Lynchburg daily Virginian. [volume] (Lynchburg [Va.]) 1852-1861, 1856-02-21
Speech of John C RutheTfoord.
or oooCHfAND. ON
THE RANKING POLICY OF VIRGINIA,

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have made such rnpid advances. eneoan,erlng
eyerywbere. as in Virginia the combined oppo
sition of long established ana powerful monied
oornorations As many as ten States have, IN
recent con -titutiona conve ntons prohibited their
Legislatures from granting special charters TO
hanks The organic law of LOUISIANA makes II
ifnperative upon the Legislature ITO provide for
the registry Of all circulating notes and to re-
anire ample security for their redemption."-
Free banking laws have been actually adopted,
within the last few years,by nearly half the States
of the Union. But their adoption, except in the
State of New y ork. has been too recent fairly to
test their operation. Improper securities have
been sometimes allowed, some Of these laws are
loosely guarded and defective, like the first free
banking laws of New York: and hence, in some
instances mere banks of circu aton have arisen
IN inaccessible places. and il has been necessary
to Iii pose of thetrust fund TO redeem their notes.
In some of the States too the incorporated banks
have, by waging fierce and unrelenting a
gansi the new hanks, impaired their efficiency
and usefulness. Such has been tho state of
things in New Jersey and Tennessee and the
Governors of both of these States recommend in
recent messages, that no special charters be
granted, and that the incorporated banks be au
ihorised to organize. when their charters expire
under the provisions OF the general law, Where
ever have instituted enquiries in other States,the
new system is represented az uprooting the old
unpopular everywhere with the old banking
interests, but highly popular, and rapidly becom-
ing more 50, with the masses of the people, be-
cause Of the unmisiukaDle security which it nf
fords their against the sad sequences of fraud
and msmanngement in their banks. Wherever
the system has been fairly inaugurated, it is un
dergoing perfeoiing process from year to year,
nor is there instance in which free banking
law once passed, has ever afterwards been re-
pealed.
Il, Il, e 81; ;,i
have been urged against this system. growing
out of its incidental effects upon the credit of
the State. Some oppose it because. in the event
of bank failures State bonds will be forced into
market; others, because they think its effect will
be 10 increase and perpetnate the public debt,
while it may be sustained by some because it will
in their opinion, ENHANCE the value of our public
securities; and relieve Virginia from her present
financial embarrassments.
have advocated it solely AS a stem of ban
king. As such, not Us IA financial scheme, sup
port il. But it mny be important t. enquire
whether any evils will arise from it, effect upon
the erdii of the State sufficient TO outweigh its
snlutary effects as banking system upon our
currency and commerce.
Is it probable that our State bonds will be de-
preciated by the failure Of banks under this
systeml II So we have no power To prevent it
III thirty out of thirty one State IN the Union
Will our State bonds be safer from compulsory
sne at auction with the banks of other States or
with the banks of Nireinnl Tohaye State bonds
forced into market under this system in sufficient
quantities TO depreciato their value 1t Is necessa
~ 10 suppose general failure of banks and
withdrawal of all their notes from circulation
Bat IT is more easy than fair to attack system
with improbable suppostluns and the probable
consequences of improbable occurrences. Sup
pose all the old banks fail, would not the public
deposits and the public revenue in bank notes in
the hands Of the sheriifs bo lost! and would
there not he, in this also, amidst the general
distress and embarrassment that would en-ue, a
depreciation of State stocks and all other securi
tesi Unless have been greatly mistaken in
the whole course of my argument, the failure of
banks under the old stem would be more pro
bable occurrence than under the system propo.
sed The depreciation OF State bonds rs well as
of all other stocks which would ensue, in either
event, would Indicate simply scarcity of money
and not impair the credit honor OF Virginia
which must remain nnhlemished long as her
ability and purpose to pay the interest and re-
deem the principal of her debt shall remain
doubted,
viii this system of banking perpetuate the
pallic debt Why should it! The system
would not expire with the existence of the public
debt. Upon the redemption of all the Common
wrnlth's bonds "a happy event which will not oc-
eur IN the life time OF my member OF this House
IT would be simply necessary to provide some
other trust fnnd for the security OF the n"tehod-
! ers. The free banking system has existed in
New Jersey since 1880 aud has been twice re-
commended "a an exclusive system by Governor
Ford, although New Jersey is wholly free from
the evils of public debt Should other securi-
ties be substituted, when public debt is cnn-
eei'ed' 1t would be fortunate change for Virgin.
IN To receive at home interest upon the bonds Of
either States rather than to pay it abroad upon
her own'-to bave semi annually current of
specie coming in, instead of semi-annuny Il
current ct specie going out, But suppose that,
with III" redemption of our State bonds, no other
trust fund should be provided for the security of
the notchodcrs. What would be the conse-
qoehces! he payment of rhe State bonds
would give US, tor the FIRST time in the history of
Virginia banlng, specie basis in the vault, of
our banks-not specie ba is Of % per cent.
"niF' Dat specie basis fully equivalent to
larger IN iact than the whole outstanding circu-
iail"n; and ihat circulation might be called in,
ana tins specie take its place, as currency, with
OUT the withdrawal of n loan from any debtor If
tue banks. Thus n bank of discount. deposit
and circulation, would be converted into n bank
"' discount and deposit simply, and paper money
would be replaced by gold aud silver. 70 my
mind SIR this, too, would be happy consum-
nation.
he gradual adoption of the new system would
gradually increase the demand for our State bonds
ana gradually enhance thier value. This is now
an OBJECT to us OF the very highest importance
not only because of the present financial embar-
easements of the State, but also on account of the
enormous supply Of all kinds of public securities
with which the European war has flooded the
markets Of the world. But it would not recommend
the system to ne, Mr. Speaker, if | thought that
| 1t would furnish the nducement us well as the
means Tor Increased appropriations. at this time.
l" works OF internal improvement. | think we
should pause in u course of policy which has emp.
ted onr treasury. stopped the sale of our bonds.
and nearly doubled our taxes. Let Us manfullv