The Council Bluffs nonpareil. [volume] (Council Bluffs [Iowa]) 1857-1867, 1857-10-24
Exemp,sps Banks from Paymen, u Debts.

ExemPttps Banks from Payne nj Of Debts.
1 The method which has been sometimes re.
sorted to, when banks have either yiciouslJ
or innocently become unable to pay theil
bills, Is to suspend specie payments, and ther
prevail upon the State Legislature to pas,
laws exemptine them from the consequence,
Of their failure. This expedient has beer
resorted to, for the second time within two
years, by great part Of the banks in the
United States. Although excuses may be
rendered for such a course, under universal
and unexpected calamity, there can be nc
doubt that the bank suspensions must work
the direst mischief to the community
Without going into the subject in detail, the
following considerations are sufficient to
show the nature and tendencies of such a
measure. -s
l. The obligations of bank are as bind
ing as those OF an Individual. There is nc
reason why it should be exoneratcd from
them more than an individual. If a mer-
chant fail to pay his note to the bank, his
credit is dishonored and he is expected to
pay interest from the time Of his failure
There can be no reason why bank should
not abide by the rule which it enforccs
upon others. .-...--.....-
2. The only circumstance.which gives any
value to the bills Of bank is the assurance
that they will be paid in specie. But if the
bank is allowed, ut will, to absolve itself
from this obligation, what is this assurance
worth? This very power conceded to banks
would render paper currency worthless.
3. The only restriction upon unlimited
issues of paper money is the obligation i'm
posed upon banks to redeem their bills at
sight in specie. So long as this is enforced,
the currency could not readily become inju-
riously expanded. If it be not enforced, or
if the bank may be easily sheltered from
the results Of its imprudence, Il paper cur
rency may be expanded illimitably. In this
manner, as in the case Of the continental
money, the circulating medium may be rem
dered good for nothing.
4. The tendency of frequent suspensions
must be to drive all the specie out of the
country. In consequence Of over issues,
prices will be kept so much above those OF
other countries, that products cannot be
probably exported, and specie will imme-
diatey take its place. Thus, as soon as
banks resume the payment OF their debts,
prices being high, they will again be
compelled to suspend, and thus, few such
examples would end in small number Of
spasmodic contractions and suspensions, to
be followed by perpetual Insolvency.
5. As banks are at present managed, in
too many instances, the officers of the banks
themselves are the prime pal borrowers. By
combination with each other they may easily
procure loans sufficient to control the price
Of any of the necessares of life, within a
large district. If, when their loans become
due, the borrowers were obliged to make
payment, they must relinquish their mono
ply, and sell at the natural prices. But, if.
us soon as they were called upon to make
payment to tie bank, they could suspend
specie payments, it is evident that they
could probing their loans, and keep up
prices at their will. The tendency Of such
a courseis manifestly to set the poor against
the rich for cause, most barefaced OPP
preston.
These are few of the most obvious rea-
sons why banks should always be obliged
to redeem their bills, in specie, and at sight.
If they fail to do so, the legislature should
not shield them, but should expose them to
the natural action of law. A few examples
of this kind would do much to place the
currency upon sound basis.
In this manner, fuctuation may arise
innocently. And every one knows that such
fluctuations are constantly occurring in the
mercantile world. But what occurs thus
innocently, is liable to occur viciously.-
Mainland.