Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1856-01-15

tobacco to agent, he hnd been permitted to bnr-
row money on good personal security which would
have enabled him to hold his tobacco, without
paying indirectly luxurious aud ruinous a rate Of
| interest.
The third process represented at times by bill of
exchange has been partially adverted to in describing
the preceding Of the manufacturer who has had
project his drafts by other drafts not based on busl
ness transaction. This process is "kHe.fw"g," term
we'll known in mercantile phraseology. Cniortunate-
~, is 10 be eurei that bills OF exchange not
inisuscd by only the uulucky consiSnor who has To
smart for it and paying rate of usury that too IRE.
qucntly brenks him. 1t is much to be feared that
bills OF exchange arc often discounted when no actual
exchange of products are made, but entirely on the
strength Ot the naiilss on the bill.
fall pauc has become to be au annual recurring
event in Wall streut. During that period stocks are
depressed aud the best paper be bought at rates
ranging from to 8 per cent. per month. During the
two lust falls tile panic has existed in Richmond
and most Southern cities. After the commencement
| Of the yeHr, and especially by the opening OF
the spring. confidence reviv-s and stock advances,
aud rates OF interest subsde to the legal rates. This
s perfectly understood, aud some men of capital
Of an enteprising turn use their means aud extend
their credit tl!egti,nately TO mnke Investments du-
ring the fall with the same confident expectation Of
profitable return that farmer has who his grain
in the season aud looks for bountcous harvest
to crown his labors. These capitalists, every fall, are
| found 10 have large means. Now, SD far as they
| make their investments from money derived from
any other source than bills of exchange ster
! ling bills discounted III our Banks, they are free
| from any censure here. But it may happen that
! n man who knows that his paper can be bought
| i'll New York at three per cent. per month. or
| las debt, which he does not wish TO sacrifice
| his property to pGy at that time, 10 excluded from
Bank, although he offers paper secured, the best
personal securty-becauSe the funds of the Bank
| huve been pre-occupied by preferred bills OF ex-
chunge-thc drawers of which, by means Of discount,
so furnished them, buy sight check which is remit:
ted to New York tn be used in shaving paper. buying
up stock retained at home to buy property forced
into market, because the holder could get no accOn'
mudaiiou Mt Bunk The writer of this has seat at
the Banks. and, therefore, does not know that this
occurs but OF this there is doubt, that the prefer
cnce thus given TO class Of paper gives an op-
portuuity which it would be singular il not embrn-
ced. 4 party here has partner in New York or Ii
verpoOl he offer the bills of exchange stirring
bill. drawn by him silent partner; the bills a:e
discounted, and sight check renittcd to New York.
for joint benefit, TO BIZ used on Wall Street. Again:
q party may have established creditin New York or
Liverpool he draw with certainty that his bills
will be accepted; he offers his bills for discount; if
sterling bills they discounted without going be-
fore the Board if Northern drafts, they preferred
to other paper. He obtains his money, and III like
manner RENTS q sight check, to be used IN New
York. Before his bills mature he will, probably, be
able srI out large profit and protect his drafts
Surely this il great abuse and should be corrected
| by those having authority. Another mode by which
the same end is accomplished without the "dlum OF
drawing olils on 10
IL is believed that during the present fall, very large
sums Of money amounting, in the aggregate, 10 half
q million, and owned by citizens OF Richmoni were
used in New York in Wall Stree, operations
Some Of the Of this money are engaged in
business in this city, and, instend U recHlling their
money to carry it on they offer TO our Banks their
bills based on produce, aud have them discounted 10
the exclusion Of equally mertorious persons whose
paper is hume paper Surely no Bank ought to tolerate
| this.
But another and strong objection to this policy of
the Bunks Is founded on the fact that these bills are
frequently discounted here for the benefit OF the ac-
cepor aud the proceeds remitted in Northern check
10 the acccpror OF the bill in bolster up his credit anG
give him the direct benefit of the bank discount. In
| the printed record of case lately pending in the
Court of Appeals letter is published III evidence,
from foreign house Of supposed great wealth and
high commercial position 10 firm OF great respecta-
bility in the city Of Richmond III which the writer
states that it is important to raise all the money pos
sbe, and desires his Richmond friend to draw time
drafts his house the North, have the drafts dis
counted at the Banks here, and remit fifty Thousand
dOllars-and this is asked in nattrr-Uicourse style
As ii it were nn entirely proper and regular mode o
raising money.
In many OF our Southern towns, there are firms
who have partners at tho North. In times Of dih
Guilty and pressure At the North these Southern com
mercia CONNECTIONS are extremely con venent, ena
bling the Southern partners 10y bill OF exchange Il
borrow money at the Bsnks here and remit the pro-
ceeds in sight draft thuir Northern friends. The
of which to sraugers i'll preference TO the best
home paper.
Ii there be any doubt Of the correctness OF the posi-
tions above taken, do not rely upon the general de-
nia Of any one, but let the committee on Banks sum-
mon witnesses before them and require them on oath
TO give in their testimony. 1t is kind of proof that
I would much delight to Oicourse no one would
volunteer 10 give this testimony. But II thero was
any hope OF breaking up the system, evidence
enough could be produced TO subsantIate every
nfaH
with the Northern trade, it frequently leaks out that
bills of exchange have been used for the purpose and
with the effect stated above. No one iu,iinates any
thing Of this kind while they appear to DC prosper
Gus, hut when they fall their looks tell the tale OF the
manner in which their ruin has been effected, to Wit
by excessive commissions TO raise money, by sacri-
fees of their property and by their constrained ant
blind confidence il their Northern factor.
If these things are true it becomes useless to At
tempt to show farther that the discount nt this kind
OF paper is most hazardous to the Banks rs well aS
the drawers of the bills. In dscountlng such paper.
the Ganks look chiefly to the credit Of the drawer OF
the bill and the acceptor, and, taking for gruuted
that il represents bona ids shipment, they are less
scrupuous as to the goodness OF the endorser. Inc
endorser may,it is true be- good tor any separate
! draft; but when these drafts become numerous and
the transactions heavy, and the drafts are returned
dshonored the endorser frequently found TO be en
rey insufficient security, and the Banks either lose
a part OF their debt are compelled to give long
exclusions in order TO obtain it. gentleman OF
great intelligence and sagacity, who WAS tor long
! time connected with the Banks, informs me TINT this
paper is the most hazardous that the Banks can dis
count and that the losses and embnrrassments pro-
oeeiing from this kind Of lnans far greater than
from any other Here is authority added to reaaon ne
force of direct evidence, added to the weight ot un
answernble reasons in favor "t the proposition. IL
would be nvdious to cite cases. but the experience OF
the Banks and the recollection OF our citizens "ouiu
readily confirm tho same truth.
In the year 1851, the whole South, interested ID
specuatiOls III the great staple oi the Soutn' tco-
tony experienced the truth Of this and some OF the
Banks which had largely discounted the sterling ana
| domestic bills Of exchange, based on cotton ship
rneNs, were threatened with losses, which, tor the
! ;ne weakened their credit, and brought them to the
verge of suspension Large quantities OF cotton had
/ been bought and shipped and drafts discounted "h
! tn. faith of the shipments by the Southern Banhs-
| Cotton had been bought at comparatively hish
figure but the war breaking out, dlsrurbn, the cal
culatiuns and destroyed the hopes of the buyers
Cotton, when sold, realized heavy loss. anu recia
nations amounting in the aggregate to millions, were
claimed uS our Southern merchants lntse me!
chants were still iu good credit with The southern
Banks, mud continued to draw drafts aud have ui'-
counts thereon, up to the time OF the fecau'a'ioh7.
The drafts were returned, protested lot non-GoceP
! lance and the Banks found claims ON thelr haiids
s1onsr persons recently derned rich, but then ln-
solvent the collection OF which was hopeless III som.
cases, aud in others plust bn the WORK VI tine. =
sympalhetic pressure cxteudcd over the whole couh
! try; money panic eA'.eu e.ciy "n9's' anu :.
Of ascrbpg the difficulties OF the times to The rtnt
course 10 wit, the losses experienced by the comnel
c,al world during the preceding yeur by their ship
neuts, which losses could be traced 10 'he war a
scape-goat in the shape OF the importation OF ran
road rou into the United States generally anu oi
puaua' into Virginia, wns found; and ineh W."
ought to have known better, sought 10 as'en on THESE
articles, which are doing 50 much TO enrich and dc
yelop the country, the odium OF " pecun'ary pres
sure 10 fact occasioDed directly By evertradIns en
ccuruged by the banks, aud Indirectly py tue war.
| In u.irhboriny State an able public discussion
iu the rewpapers has bruu.h, al enlightened puol'r
opinion 10 bear upon the acton Of the Directors OF
the Bank and notes personal security are IN The as
ble ta clause in The new charter Uf the Banks has
contributed to that end. BY that clause the Banks
are prohibited from paying out from their c1untet'
any thing bu, specie, their own uotes. IN LOUIS,