Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1856-02-15
Inherent infirmty Of their organization will alone ex

mainly, originate in any increase of profits and
wealth which alone can supply reliable and safe de-
mand but was in great degree at least the offspring
Of Il sudden inclination for Banking, excited by the
drusve arac!iplIs of n novel and plausible scheme
Ii WAS fictitious or artificial demand, and we now
experience lis natural effects, in the depression Of the
very prices, which, for a time, 1t advanced. The
price of State bonds has been deprecated by the
amounts which The stock Banks have had to force
upon The market: and the price is still kept down by
the apprehension that other Banks must yield to the
necessity. 1t may be said that the opinion now
uf Banking stock, with reference to its effect in
maintaining the price of State bonds, il as generally
adverse il was favorable in the beginning.
The advocates ofthe scheme rely OH the experience
pf the large Banks OF the city OF New York, whlc!
have preserved unaffected their credit aud Usefulness
nOtw outstanding their cOnstit 10 the stock basis
They overlook the differences, both prominent aud
material, which distinguish the banks OF that city
from our own. In virtue Of her distinction, as the
great centre Of commences and trade, her banks pos
sess resources far beyond what is enjoyed by our
banks elsewhere. Ii is on their immense deposits,
their circulation, they rely to sustain their dis
counts aud lOans and tor their profits of course and
though their deposits hucuatr as the times are propl-
ous or adverse yet they are always large, and act
which deserves to BIZ especially nOticch) are larger
relatively, in periods of general uneasness and en-
barrasslnent. AS capital becomes more valuable, II
is the more attracted to the commercial emporium;
and, therefore, the cause, which reduce the aggregate
amount of deposits, the country through, increase the
system admissible in that city, may be most untortu-
nate aud disastrous ont of it. Besides, the relative
capital absorbed by the investments which the New
York city Banks found IL necessary TO make, was III
considerable, compared with what would he required
of our banks. They neither rely on circulation, nor
does il exceed at any time the amount OF their com
may be put down at about Oneilh of their capitals
but the circulation of our hanks is essential both 10
them and public, and is equal III amount 10 tie az
-reyate of their capitals The New York banks
ho Hiaal, l,l.lf hair
far less safe and secure if their means were locked
up in Investments to the extent proposed 10 be e1'ct
ed of our banks. They would prefer, doubtless, to
surrender their circulation rather than submit 10 such
q condition.
Again. New York did not require her banks to pur-
chase her bonds directly of herself for the lack "I
other purchasers. This is a supplement to her
scheme OF which the merit IL all our own. She se-
lccted stocks her bonds, and the bonds ot the
United States, which were at the time, in demand nj
high prices, at home aud abroad. The stock to be
used here, are State bonds. in.rscaly rs rant.
| BILE any other, are al prepared To nsIst ana
| maintain, but, unfortunately, below par and which
will decline still inorc II the amount Dc ncreuseu' US
| the scheme cOntelDp,ates. To begin with stock
unavailable, except at a loss, Intending 10 m
crease it largely. in expectation OF demand al lie
exact moment il would be needed, would not be JUS
titled by the example of New York, nor, what IL IN
| infinitely higher SANCTION by the wisdom and fore
| sight which distinguish our Commonwealth.
Why change our bank system! Why give up an
organization with which entire pubic ID familiar,
and which has stood the of time and vlcssitudc
1t has been in use than half century-has been
enlarged and expanded from time 10 time, as the
| growing commerce and business ot our State
called for an increase Of bank capital, ana
retains the confidence which has been always
reposed in it. Neither note-hoder, nor o'her
creditor, has suffered loss, or been delayed,
throughout its long career. Even III the suspen
sion Of 1887, a period of unexampled financial re.
wilson, the circulation OF our banks was sustained
at its full value, manifest from the tact, that II
| was the medium in which all purchases were haue,
deprecated and depressed were the prices OF all
commodities State bonds. lands aud other property
Nor it reproach to our banks that they dld NOT
then pay specie. 1t was the common condition OF the
banks throughout the country, and the unversal ei
burrassmc aud distress were mllgated ana renewed
by it. If the banks suffered temporary dlscredt
was the support and relief Of all other trades ana uv
ocatons. Our system may chalien2e comparison ioi
safety and security and BECAUSE is our system aic
comes to us sanctioned by experience. Is worthy L
be cherished and upheld In lis federal ieature thcr
. is absolute security 10 creditors. The mother ban'
and branches are indlvisib!e III lia0y the inslu
ton a whole being responsible Tor every depart
ment, while each department is under separate ant
independent control. There l., therefore, no daSe
OF mismanagelnen TO Oil extent to affect the credit
the corporation as a whole. 1t possesses the furthe
important advantage, that it supplies the means o
multiplying our banks, new points show themselves
entitled without ncurrng the risks OF multitude
small independent banks. This is no slight ol
nconsiderable advantage. II Is great conre
uence 10 have circulation consisting vi notes wei
known and familiar. Moreover, banks OF small cap
tai exposed ~ risks peculiar TO themselves, when
are increased they are removed from the seats o.
raIe and commerce; and then, again, Us iidePenu
ent banks are Increased and Dispersed through iit
State is the difficulty of maintaining the currency al
any hear approach to q stable and uniform value
The demand is for I'll increase OF bank capital. II
is common opinion that 1t IS wholly INADEQUATE an
insufficient. Certain it is that its increase has not
kept pace with the growing commerce ana produc'
tons of our State. In tis city there is conessedly
need Of more. Yet the capacity OF our banks To dis.
count and loan would be sadly reduced, 1t required
invest the amount of their circulation III stocks.
| Whatever was 40 invested would be 80 much capitai
diverted from its true and legitimate employment
The industrial classes and trade generally would De
curtaied OF the facilities at bank which they now
enjoy, As the necessary aud Immediate effect OF the
new scheme For there ID no reason for thinking
that the capital 50 diverted would be supplied by new
subscriptions for bunk shares. Aud as the discounts
OF our banks high as either the law or their
own safety will permit the requisltion to tac' tbeir
circulation with State bonds would impose upon them
the necessity Of rigid and oppressive course o col
lection. Such would he the inevitable consequence
of such requison, producing results more or lers
disastrous az il might be enforced gradually or nj
once, but extensively injurious and embarrassing
however ndulgen'ly executed. The transition would
be period of gloom and apprehension OF suffering
and r.verses; and when the end cume we should find
ourselves crippled and kept back for the want Of the
requisite bank capital
And after OIL our banks possess now, and insure TO
their creditors note holders and others, higher and
better security than State bonds or other stock. IL
consists Of their bills receivable their prOmissory
notes and bills OF exchange falling due at short infer
walls, and executed generally for value received. Ihe
suficency of this security has been tested by expert
ence the usufciency of stock has been exposed by
the test. In the suspension OF payments oy the
banks before referred to- their circulation did not de-
preciate whilst State bonds dd nay, such was tnt
kh..,r
have been hopeless and nugstory o attempt to re-
deem il by selling them. Nor would the experiment
have succeeded better any where. Ii is the law Of @
financial crisis of universal application, that short ne
goable paper is more reliable than any commodity
n. nn available and convertible fund. Of what value
would be stocks or the chance of disposiDg vi them
when all the industrial, producing and commercial
casse. had failed and were unable to meet their en-
| gapements The bills receivable OF our banks e1
| ceed BY more than the duplicate-they are not thI
from threeold-ther circulation Is there NOT, III -
large au excess Of assets above the circulation secu
rity the most ample and certain To doubt II ~ouiu
impue degree of mlsInanagement tn our oaiks' nt
| terly unauthorized, and well nigh Impossible con-
sdering their division Into departments uue' sePo
rate direction 80.
II il be said that stock banks, too, have their bills
receivable, and offer security consisting oi per
sona and public obligations combined, The answer u
Us TO their STOCK that 1t has been SHOWN not 10 Ct
available in the contingency against which Il wouiG
he nroyded; and as their bills receivable, they
wonnId in amount be greatly less relatively, than
would be held by our banks as now organized. The
stock banks at present in existence in the State, ex
hibit a line of discounts less than their capals-rs'
by ncurly tifth-whereas the banks applying Tor q
renewal of their charters show that their discounts
are within small fraction of two-!old of their capt
tails The bills received of the a'e about equal tt
their circulation, willis. Of the other they are not fal
short Of three 10 Would there be no difference
in its effects upon the community between the col
lection of the whole and part only of the debts due
to the banks !-of the whole, e, might be necessary
in the case of the stock banks driven TO their bills Il
redeem their circulation; AMI Of less than half oy OIL
old banks, as now constituted, acting under IKE NC
ce.sty Such would be the exact condition of the stock
bauks IT, us has been urged, State bonds were found
unsaeable in the contingency supposed. Bat II "t
suppose less exacting and stringent exgency' aiI
assume that partial collection OF their debts oy le