Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1854-04-04

IL was a'so d"ronsrratei, to aulhor;ze bonds AID MOI
sanrs 10 be received as a pledge i"r me ~, %o,der uoIer
se..o Ut;ch have been sustained By tie nolehocei uuue.
U.s. lou system in New York, comparatively s"'a',' 49,
VA mainly due to the ~inateqdacy OF TINS class " s.ru ia
49, Jrhe rouuuuiler is liable TO be imposed uPo' ' n
YES. ~ s,;on. as &c the veluc OF the mortgage; ana NV
.np p,,o oyervalued when received, sells for less '"au ''
m 49,. ~ when il is forced into market. ,..a.
T,s Nav York law is still detective In allowing oo.ss
Marriages 20 be received among the securities q te
r;rcnIation, and in allowing individuals 10 curry ~ ". ~ -
soSM nublic securities to The amount OF S5O.oW.
R nt> upon The whole, notwithstanding the errors commit
"a md The eyasions pracliced, the free banking System "
New York his given 10 The %notcholder q security "tun ~,
aver .niuyed before. II is true that several banks, unae!
the system, have heen closed by authority OF ia", " h III
Inadequate securities have sometimes caused losses 10 o'm.
nniiisrs Rut The banks, which have been 'wound up," have
bn,n generally banks ofindividual bankers, or banks IL sh'un
capit,l and small calculations; and even where they nave oetn
lnus closed. either the whole or a large per ren. 49,, :, 70.
circulation has been redeemed by the eale OF Inc ptogols g
curiies. The IJsses sustained under inc Tree osnhns ~
tern in New York, bearing but a small proportion ~ 'I n ""n
her. ~" If hanks and their aggregate capital and circulation,
were principally experienced during The hist years oil inc tAi
u.Iiment. and grew out of abuses which have been euaroea
seainst and er;oTs and omissions which either have been re-.
moved nv subsequent, or muy be by future Legislation. Inc
report of the sups ,ds "S Ne% .; York in January, 1858,
Shove that "thc total amount OF circulating ho.es issueu ~
hanging associations and individual BANKERS; oots'enu,hs y"
,hn lar day of DECEMBER, 1852. was sl9.lo9u oo, ior me re-
tnu ,i 10 - which' securities were deposited and held IN
trust BY the superintendent, amounting III W ask.esaT
$50, 23O.l l2 g." Bonds and mortgages , Iu"I I.rasr n,pt Of
ore 6Ith of these securities, but much me larger par.
,hem consists OF United States stuck and New iorR olate
sock. 1t Il probable that some oil 'hese securities, mo,e
rsneciaIIy the bonds and mortgages, would sell iot Iess .nan
I ,Hpi, ".,im,trd value, II forced into market. But ia not the
~noteholder more safe, even with an inadequate mo,'gagt !"
his indemnity, Than when he has nolhins spec'hc VI o"""
~ The provision fox the noteholder's security now meets me
approbation, not only OF the public. but even OF inc ouha'
| in New York; as il would do here, II our cohsutulion, "'s"
mad happily put an end 10 special Legislation anu ~ s si,b .u
+ charters To favored corporations. IL mas iounu Nv .f,ica
r classes, all parties, and with men o. eTTty n - rso - IN IN thai
! upjnion in New York. After g trial OF en- years ~ issd
;, Sra,e, il received the sanction of BIZ. Fiiimofe's unqua,,oo.To'
> COMMUNICATION in mis- report as compittoiier, mace ~ 80
y and his views on the subject are sui' uncnangeu. O' =,
1ha b;ohest authorities ia the country upon all questions u
currency, Mr CambreHng OF New York, gives IL VIC ~
{ iorsement also, strongly ooJccung, however " vac e.o -
lion nj bonds and mortgages, which, he says, mas oeen ,"e
!, cause of our losses by the few banks which nave iaNeu.
MI. ST. John, the present superintendent oil Inc oanAiss &c
nartment. saws that the free banking system oil .nu' olale'
III fairly and honestly carried OUT, presents a > pu, nic ond ~
!, binalion of all The elements of security 10 the puoic - ", "
& sillholders, as can well be deyiseo'r ,n n,,shoIdcr's secu
suppose, if the special provisions Tor lie nottnoI ,na, Sii
riy in the New York law he'd proved iu'ht, .ns' sm.'
. lar provisions would have been adopted "'t W. w, o "a 81.
:. lion, by ali The States which, guided by Inc iH'.s VI W.
vynsrirncr, have rcsen,tv passed general laws TO authoflzs
banking. What be:ter tc1t cogIi have been ahIlueu ~, y" nI
4 security Of the notehoiiers under the !fec oan"" S.rT han
: New York, and OF the excellence OF Inc system t,se". .nn
We Witnessed las: fall, when the banks oil New IN 90 =!
, t~wilhs,ood, unhurt, q panic a. alarming as ' "a II ~ I res
and with the same evil prognos;ics2 II Yves happy, indeed,
for the whole Union, thai, Of such a crisis, 'aete s"oua
have been in force, al the comnerciai metropolis ,r " H ~
, tinsnt, SUCH Wise and prudent restrictions upon w "u H.niei
/ of banking "a 10 pr2lect, not only New YORK. out rIelnll
and all the States, from tie evils which ensneo 10 looI' suo
which always follow upon the tisfufoahce ol c'eu'' NV '"'
depreciation Of the paper currency. L,.
The experience Of New York. then, is ~altogei'ar laVorao,e
10 The provision requiring security Tor the ciIcuia'ion. ~
{ admonishes US, however, that lhi1 security shouio no' con
sist of bonds and mortgages, but OF a2ch puoilc STOCKS az
are readily con eIiihle Toto money; that 10 prevent fauus
and the undue multiplication Of small banks, no BANKS OF 10
dIyiduaIa, but only Joint stock banks should ne authorized,
| with a minimum capital 10 be subscribed, 90 wen as d Wt"t,
nun. amount OF securities IL be deposited. before 'heY shouIa
be authorized tn receive and issue circulating notes. anu 'hd'
The Law should be 80 framed as TO require every oanH 10 DC
bona fde, a bank OF discount; and deposit, ns well as ol cir
culaIion.
Let the general banking law OF Virginia contain then such
provisions as the following: tina! not less tnLa t"enty pei.
sons may, upon terms prescribed, form an association -
carry on the business of banking; that no such association
shall commence The baGiness Of banking, tclote q ccrlihca'e
shall be made bv tho president and directors, IT, DO recorded
in the clerks office Of The coanty where the bank IS sltuatcd,
and TO be flied in the office Of the treasurer, wi,ici. shai spe'
city the name Of lh1 bank, The name of the place where II
is located, the amount ot capital STOCK suosctlocH ana LnH,
and the number OF shares, The names and places OF residence
Of ite stockholders, and the number .! sh1res heid by ehch,
and the eGaount OF current coin in ia posseas'oni nor before
the governor, being satisfied that II has M possession' 10
current cuinl, al least i~vo-ffths OF i;s capital Stock, shall
issue a proclamation declaring the fact, and that HE oahk
ls sgthorzed 10 commence operations: INA. lnt .isasuse'
Ill he has received from it bonds of tile STATE oil Vifsm'a or
bonds guaranteed by the State, or STOCK OF Inc on,l'u
STATES, amounting 10 The aggregate 10 at least slU0. UVD; that
lis n minimum canita! shall be ~slUU,UoO, aii ITS mdF,"um
capital, 81 .OG0 900; that when The capital stock .! . sahk.
once organized, is after yards increased, II shall be by vote
Of lhree.fourlhs Of the Stockholders, and n new certIfcate as
to such increased stock, similar 10 The lIrsi, shnh De n'cd IN
the office of tie treasurer; that The treasurer shall not issue
to any such association circulating notes 10 al amount
larger Than the amount of is capital stock, appearing by me
certificate, filed in his Cilce, 10 have been actually sho'ciloea
and paid; that the shareholders in every such associalloh
shall be individually liable TO the lul amount OF the', 1espec'
tive subscriptions; that every bank shall be a oanK ot ats,
count and deposit, as we'll as of elrcr!ation; that t;tis snail
be verified in the reports required by Law, bv Inc o,lns Of he
president and cashier; that interest upon The securities de-
posted by any bank shall cca0e 10 be paid 10 II, whenever II
NAV appear, through one nf its reports, OF Otherwise, thntit
is merely a bank of circulation. or that me specie IN ~ pos
az sion Is less than one.fhh OF its circulation, or lis clrcu'
ia,iun greater Than it's capital; and that such associations
shall be closed and wound up by judicial proceedings
when they fail TO comply with tho requirements OIL me law,
and their further continuance is hazardous 10 inc puolic.
Such provisions, il il believed, would avoid Tie errors ana
prevent the abuses which have been committed 10 new
York, would prevent expansions OF the circulation oepono
the capitaI stock actually subscribed and paid by well ascer.
tanned stockholders personally responsible 10 the extent Of
their subscriptions, would put an end - eVaSions, when, IL
is said, have been practiccd in this State by one or more OF
the chartered independent banks, and would be calculated 10
secure to The people OF Virginia The inestimacle dement's oi a
good currency, consisting either Of the precious metals, or
of circulating Eo,es adequately secured and readily conSerH'
BILE into gold and silver.
! There would be other provisions in the proposed general
law, determining the proportion between the specie IN Inc
vaults, ,hs outstanding circulation, the captll, the debts
and the loang and discounts Of The banks. and requiring ire.
8 ouent and full reports of their transactions and their condi'
ton 10 be published. Such provisions, however, would mol
he neculiar 10 a system Of FREQ banking. There might be
| clauses, also, providing still more eilectually for The prolec.
ton of the public, by requiring The banks, as in New Eng
land, under the Suffolk bank system. and in New York. BY
) The law OF 1910, TO keep specie funds at one or more CONNER
cal points tor the redemption of their circulht ton; BY means Of
The unlimited responsibility Of The stockholders, as in Scotlandi
! by limiting the aggregate amount oil the whole circulation as
Ia EugIant; and by making the noteholders preferred credi'
tors of a bank, in case Of its insolvency, at has been done in
the constitutions of New York and Michigan. But il is not
I intended to consider here such restrictions and regulations
D as might be imposed by special charters, as welt as through
E a general banking law, but 10 compare the old banking sys-
:. TEN of Virginia with the proposed general Law, only in
i. those points in which they must necessarily ditfe.
These, then. are the principal differences between the old
a system Of banking and the system proposed; That by the lat.
4 ter, The business OF banking, under The restrictions deemed
) necessary for the protection IF the public, Is open TO all,
while by The Turner il, Is confined comparatively 10 Q few
i that by the latter. but not by the former, a trus! fund, con-
! sistine of public stocks, will be set apart for the redemption
of the paper circustioni that under the former, there will De
a few large banks with numerous branches. and under The
la,,er, a larger number OF independent banks, win smaller
capitals; and that, under The old system in Virginia, there is
; a partnership between the State and the banEs, which will
not cxis, under the new.
As to the first of these differences, besides the general or.
: gumeni already advanced sqainat monopolee aid ia favor oil
general rather than special legislation, there are other !cu-
sons WIZ special charters 10 banking companies should not
be granted. "The Practice says Mr. Fillmore, 10 his re.
Lpoft, as comptroller, In 1918. 'of granting exclusive prvl-
leaes to particular individuals, invited competition for lsais-
lative favors. They were sooa regarded as part Of The spells
Belonging 10 the victorious party. and were dealt GU, 8. re-