Republican vindicator. [volume] (Staunton, Va.) 1849-1857, 1856-01-12

Washington Hunt, comptroller OF New
York, states IN his report Of January, 1880
that 1.-TWO individual bankers have given
notice of their intention 10 closeup therfbas-
mess and have returned a portion of their
circulation, to wit the Warren County
Bank and the Franklin County Bank. -
"Only one bankEfailure has occurred curing
the last Year" (1849 This was another
free bank at Buffalo. What happy soul
was Mr.. Washington Hunt, to find that he
was able to congratulate the Legislature Of
New York upon fact so unprecedented
and remarkable? Not content with an
nounc,ng one bank failure during the last
year, he was determined 10 exclude all
doubt as to the number of failures, and. with
ev,de ut delight says there was "only one,
Experience having fully convinced the
people Of New York that stock banks were
not entirely safe and needed additional re-
straints, by the Legislature, :.durng the ses-
sion Of 1848-'49. in obedience to the re-
quirements Of The constitution as amended
in 1916, passed an act making each stoak-
holder of Tie banks responsible for an at
ditional amount equal TO the stock he may
hold, to be pad in the event o: failure OF
the bank to meet It's liabilities. Those
who recommend the policy of compelling
all the banks Of Virginia TO re.organize
and to base their capital upon our State
stock, have relied upon the stock as ample
security, and have not as yet proposed that
the Legislature OF Virginia should go furth-
Ell and impose personal liability upon the
stock holders in the event Of the failure OF
the banks. Ii the Legislature OF VHgin-
ia will, notwithstanding the failure Of SO
many free banks in New York. as well as
IN other States, follow the lead Of New
York upon the subject at all, why stop at
the halfway house? Why not also re-
qnire the additional protection and securi-
ty exacted by the late ac, of New York;
Is this declined from the apprehension
that the people Of Virginia are not likely
to engage IN banking upon such condi-
tons? o; is it upon the ground that medl-
cine had better be administered in broken
doses?
The free bank law Of New York as pas
ed in 1898, was not designed to advan.e
the Internal improvements of New York,
or sustain the State credit, or absorb the
State stock. This idea IS of more recent
origin. From 1888 unit! 1848, the Legis-
la,ure authorized The free banks 10 use
oonds and mortgages as well as the stocks
oflhe several States as banking capital
In lS4S, the law was changed and the Leg.
islature required the bank capital to con-
sst of New York State stock and bonds
and mortgages. In lS49 Mr.. Hunt, the
| 4 all hat b., Ia
changed SO as to allow "onc-half tht
amount Of stock securities deposited ~
this office TO consist OF stocks oil the United
States" Ii free-banks are destined to
succeed any where, they ought to succeed
I in New York, because she is the great
creditor State oftbe coniederacy, and her
commerce and wealth are immense. Her
banks are less liable than those Of Vrgin.
ia 10 be called upon TO redeem their circu.
lation, and have greater facilities for OBJ.
tanning specie. Notwithstanding these
favorable circumstances, nine Of the free
banks were closed by their own stock
holders, and thirty one BY The Comptroller
in compliance with law, in the short peri
cd of ten years. II these things are ryi-
dence OF the success OF banking system,
what kind of evidence is required 10 con.
vict it of iaiiure' Free banks, relying
upon their stock as their ultimate security
keep on hand less specie in proportion to
their circulation, than the chartered banks
having a specie capital. On this account,
the free Banks of New York were soon
deprived their specie and failure speed,-
ly ensued. They failed. not because their
L. & Il,
ter, as the stocks of different States, mort
cages, &C.. but because theft stock, their
capital. was not specie. The capital OF
the free Banks was not touched until the
Banks failed, and then their capital, alias
the stock securities, were sold TO redeem
the bank circulation. Had these Banks
been based upon the solid foundation of
specie, instead of their foundation OF sand
they might, like the chartered Banks Of
Virginia, be now in existence, and, il cal
led upon, loan money to the Common.
wealth. We have no disposition to com
mend upon the many injuries results ex-
perienced by the people of New York in
consequence Of the failure of SO many
Banks. This unpleasant task may well be
left TO the able pens of Messrs. Fillmore
and Hunt. We sincerely hope that nobe
OF the free Banks OF New York have fail
ed during the last five years. AS each
stakeholder has recently been subjected.
by law, 10 liability equivalent TO the
amount of his Bank stock, it may well be
presumed, that this legal provision has ten
ded to augment the vigilance OF the stock
holders, and thereby ensure greater a,ten-
ton CD the part of Bark officers. In con-
sequence oflhis, Bank failures have prob
abb, diminished.
We may be told, that since 1898, there
have been many failures among The char
tered banks OF other States, besides the
failure Of the tree-banks of New York
We may ADM, the fact, yet we contend
that il is entirely irrelevant in deciding the
issue now pending. 1t has been asserted
that the New York plan of banking is bet.
ter and more reliable than the prevailing
mode of Virginia and that we ought to
adopt the New York system. The COM
parison invited is not between the charter
ed banks Of other States and the chartered
banks of Virginia, but between the latter
and the stock banks OF New York. The
comparison is between the iree-banks OF
New York. more than thirty OF which