Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1854-04-04
u,nopIry REPORT FROM H COMMITTEE on
W1.SSHA BANKS.

ot,b. Ha.,e of Delegates of Virginia. submitted by Mr.
RnlherEoord Of Goochland, on the I'm OF February, and
The minority Of the committee on banks, dissenting from
the yeport of that committee on a resolution instrucling them
.To enquire into the expediency Of reporting q general Law
TO authorize tho business OF banking" beg leave to submit
the following views:
Tho pas, legislation OF Virginia renders it necessary tina,
we should now consider the policy Of adopting a genera
law to authorize the business of banking. Two different
tween ihem. the system OF free blnkiug must necessarily
come under our review. But II Is proper 10 give, hrst, q
brief history of the legislation by which these two differing
systems have been brought into existence.
The first bank charter 10 this State was granted in 1904
10 the Bank of Virginia. Afterwards charters were gran,
cd, in 1912, to the Farmers B ,nk of Virginia; Ia 1917, 10 the
Northwestern Bank and Bank Of The Valley; in 1884. to the
Merchants and Mechanics Bank Of Wheelinei in 1887, Il
the Exchange Bank of Virginia.; in 1899, TO the Bank Of IA
nawha: and In lS41, 10 the Bank of MartinsburS in Berkc
ley. All Of these have gone into operation, except the Bank
of Kanawha and the Bank of Mar,insburg. The aggregate
maximum capital authorized by the original charters of the
six banks fret named, was about seven millions Of dollars
But, from 1904 to the present time, various acts have been
tiers have, from time 10 time, been extended, their capitals In.
creased, and branches established in The principal towns and
villages of The State. The six mother banks, viz: the Bank
of Virginia, the Farmers Bank of Virginia, the Exchange
Bank of Virginia, the Merchants and Mechanics Bank o
Wheeling, the Northwestern Bank of Virginio, and The Bank
of the Valley, now have, with their branches included, ar
aggregate banking capital actually subscribed, amounting Il
SIC. $780, 700. They have connected with them thirty mine
branch banks, actually established aud in operation, and
since 1851, have been authorized TO establish twenty .nine
new Offices of discount aud deposit, with an aggregate maxi
mum capital. in addition to that previously subscribed. Of
81 ilou,VVu. lUe ClQtteIS u tHese corporations Qlner90.-
They were granted, at different times. and, as banking expe.
Renee Increased, new provisions were introduced. They
were originally granted with reluctance. Virginia and some
Of the other southern States were opposed. on principle, I,
the banking systern. 1t was not introduced among US, un
I'll after long and strenuous opposition, and when there seem
ed to be no alternative but between the paper circulation O
the neighboriug States and the issues of our own banks
The charters of these banks were neither granted nor renew
ed, as a matter OF course. There was a struggle. aIwav,
between the friends aud opponents OF the banks; and, wher
banking privileges were originally conferred, or subsea uent
~ enlarged or extended, the State Invariably exacted 10 re.
turn some compensation from the favored corporations
This differed 10 the different charters, being sometimes a
larger, sometimes a smaller per centage-somslines 10 the
that a partnership. much TO be regretted, was formed be
tween the State and The banks-the State owning stock in
the banks which have been named, TO the amount of
1906. 200.
Thus, prior to the year 1850, during the first half of this
century, six parent banks have been established in Virginia,
with numerous branches. with an aggregate capital sub.
scribed of slO,939, 700, more Than one third of which is
1881 y"
But since the year 1850, during the years 1851, 1852 and
1853, various banking charters have been prsnted, widely
differing In character from The charters of The six banks
which have been referred to. During these years, acts were
passed, giving charters 10 as many as t%hirty.fve banks, gen.
orally called Independent Banks, authorized 10 create a
banking capital, with a minimum Of s3,225, GOO, and q max
imum, amounting 10 the aggregate 10 SlS,7 $50 600. Under
these charters, twelve independent banks have gone into
operation. with a capital stock subscribed, amounting TO
S2,s47, 500.
These independent banks, chartered in Virginia during the
Last three years, closely resemble those banks which, in New
York and other northern States, have been established I'M
der what Is called the free banking system. The provisions
are substantially the same, though q well matured general
law would contain more efficient safeguards for the pro,ec-
ton Of the public. The main difference is, that while the
former owe their existence TO special charters, the latter
have been organized under a general law, TO authorize tho
Banks, except where differences may have arisen from In.
advertence or haety legislation, are fashioned in the same
mould, prescribing the same conditions and regulations, each
being q transcript Of the other. as If they had ali been copied
from o general banking law. They seem to have been con-
fered, whenever asked for. as a matter OF course. and with
ont contest. They have been granted, indeed. with such fu
cilty, that if a general banking law, containing similar pro-
visions, had been enacted thIGo years ago, the result would
have 10 no way differed, except that the volumes of our
Sessions Acts would have been considerably diminished, and
the expense and evil Of useless legislation would have been
avoided. II, therefore, this kind Of banking is TO be con.
,inued In Virginia, 1t will hardly be disputed that a general
law to authorize and regulate il should be passed.
Thus, the subject of tree banking, and the whole subject CT
baDkiug, comes before US. For several sessions, the legisla-
ture have avoided to consider what should be the future poll
cy of the Stale as 10 this Difficult, and important question:
They have, with equal facility, granted charters TO indepen:
dent banks under the new system, and established additional
branches for the parent banks of the old. BY making The
charters Of the Older banks expire fortunately for the views
of those banks) in the same year, they seem to have design
ed to postpone the question, until, upon their Simultaneous
application for a %recharter. The whole subject would come up
10 all its bearings. Such an application for a renewal of
their charters Is now before the Legislature, and the question
can be postponed no longer. Our future policy with regard
TO banking is now 10 be determined.
1t will be assumed that banks in some form must continue
to exist In Virenia. The question is hardly open. If, in
deed, no bank existed In this State, nor in sny of the neigh
boring States, II might be ~predicatcd, with the lights before
us, that a proposition TO establish banks Of issue would be
regarded with ANAL favor, But whatever may be the supe-
rior advantages of an exclusive metallic circulation, however
strongly il may be recommended by the past history of banks
and banking, as well as by the lights of political economy. it
seems 10 be vain TO hope for It.. The Union Is flooded with
q currency of paper, and one State alone can erect no bar.
risIs which will stay ii beyond her borders. The credit sys
tenn and the paper money OF the banks have their roots TOO
deep and too widespread 10 be e1tirpated, at this time, by the
legislative enactmen,s of a single Suite.
1t Is mot q question between banks and no banks, but be.
tween different systems OF banking between banking under
special charters and banking under a general law.
A general law opens the business of banking 10 all the
citizens of the State who comply with Its requirements
The system of exclusive charters confines the privilege of
banking to comparatively a few and to favored localities
IL is the difference between the monopoly system Of mo.
narchical governments, and a system OF free trade and equal
competition, more in accordance with the genius of our in.
situations and the dictates Of an enlightened policy.
The monopoly system il condemned by it's own history
and by sound principles of political economy. 1t is iuu-
rious 10 the community, because 1t disturhs and diverts the
heal,hful currents Of trade, and intcrfsres with the natural
lava which should determine tho employment, aud distribu.
ton of capital. II Is unjust aud unequal, because it benef is
the few at the ey cense OF The many.
Some kinds Of business, It Is true, (amoug them the bust.
ness of banking 'equirs legislative restrictions. The pub
lie good demands that certain avocations should be placed
under u general Prohibition, TO be removed in cases where
from this prohibition the special objects Of legislative favor.
General laws prescribe tho conditions 10 be complied with
before the exemption can be made. Charters of incorpora-
ton grant exclusive privileges 10 a few, and debar from their
participation and enjoyment The people of the State al large.
General laws afford 10 all our citizens the same advantages,
aud place them on On equal footing with respect TO the legal
privileges granted by the State. 1t is also true that when
she object OF special charter can be effected BY general Ia Avs,
the State is saved the expense of unnecessary and The hazard
'P''~ 'hfS.-
ton 10 diminished, and more time lie afforded 10 The Legisla.
ture to discharge their legitimate duties 10 %proydiog for The
general interests Of the whole State.
The convention Of 1916, which framed the presen, cons,i-
tption Of New York, said to have been one OF the abies, DO
dies Of men which ever assembled in that State, were 50
fully impressed with the evils Of special legislation. lha, they
inserted 10 their organic law a clause prohibiting the csea.
lion of corporations BY special charters, excep, Tor munich
pal purposes, md where the objects OF the corporation could
not be attained auder general laws. Similar clauscs, prohi.
biting the grant OF special charters, are contained 10 The con
siltution of 1874 tor Iowa CT ls45, for Louisa ma; Of ls47,
for Illinois; Of lSlS, for Wisconsin,; Of 1850, for Michigan;
snd ia the constitutions Of 1851, for Indiana and Maryland.
In the las! constitution of Tennessee, adopted as far back as
1888, II Is declared that the Legislature shall have no power
ITO pass any law granting 10 any individual or individuals
rishto, privileges, immunities or exemptions, other Than such
as may be. by the same law, extended TO any member of the
community who may be able to bring himself within the
provisions Of such law" And though in the same instrument
the power is reserved TO the Legislature to grant charters
deemed ~expedient for the public good, yet the Legislature
of Tennessee have faithfully carried out the spirit of their
constitution, by the enactment Of a general bank law and of
other general laws. The Ohio convention OF 1851, have
gone still farther than the conventions of other States, in
providing by a clause In their present constitution, that "lhe
General Assembly shall pass no special act comforting corpo.
fats powers" aud requiring the Legislature 10 provide by
general laws even {r The oPsapi1a flOn of ciiiea md viIInupa