The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1855-02-26
TIVE DAILY DISPATCH
MONDAY MORNING, FEBRUARY .. isss.

CHE DAILY UISPAICh
MONDAY MOANING, 1EBRuARY q. lass.
BANKING ON STocKs.--New York was the |
irst State. we believe. to institute the Bank
ng system, based upon. stocks and bends !
md mortgages. Other States had preceded |
her in ether expedients to dispense with the |
only true and safe foundation for banks of
MONEY The Soathern and Wes-
tern States had, some Of them, tried real es-
late and railroad bonds The result proved
them utterly unreliable. The fluctuations
In real estate were great, and it always turned
out that the very moment that it became me-
csssary to convert It into money to maintain
the credit of the Bank, it went down to the
very lowest point--falling far short of the
amount It was pledged to secure, and leaving
the creditors Of the institution minus q large
part of their claims with no hope of getting
any more. 49, t*
The New York system was little better
but still was the old expedient in new form
to get rid of the disagreeable necessity OF
putting up the hard money. State stocks
and the kinds of mortgage and bonds they
received as basis of their free Banks, as
they were called, were little better. little
more stable in value, than western and south
western lands. The result has proved that
the expedient was only Lesser evil, and that
stocks are not the proper basis Of banking.
The failure of many Banks in the State of
New York last fall caused the subject to be
brought into the Legislature, now sitting at
Albany. The matter was referred to COM
mittee who, after examining into it fully, pre-
scented report, in which they declare that
''the certain and entire security of bill hold
ers require that bonds and mortgages shall
no longer be..received as a basis for Bank
ing" In sixteen years thirty Banks, which
had deposited mortgages as security for their
circulation, failed, and in not o single in
stance has the security, when brought to sale,
yielded the amount for which it was pledged
Out Of S7a4144 mortgages, only S441,77l
were realized. Of s26,Ol9,560 of securities
deposited with the bank department as a Sc
curity for circulation of Banks, there are
96.71s, PAS in bonds and mortgages.
The committee make no especial allusion
to State stocks; hut the decline in the value
of those stocks the past year, prove that they
are not 8 reliable basis for the redemption
of the circulation of Bank notes.
The system is very deceptive. The desire
to duplicate the interest ON State stocks is
exceedingly tempting to the holders Of
those stocks. The motive to make as much
rs possible out OF the operation, induces the
Banker to deposite very large proportion
of bis capital with the State-reserving gen
orally too little in specie as a protection for
his circulation. Upon the first pressure he
has to withdraw part of his security and
sell it for what it will bring and in almost
every instance such forced sales must be eff
fected at loss. Besides, the proceeds must
be Immediately invested, at the expense of a
heavy premium, in gold or its equivalent, to
continue the redemption of the notes that
are run in upon the Bank This has been
the experience of more than one of the Stock
Banks of this State, and the fattering idea
of duplicating interest has been completely
dissipated by it. 1t must be remembered too
that the depostors have no security in the
Stock Banks. The entire deposite of stock
with the State is to secure the note holder.
and when the Bank fails can be appropria-
ted to no other purpose whatever.
The invitation or temptation held out by
the system to establish Banks of circulation
adds largely to the paper money of the coun
i try, when there is no corresponding increase
of the precious metals. Thus, without an
increase of the real basis, money, through its
paper representative, becomes more plenty
and less ralaable. Trade, speculation and
adventure of every kind is stimulated. BY
and by the notes of the Banks are return ed
upon them-they curtail their discounts, and
then there is the pressure that so harnesses
the people and that ruins so many of them
who have to sacrifice their property to meet
their liabilities. For when this state of things
happens, money becomes more valuable, be-
cause it Tor rather its paper representative
is scarcer; and property of all kinds is fallen
in the market.
These are some of the evils of system of
Banking which seeks to find a more ready
basis for banking than the only truly safe
and reliable one, of money.
Believing, as we do, that the svsten, ;s
fraught with evil. we hope it is to be carried
no further in this State. We mean not To 70.
feet upon all the institutions of this kind
that have been established by our Legisls-
ture. We know some of them to have been
managed with great judgment and success
THE TEN MILLIoNs,-The New York Herald
states that according to its special advice. from,
Washington there is probability that powerful
effort will be made to grant to the President al.
cretionay fund of ten millions In view of the nos
sible exigencies which may arise during the re-
cess OF Congress- especially In view of our relations
with Spain.
ma SouLE IN FRANCE. We learn (says the
Baltimore SUM by private letter. that the Hon
Pierre Souls late United States minister to Spain
accompanied by bis family, arrived ON the 9Th inst
atBordeaux, France, where they would remain
couple Of days, with Levi Bowen, Tso. the II
States Consul and then proceed to Liykpool and
embark in the steamer of the 10th ms for New
York.