Lynchburg daily Virginian. [volume] (Lynchburg [Va.]) 1852-1861, 1856-02-23

tons of the bank officers. on "A subject within the
range Of their experience and observations was
| prai seworihy and honorable TO the Committee.
| lis only regret was that his claims upon Their
| indulrpnt attention were not less humble.
II was expected he presumed that he would
| direct his attention 10 the two schemes of bank
| inenow somewhat prominent in the public view.
| aud contrast their claims 10 favor and adoption.
The essential difference between them was in the
| security they provide for bahk obligations, and
! in the application use they make of bank cap
| ital The one scheme requires arge part of
The bank CAPITAL to be invested in State bonds.
to be- set aside as security for the circulation;
the other permits the banks TO employ their cap
taIs in discounts and loans and relies on their
bills receivable for tine protection OF their circn
ainn Now the problem 10 be determined was,
which of these schemes, looking to the fuhment
CT their obligations by the banks. provides the
safest and most certain security; and looking to
the accommodation aud encouragement oi the
occupations and commerce of the State. insures
the greatest efficiency and usefulness IN our
banks.
He was convinced that stock. security for
bank notes, would prove to be lusory and de-
ceptiye 1 here was Oh ection to it, for such.
IA purpose. which lay ON the surface, and
not within the power OF precauton to remove.
A security for note holders it cannot be, howev-
er reliable as an ultimate indemnity to specula
banks. The note holders were the people of the
country and town who require their bank notes
for their daily wants. aud are not in condition
To be postponed in the 1T of them. They are Ii
able TO be alarmed and mslod by any reports
uniavorablc 10 the circulation, since they have
not the information to decide upon the probable
loss, and need too much their ready money 10
await the issue. With the great body of them
the difference was not material between in
solvent bank, and one which, being discrcdited,
succeeds attera time in redeeming its circula
! ton.
Now, the instant resort was had to the plight
| ed security by any one note holder, the bank
would be condemned to discred,, and all its
creditors brought down upon it. Hence banks
would inevitably fail which might have main
tained their credit if they had had the control of
their entire assets, and could have turned them
10 account then without exposing their necessi
ties. Ih, is Il familiar result in the experience
! of individuals and corporations. There i no
! business, banking or my other, which can be
conducted safely, deprived of the control Of any
large part of the capiial on which it dcprnds;and
least of all. with principal part ofits means 10
other hands. appropriated 10 class of creditors
whose confidence would he destroyed by the
! first attempt at coercion. 1t would, therefore,
! Turn out that the means employed to protect the
noteholders would detracl from the ability Of
the banks 10 preserve their credit and as the
note holders would suffer by their discredt, even
though they might be uole ultimately To re-
deem their circulation, it followed that the seou-
rity intended for the note holders would prove II
snare rather than protection.
The plan of providing for the circulation by
requiring "A deposit OF ST oeks proceeds ON IA
faney. 1t assumes that stocks have
chngeahle and cerlam Yallie, orat least are not
subject to the fluctuations III price 0t other COM
modities. This was en- Ire mistake-on the
contrary, il wnuId be more correct to say, that
of All commodities thnY most liable to tuctua
tons o price. Usually thu first ntimatipn of
an UNEASY and difficult money market Is II decline
in The price Of stocks, and tile decline keeps pace
with the Increasing strngtncy. Stocks are of
ten of slow sale at nadae ed rates, when other
things are III request at hlish prices. TIN sis eX
emphhed in the present condition OF markets.
wherein all of our roauets are high, and State
bonds, and other stocks, alone are low. In truth
II Is only when profits small and interest Il
consequence is low thl stocks are in demand.
1t is not possible TO 81 what State bonds will
be worth year or more hence. and stll iessthat
thry could be disposed of udvantageou,ly to meet
| an emergency. They are now nj a discount Of
five per cent. a year ago they were at dis
count of fifteen per cent. During the suspension
of specie payments. when dle State debt was
greatly lAs- Than it now is, hey were at yet more
reduced prlce--as low even as twenty five per
deenable. The fact that stocks are liable to
sudden and extreme mutations of price is too ia
miliar tn need further illus traton. Indeed the
disposition to deal in them VIGOROUSLY nsta
BILE and capricious.
Now. the low depreciation . which State bonds
were reduced at the time spe Gle payments Were
suspended, Of itself refutes he pretensiun. that
the circulation would be sec, Ired by having them
pledged for its redemption. | cannot be doubted
that at that time the eircalati ON would have been
discredited il State bonds hav been the tounda-
tion of Its credit. This concl uson is a necessa-
ry deductions from the differ, nee in value, which
then existed, between State bo nds aud bank notes
The butter must have sunk to the level of the for
ner, # Il had been the basis b 1t resting on II more
available security, they were maintained in pub
lie confidence, nor suffered III " sensible appa-
rent decline. Yet there are Il lose now, who thInll
that State bonds would be hen eater available, un-
der circumstances uniayor able to private and
public credit. aud who would make them the ba.
sis OF circulation. They 70 rge the depressing
effect of money crisis upon Il value of all stocks
that il is for such contingen ~ that their scheme
is designed. They sappost that stute bonds
will be II safe resource, wheil the currency il
suspected, and uneaslness an i distrust begethes
itatlon and anxiety in thmilia r and ordinary ne
gotafans. The superstition Is Ieiuted by the
experience of the last snsp ensiou. when there
were no caases to depress our State bond, except
such n belong to, and are inseperable from
period Of embarrassment. I hey had then been
disposed of to parties. having the means to
qnire them, without reso ting 10 any artificial or
stimulating enticenents. and were exposed TO
sale only the holde, elected. tn cir necess-
ties n,training them The Stat neht, more
over, inconsids rabe, aud was not felt
burden.
The one now proposed "a be IN, ,dc of State
bonds would aggra rate the depress my tenden-
cieS of financial revulsion. Nv in reducing n