Wheeling daily intelligencer. [volume] (Wheeling, Va. [W. Va.]) 1852-1859, 1855-10-19

more u.St1nt Tue UEt6t5I aiu Gt'Sy tGu " 1uCI4
own advantage, atleast.
Not only IN Indiana aud Illinois but in other
States, we find Ills in general 10 be the practical
working Of the sys,emS--a large number Of stock
banks, each of small capital. and located as far as
possible at the most inaccessible points OF the
country. We have heard OF banking in woods and
swamps. where nature never intended banks 10 be;
and of circulation carried off by the Owpsrs Of
such BANKS TO be used FIVE hundred or thousand
miles from the place of Tetempuon. " t have
foundsthe system in these instances at least, in
stead of furnishing circulation promptly and
easily convertible, to result in flooding the West
with eight CT nine millions Of dollars in bank
notes which could only he converted into coin, or
checks on available points, by sale to broker, al
o discount varying from five 10 fifty per Cent.
Banks Of circulation should be located al COM
mercisl points. When the circulation is needed
by the business of the country, ii is at such points
that tie demand for it is felt. 1t is a! such points
that il can be most safely and iudicIouSly employ
ed. VIII n the state Of business requires the con-
version of bank notes, it is at the commercial
points that such conversion is most easily and
promptly effected, located as they must be on the
main thoroughfares OF trade aud travel. II small
hank be located III situation OF the main lines
Of travel the nveribtIity of its notes, whatever
may be the theory, becomes in practice an i'm
possibility. 1t not possible to concentrate enough
of its notes at any one point, if they are once
well scattered. to pay for the risk aud expense of
sending them hoEe for redemption.
So important would we regard, under any Sys-
TEN, this principle ofsecuHng practically the prompt
aud easy conyertibilily OF bank notes, that we
will venture to suggest as All Improvement on the
present old Virginia system of Banks OF large
capital with branches in different quarters Of the
Stste, that provision should Ie adopted requiring
the Pareut Bank. and every branch, 10 receive the
notes of the Institution, wherever they pay
able. in payment OF any debts due to itself, and
further requiring the Parent Bank to redeem its
branch notes in coin. il demanded, at discount
not exceeding one per cent.
Another objection to The stock bank system is,
that the banks Of this kind are much less able
than Others to aid the business of Their neighbor-
hoods by proper loans anu discounts.
To explain this, let us suppose two banks of a
hundred thousand dollars capital and an equal cir
cuaton to be established under the different sys-
TENS. The Stock Bank has collected in, then,
$1,000 cash, which it has loaned to the State.
in Other words invested in Stale bon's, 1t has
pledged these bonds TO the State Treasurer, and
obtained a hundred thousand dollars in circulation
duly cOunlersgned. 1t cannot legally issue this
circuia'iou without purchasing aud keeping on
hand fifth of tie amount or $4,000 i'll gold
coin. This coin il can only obtain by purchasing
it at premium with its own notes; and after ma
king such purchase, lis whole fund fol- banking
operutiou Will be less than $50 600 Of its cir.
cuL'tion. In order To keep up the SIC, 600 Of coin
II must cautiously select out of the paper Offered
for discount, and the loans applied ior, such only
will secure 10 the notes it issues therefor long
circulation, and as will hrng in, before the no res
are Returned for redemption, the prof. CT kind VI
funds to enable the bank 10 redeem them without
reducing the amount Of coin Which 1t is obliged
TO keep. Hence even in regard TO the limited
amount which il is able 10 loan. lis managers will
soon learn 10 avoid neighboIEood operations, aud
10 give preference 10 offerings and applications
from assistance, which will afford the opportunity
of sending abroad its circulation and scattering IT
al poinslwLence ii would be difficult 10 return ii
for redemption. The circulation which it uses in
its own immediate neighbOthood, Can OF course be
readily and easily returned TOT redemption when,
ever the business of the neightcrhood requires lis
conversion into other funds.
The other bank, established on the oil system,
has likewise 10 keep on hand, $4,000 of coin, as
the basis tot its 100000 of circulation But the
important difference is, that il is not obliged 10 loan
It's caita 10 the State. Out Of lis hundred thou.
sand dollars of capital, ii supplies itself with thu
requisite amount OF coin, ami has then left for
loans and discounts $4,000 OF lis capital and
100000 of circulation. The one has $50, GOO 10
loan, all of which is in its own notes, and must
make its leans and discounts SO as out oil this
amount to provide for the redemption of SlOG, 900
of circulation. The otLer has $4,000 10 loan,
and out of this amount TO provide for redeeming
100000 OF circulation.
The above may suffice to explain the general
operation and effect of the two systems i'll this re-
spect. To be strictly accurate, the expenses of
starting and conducting the two institutions, and
the amount OF deposits, should be taken into con-
slderation, but as these would probably be about
the same in one case as the other, they wOuld
not "f1ec: OF impair The position we have taken.
four argument be correct, then stock bank,
owing to the fact of its having AT the Start loaned
lis whole capital 10 the State. would be less liable
to accommodate the business of its nengl5orhood
than bank Of equal capital and circulation un
derthe old system, in the proportion OF about
eighty to one hundred and eighty. But ii must
further follow from the same view, that the stock
bank is obliged TO he necessarily much more per
emptory in regard to its debtors than the olhe.-
If in the one case $4,000 out of the hun,Ired
thousand dollars of isI circulation is returned f..
redemption. must collect and replace this amou
out of the $4,000 of its loans anil discounts. In
the other case, the $4,000 would be collected out
Of $4,000 of loans.
In relation to depositors. the stock bank system
is certainly defective, All the real funds of the
institution are pledged to the note holders. They
ATE the preferred creditors. In case Of failure,
the depositors must be satisfied with what is left
We need saw nutbjny IN Relation, 20 ~. vital =,