Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1856-06-03

,,,;,n and pledged for lis redemption. n"; under
g.. cnnIr, of The bank but in the hands o govern
mnt itself; mud, secondly the Individual Liability 81
, >i,ck ho!ds To the full aIn"u:!; o:ihc capital stock
su.srr,bcd. What Just uh"ciol can there be 10 tins I!
Is not the note holder, in fact emier To the bank
receiving no interest on his iuau -! Should ne De
forced under the operation of our laws tn lend nun
ont s,1nr.iD rs rr rs rnhOut interest! In pecunla'
nv transactions between individuals, the money cnu-
r is not content with the security which the charac'
ter and supposed fortune at the borrower afford nun,
He requires, in general, other names upon the BONA
us well MS the borrowers, and, in addition. mortgage
or trust coed 10 strengthen the bond. Shall govern.
m~nt be less careful III providing for the security OF
the whole community, compelled by the act Oi gov
crnnent itself in authorizing the issue OF paper mo-
new To be lenders and lenders without interest," 10
the banks
1t sluuld not surprise u.s. perhaps, that the repre-.
Senatves of banking corporations zeainu.iy oppose
limitations upon the lucrative privilege OF coming
ih-ir credit" But is it not To be wondered a thain"t-
w!rsanding all the painful experience OF the past go
rr:men should have so long ne"eceti,ln tins matter,
and obvious duty IL lts citizens IL was NV
until rev ulsuu had followed upon revnlSion i"r ioh@
series Of years, and millions upon millions han deem
lost 10y the people, through excessive issues OF paper
money that the first step IN the RIGHT direction ""S
taken, III the year 1885, at time when every DAM
throughout the wide limits of the Union had stopped
payment. BY the general banking law OF 1910, W
New York aud in England in ISL, 10y the celebrated
banking reform of Sir Robert Peel, the issue Gcpar.
at last separated from tHc
meut a such banks bankers us issue nntes
to secure them by providing aud dcposlnS WIN gu
vcli,nemt an additional capital besides the cap'td NJ
for their ordinary business Ii IL ms require
nrui, SO emuently just and proper III Mseh anu
which Inns worked 81 well in England and New forR'
winch constitutes the distinguishing difference oe'
tween the system proposed ana tue Ola DRINKING Sy
TEN of Virginia. Can there be any dount, the' WIZ.
of thes. two systems furnishes the best security u
the nn;chulder ~ - , -,
,u,,sI expansions and cuntraoii0ns oil CURRENCY anu
rI,, long train al disastrous consequences "he" ''
I,,y in their wake If the new system BEST secures
th. u,,,lllerS would you not inter, without lurllei
,rnf that il is best guarded against expansions a''d
r,uIractisl Is il not just to lnler that the same se
rurl,ies which protect you against "nr'n'es' VI.
,,cur. van from a redundant clrculatonf Il srcurr
re a,,,st either 10 almost To the same extent Sc
rurity against the other But tho provision w '''
,.w .y.,,u which the old banks 90 Warmly a''ach,
| contains direct guards, mutually auSniH'y nS NV
hoth The capita invested i'll trust iunu '"' 'no
uoeholdrr is Withdrawn from tue ousnes. 20 -, ,;
o,, ,v tI,r Comm tter Banks, illc captai lhus'
n. maid up aud certificate {" The iacI h'eu WIN '
tr.a.urrr before any circulating l"tee can W
r i tb,, TREASURER authorized 10 denver cHcu"t'"S
,. ~ nuy bank uIIil part of It's capital, equal III
,,,,,, T., slI.n notes, and not less than one nun
trad Thousand dollars, has been DEPOSITED III MS
haml. in the form ui public securities; nor can 'he
.,.ste amount ut lis circulation, under any cIrcu
.1 uni paid up. Suppose this capital 10 Gc s3ooooo.
t1n..iih ui II SoJ,UUu) is required to be III com
when il, bank GOES inn operation. suppose 'ie re-
naming four ilihs lS9iOUOOj and stooOo OF inc com
he invested in puuc stocks ana exchanged 'o' c"'"
i,,n,,,oir, lnen ms The specie must continue 10
,r.ry,. 10 the circulation the proportion OF one TO
i've the .un oi S!jOO uO woud be the extreme nlt
"a. which, under the requirements {" tins taw, q o"hh
h.yIu, !. capital of S3JUOOu, would, without drpos
If. b.. able 10 lend lis credits III The community III
tIl..
iur,a,. in circulation the full amount of lis capi
,ul the highest limit OF the law, and thus aud To lis
prt;s by the Increased amount Of its interest paying
stocks But this would, IN tact, diminish the loans
and discounts. \ purchase OF additional stocks To
the amount ul sjuOOO would, in increasing It's crcu.
laton To- S5h.UUU render 1t necessary 10 purchase
asu $4,000 OF specie, 10 preserve the proportion u
one To five between specie and circulation; and the
uircularlus notes employed in the circulation OF spe'
Gle not being reproduced, like those Invested III
public securities, would De necessarily wlInuraWh
from the loans aud Discounts.
Here then, is the difference between the two sys-
tens as to loans aud DISCOUNTS Under the old sys.
,rn double capital is the limit, and IN spite OF
III. Code this limit is often exceeded Under the
new with .urh provisions rs have been referred Ia,
the limit is five sixts ut the capital, where there are
no deposits. These would, under both SYSTEMS, con
.litutr 10 some extent, bass of loans lhus, under
the new system, you require tar larger capital tha
uul,r the Old Ia sustain the same !oHus 10 the com
murj.y. That such is the difference IN their practi-
cal operation is made manifest by the bank rcturhs
wh-rcvr; the two nysiuiIs arc compared.
IL il not clear, ther that uuder the proposed sys-
tenn tar better than under the DID, you attain the TWO
cardinal Objects of banking legislation: first crcu-
latiu secured and restrained, and next. the erection
of 4 barrier against expansions u! Ohih rTo'!Ii 10
,nrs. great objects The Interests "t s"rkioGrts ana
derD,iturs are subnrmaic for while deposits are vol!
uui.ry. ;.e USE III bank n"'es is unavoidable. but
,,n,Iturs ami stockholders, also. are best guarded
u,iusi loss. under tie r"siru which best secures the
i!,.I"i,rr aud best gUardo caln-t excessive loans
H. Ia. community. Inc additional "G"nrtrs required
To- ;rr,; class Of creditors enure 10 She bcrcht
81. all l:rL t!ir additional limitations upon loans and
discounts, ih.t giyu increased stability To- the bank
IL ~ ~ f.r .r.ie ~" L"r'! c"rmrh deposits E" the
working Glasses that Sav,iIg2 Ecnks i'll EIgaNd "i'd
-uu az the States OF the Union aro reI u'rG To make
Investments, not III mercantile paper, bit ~ iIcrina
n mr. Government securities. We have the testimony
OF practical bankers, examined before the BANK In
mite, of the. lulse Of Commons, III England, III 1870
tnai in i!m"s If emergency, was always easier W
,E.riu money on government securities than on the
best rrv vi bio bills. and that no system OF oatklhg
would IN their Ul:n!"u, be safe IT the capital OF the
bank were invested altogether II commercial OILS
Bat the advocates III the OLD pGnlc object 10 the
Limitations upon the loans ~ well IA 10 HE sec-r!ty
.ur . circulation. We are told that, u Tie Dalks
are not 10 be allowed to lend to the community be-
yond their capital, that capital might rs well nave re-
nnIucu with those vino subscribed II, 10 De loAucu UT
otherwise employed by liz ndiylIua proprletors' ana
ht there will he no adequate prrt re;urhed 10 Tue
b. nor business facilities afforded to thecuInnuniy
Mr. Speaker, it ~Guid, IN my opinion, not enly be
~ we'll but far better, Il the capital al banks hha
never been diverted from those chGHHcs INTO which,
without the agency OF banks 10 lend and distribute
n !, would naturally have found ts way. IL the ne"'
system nearly approached "unhamk ng the oanKs'
il wuuii be to my mind, its GROWING merit But
sir tear that, 10 THE respect It falls short nt tie p',
sitIon which the advocate: 9: tbs old oanRs w"nid
Hes On t. il. The bGuks, under iiiI ~" system rs
l..nfl thlIt t.ff
-sr,a extent their credit we'll rs their capital -
rhry G.ay Jay out their capital III interest, bearn!
funds invest ,:.,lr circulation, equal or nearly equal
To their capital, in nir:esbeariug paper, and ais"
lend, at interest, large Forti2 % TIE money OF 'her
Jrpo.itors on which no interest IS pa.I.
Ought not such profits upon their capltGi-dratle
and more than double the legal interest upon money
be sufficient to satisfy even The corn"ra appete
of LHukIug corporation Sir, always apptehenl
that something il WONG when bank dividends are uil-
usually large ~. svw can they make these enor-
NOUS dividends upon ,L-ir capital stock, except
through enormous loans ui tiel. credit, anu OF
money which don't belong /" them IL S'es On the
y. %; the disastrous suspension of 1887 that the o-
its of the Farmers Bank VI Virginia were, at Rich
mund - II per t upon its capital; and 1t WAS du
ring that unhappy Suspension that the largest dlvl-
bends were declared by tho banks of Virginia.
Bus w;il the mercantile community suffer, under
III. proposed system, for the want OF what aG called
..business faciltcs dHiit, il caimed that these
business facilities are a great advantage to tho.e
who receive them. Who are their recipients! 10
what extent is the capital credit Of the banks loan
ed TO the great body Of our farmers and mechanics
! II borrowed capital or credit is important to The
ccu,inuuy should not the fariners have the beneht
of i; H. eel Us the merchants and specuIa,ors In
1888 during ii, suspension of specie payments the
Lsl-lnrure required tise t~o great banks at Rich
mnnd the Bunk Of Virginia a:G IT,. Farmers Bank,
10 make out lists vi the parties indebted - l:en ape
c:ns their occupation well as the amount GS Their
lui,n.ires.. The result is curious and insruci"e
Al Richpo...! Ii!usc two banks with loans amount.
iur to ,nure than eve millions, had, the books OF
both banks not one InechaIC end but nine farmers;
and tn. great agricultural interest CT the state con-
stIiiirr ihree-fnurthS of our population. I'D the
hc.tl q. got even unefieth part OF their ioana.-
tl,,us. nIs D.I ~ "a