Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1856-01-01
THE STATE BANKING SYSTEM.

THE STATE BANKING SYSTEM.
r" Nc EditorS oi N" EnY""v:
Grntlrlrn:--Yo correspondent li. umrriuok. u
week two since, To l~rG>r the advantages al 'iIc
al" charter sysiein "i banking, III Virginia. over iiIr
proposed reform oI agcncral bnuns law based up
IN Virginia State SECURITIES. HIS arguments were,
ruunliy wanting in candur ;l III i.ir. He neither
represents the General EaI;ws Sy.t'n IA II reilly
exists in New York kilir irri State tn Introduce it a.
has been the foremost I" brn.s :; ntp lis sacSt tnd
most perfect iIriu-n"r has he shown wherein iI,.
oil SiMr Banks, nov appiyIi. i"r rr-rhari"r. would
hr l., secure hy the Introduction "i State Stocks hs
the basis oi circulation, mi!i"n" I" I'll" specie they
ur, required Ia keep un hand. /" my that thrs,'
bank, have been LARRY maIIag"'! iur hat II century
past ana t;cn ~ mirr that they would "" bc 81 man
agc Tor hal! century (" come. h"ca;sr required l.,
pllt up additional Sr'UrIiS nr their circulating note
i wholly u.irsi. Ii would have been lualIy piau-,-
hl, aud infinitely candid /" argue that II Is The
MOayrgiy uf r business "i banl!nS Which they de-
lialu II, tho hnnlS al the Legislature IL render them
useful to the public, ami, c>!"';:i!y. profitable L"
themselves. The point thus :n!dc would Il: least.
have. had credit for bolIucs.. There many good
peoy.r too, vino might have been taken with the
idra uG II great regulator nj Rchmund, like the
Bunk ul Virginia or The Farmers Bank, and disposed
"a give in 10 the modest proposition ui Placing all
control anI unlimited conli;rnce-w without security
lodged with the Slaein the hands ul this msney
power in order D give 1t prominence ami prgE, rs
well Is acommaniins political influence. b
But, since this course 0i reasoning II not pursued
by your correspondent, aud seeing tat hc t. placed
the two systems tho ISSUE "t credit and security, !;
!. now respectfully submitted. through Your columns.
that the hall has not bees! told at the old or the
/. The Commonwealth that she is deeply and
earnestly engaged in system oi public works, which,
completed. Ia bring more wealth la her people in
five. than ia" banks hIvc taken un them IN ~ Years,
nrr Ia. ran has trrn. Should separate herself
from the banks, AMI st. out hrr bank stocks. The
po>t"n "i h"dig Farmers or Virginia Bank shares.
hcalsc they nfr Al = premium al home, while her
own Bonds are selling at = dlsrrIni abroad iswh"lly
Inconsistent. 1t is neither dlgmlii"i nor rrrahlc. -.
Tlr difference between holding five millions in the
stock the banks and drnaadng Ui these hnnlts f.,
lodge five millions al the stock of the Common.
wealth. ~ rrHIiY tea mfi,0HS ." dHi1rS Ia NE cy"dH
1C tie hIih'r The proceeds "t the bank shares in
vested in the Bonds ui the State, uiled o five mil
lions of the s,lae bonds pledged with the State ~orhi
1k>O,6 mOrr NAM nNE-IiiLF m" 1iS,nnJ0r p"biSr
ir6i. Ii would recall from New York and London
amount of Virginia stock which could not fail t"
place the credit nf tho Commonwealth side by side
wlll, that ut New York WORTH III the hardest of times,
H. Ia Ij per cent, aud generally ruling a Is t"
10 Ih, is, surely, worth thinking ul. The credit
ui the State, indeed. is, shnuld be, primary
sidrratnn with every true Niryinia The additional
responsibility cNactci of the present Banks rcorgan-
Zjrr under Il general law, next n he thought uf
II will harm M public interest II will conserve hn IN.
trr,l Of the note holder. 1t will tnkc from the Bank.
the present udiOu, feature ot monopoly and hrprv.
them ul the arbitrary will Of initiating the rurr":"y
wi.huu, sufficient security. II ~ not enough Ia S-rr
that this authority has not been abused. The publ
do not feel sure Of the lct. lh" system al branching
in the Businesses oi the mountains long since nprnc!
the WAY to abuses. Ii is known that the credit oi
Virginia money of the Stale has grray suffered
from This most convenient dud.G 10 escape the re-
sponsbiy of paying spcrc demand. The cast.
could not possibly be made worse by lodging Virginia
stocks with the Treasury Gt Richmond. The note.
holder would he ultimately, il not Immediately sr-
cured. The spcric ba-iS would not ar ougiI; not 10
be l,.ssenrd. The probability is it would he vOinfa-
riy increased. from oi the dnnger ri the prnnp,
ail forced sale n the stocks in case Of default FL
nnily, On this point, there need BIZ no apprehension
that any one or mere f.the present Banks will de-
cline reorganization re under n general law. Ii they
are useful now, they will not be less then. The
possbiy Of Mit-,irnDH in refusing the only charter
the State will cusrmt o grant, il very remote one
indeed. No instance u tll- kind hHS been known IN
the city "i New York, whrr" half dozen Banks ri
hall u century standing. sad old concerns with WHOM
the Farmers and virginia Banks have probably cor.
responded time nut of mmi-have recently nnd vol.
unfairly come under h" General Law, aud been but
too happy in the opportunity.
,. Your correspondent has wholly mISapprrhendrI
the history al the Genera! Banking Law Though
admitted Ia he II New York systrm he goes to th.
far West instance the ni Indiana. where th.
worst guarded features OF The first draUght at thu
Law Of New York fallen upon. through the Gun
MIN. management in the Legislature Of nonresident.
Bankers lie nlsn goes back to the earliest expert
ment "I New York. tO instance the niI"ci!"Dr nl Mi.
liRllatiu. since whus. retirement from Nalt Street.
and subsequent drcensc the system has been steadly
and consistently improved and sircn.thcl by the
Legislature, until cyerylhm. In the shape O Stat"
hu:Il rXcrp. the stocks Of New !" "rk and the Fed
rral Government, has been excluded n b;ISs OF c'r
rl,iuu. Even bonds and mortgages io one iaIl The
amount al circulation. and upon property "l the cash
vau. of double the lnor@a." ARE now admitted with
relurtnucr and under s!ch rules, presC rIed by ia"
Bank Department, II I" rerlcr The operation undo
sirablc to hanks III the wca!t!lcSt rural diSrIris
The studied policy has hc"h |" conserve the St'"
credit io unkc E. bankers anh III. people wh" rir
,ulat, their paper. Responsible i'll their primary cnpi
c,v n, electors for the prudent management oi Their
LEGISLATORS in the article al the public debt. The
amended law recognizes Nrw York st"cks alone for
thr whole circulation where only single class oi
.urily i. rendered. The banker may pledge On"-haII
in Federal stocks bonds and mort 'H-cs, but the
other hail. IN such ease, mI,t br New i0Ik stocSs.--
Trre-frnls the total n securities at present III t'
Department are, cnns,1 ucn;iy, III New lorK stocks
The premium which thy have commanded III i!'Iu-
,intinh nt .lauins bund.. ias been known 10 cover
MI accidental deficit liz tn Bank assets ron 'l"
lnrred sale uf mortgages. Su,!i 4 thing h' dchr,
wi-n the S,.rurt" wholly IN ia. Si"rks at Ne"
York an, the United Satc-. ir never known III"
failures to whi. ynur correspondent refers. partly "n
the authority ol Mr. Gnllaiin took place in the early
dnys n the system when other Stat. STOCKS wer" nj
United. Df the twenty eight OF thirty millions 81
New York MONEY IN actual circulation IN ia't
through two hundred aud lily banks aud banker
scarcely single dollar lost 10 the people IN SIX
.asr, of elu, out Of nsnnms The stnn!i banh'
in a.ih around the city during the very hafh '''t''
a. WINTER the Who'll. amount of circulation WIS 'n
paid at the Department In the Other cas-
the los. was tenth the remnant "' circ"'a'ioh M
tended 10 be- secured By mortgages which proved "i
doubtful validity or value.
= Ynur RESPONDENT too las mistaken or Who'll |
~ misapplied what he had, no doubt, casually |
;aorJ nj Gov Seymour. course the general Bank
NO Law The facts of the case are highly credltsb!e
20 III. soundnes. ot the law, and al 'hr same mt'"
b, Good sense end conservative dsment OF the Gov
.rnnr lie yas bory>sut by the press aud the people
i. I was supported tie opinion Of the head OF the
ioukiug Depsrt.nent though political opponent
ertai,i Interested Parties essayed To introduce ihe
,onl- of the C'i.e Of the State int" the Department