Lynchburg daily Virginian. [volume] (Lynchburg [Va.]) 1852-1861, 1856-02-22

cnied Ihe ) tsa -.i - 1tazEH ih#z -'z=a 'f
H., iu,rnduc iinm ii eau se mt liz hahA,ug
law prohibiiii z stocks heing taken n oasiS "f
circulation of the banks # New York. except
stock Of the ; tate itself. or of the United States
and providing that bonds should not he hypoihe-
Gated 10 more thnn one-h III the amount ut the
circulation umbers Of failures have occurred
oven under tbi system. Our system guards
agains, failures as | feel somewhat Justified III
saving from the fnct that we never have bad IL
failure of eaarie red banks in Virginia under the
old system Nor do believe there have been
anv wherever q Is system has been adopteii--
This system of b anks aud branches has been adj
opted IN keniuck after "A trial al other systems
which were fpuno work very badly. Tennss-
see has q - adopted the system. while in North
Carolina it hn- nj VI y s been predominant; and IN
no instance IN AT of the Siates, has failaYe
occurred under it q peration. The State ct New
York has enaravofed tn protect the creditors
egainst the cen-eq uences ot bank falinresr AMI
with what success there ample means OF n
certnnng She AL endeavored to protect the
note holders against the consequences OF fSii-
nres. hut, sir, it a very poor protection
When bank fails the notes are scattered. in
small sums. eyeryu here; the holders sell them
for the best price tn ey get. and they becp'ne.
after while. conc. ut 'ated in the haDti- If Il few,
who hold them until they are redeemed, III order
to make II profit by chem. This must be the
consequence when bank failures occur. 1t Is
not the standing lies that will protect ibe
note holders. As SO, N as a bank fails. the iiF-
dvidnals holding the no tes will sell themfor the
mo>t they can get.
We'll. sir it has ofte II occurred to me u
very strange thing tina, this system # free bank
ing though III existent for "a long series of
gears in New York had not been initiated by any
ii the other States lt,s now some very few years.
! think not more than five Or six. since a few
other States under what in 1uence and with whit
objects do not pretend to say. adopted the
same system. have he ard it stated that they
bad free banhipg laws in Massachusetts and
other eastern States. cannot find that there
any other eastern or middle States. save
Connecticut and New JERSEY, in which these
hunkinG laws exist: and nv o Onion has always
been. that the way in which To ey were gotten up
IN THESE two States was. that they were near
Wall street, New York. What has been the
consequence Of this free bt mixing system in New
Jersey Why, i'll IA very short time they got up
IN that State. twenty-five free banks, four ct
which were located ut Cope My Court House,
aud some othrr points not easily accessible. IL
was found that they not business instltu-
tons; TINT they were rely nominal. The
Lrglslatrre bad Ia pass .rw by which, of the
twenty Two banks that were gotten up, twelve
are ciosed or closing, leav ng nut ten now in OPP
Grafton.
Although but n short pc -iod has elapsed since
tins system was adopted il. Connecticut | find
that Virginia six per cent. stock, hypnthecatrd
security for ther circuit ton, has been sold in
New York N far below lis par value. BY one
Vi the last report- of the commissioners, it ap.
i1us that BY the fixture { t single individual.
who was largely engaged IN ralrnad contracts.
SIX banks al that staff, wl tn capital of So,
l6l,ODp, were involved, IL the amount If S540,-
Oo0, laencd on thu SECT rty Of hypoiheeated
stocks. BY depreciation in the value oi these
stocks. IL wis found that At large MARCIA would
be Qua standing TO their dis advantage: and in or
der IL secure the debt. hey had TO advance him
upwards Of :sl50,OOO more. Under the existing
lass in Virginia w. nevef could have carried on
such an operation u~ lhiS. Our law prevents
any particular per,on,of e>tlblis hment. from be-
mg dehtofto the banks 10 II greater amount Than
$JD.oJ0. II prevents anv particular parties
FROM being payers or endorSors Ia larger
amount thnn this.
In Tennessee there free bank law passed
about two years ago under which twelve free
hanks were established. Their notes are now at
u rate of discount above double that of the old
hunks. | have observed lately that the system
Is supposed to work badly ther ?. that the
Legislature have a Law before them 0 repeal the
free banking law. 1t has passed 10 Il tbird
rcadng in the Senate.
The system Of banking in Ohio, have never
rightly understood. They have ! perceive. Il
State Bank, with great many hrane hes, which,
however are unt like ours, united in interest and
liability. During last year there wa IL su<pcu-
sion OF fonr Of these branches, and nd that the
notes ot the bank, and the other bra inches. are
quoted at one per cent. discount. Ihcy have
what they call State stock hanks ia that State,
whose circulation. ! presume, secured by
hypothecutcd stucks. The notes of these banks.
which are not salabe, are now at decomt of
five per cent. while those Of the State Bank are
quoted at one per cent. showing that the securi.
iy lodged does not give increased value 10 the
notes.
In Illinois and Indiana. free bank law was
passed at the >ume time and Imagine. most of
those whom have the honor To add rpss, are
aware what were the results in these pla ces.
In the State OF Indiana they got up d bout sey-
enty banss. Forty of these have faile or got
ten into trouble, and only thirty ofthpm continue
t" exist Thor notes aicquoted at the North al
three and half per cent discount. The State
Bank OF Indiana has always redeemed il liahiIi.
ties, and the consequence is, that lis notes at
the North are at one per cent discount while
the stock banks are at three and IA half er cent:
and forty Of them at This time have eth II failed
or fallen So much into discredit that the If notes
are not >aleabe.
In Illinois they got up twenty three If these
banks. eleven of which have failed or 90 ten into
such troubl" rs Ia render this notes uns ,hIe IT,
therefore. seems IL me. sir, that it is a system
that has not worked well in these States y here it
enS been tried, as we see by few year, ohser.
walton and experience. 1t has worked better in
Nrginiaand whyl Because the old la nks not
being untiirndy 10 them. but rather d opposed To
give every opportunity of seeing how the svS-
tenn would work, have received IN payr 1ent the
notes OF these banks and paid them ont ut their
counters after they received them. | confess
candiliv. and believed might say the same of
the other banks, that W. never have inatlea spe-