope
Of bank management, follows logically, if
these considerations are overlooked. Bnt If
the exercise of this branch of the sovereign
authority, to create Il circulating medium,
winch is Given to banks Of issue, is to be I'M
der the LIMITATION Of the public interest, the
functions OF such institutions must have Il
more comprehensive range than simply to
make aI large dividends ~ possible for SHIRE
holders. iu iact, the Legislature has implied
II delegated 10 banks Of issue The powers ct
siatcsnanship in branch Of most inp"rtant
domestic rolic,. They are entrusted with !
the high duty that attaches 10 iho.c, who, in !
cnlarGirg or contracting the volume Of he cir !
culatinF medium, ran elevate ordcpr,,s ya'ncs !
AZ pleasure, and they are bound in the admin |
i,tntiou Of 20 HornentoUs 81 truS, 70 extend !
their view over broader Hcd of observation
than to- often bounds the horizon of their
policy. This is Il species OF hiah polilical
duty, rs managers Of Tie general cnr.uncy.--
Bat there is Il moral duty not lc.. imperative,
which i, to fcrcgo self interest, in that wider
ans. more ur.sc.,h policy, which refuses TO
aacriicc the Interest Of the nlany to th. Of
the few.