The Washington union., 1857-09-30
BANKS AND BANKING.


1t seems to be fit time to consider system of
banks and mode of banking. Incorporated banks
exist in each of thrtyone States and in most of
the Territories without any common system of or
ganization concerted mode of operation, and with
out any controlling agency by our national govern
ment. Each Legislature confers such powers and I'M
poses such restrictions and provides such penalties
for infringement it chooses. Although individ-
uals are in some instances restrained from issuing
currency, there are few limits, if any, upon their
power to transact banking business. 1t cannot be
denied that incorporated wealth in the form of banks
has many conveniences not enjoyed by private in
dividuals, while they are subject to some haz-
ards. Nor can it be disputed that many banks have
been wisely and prudently managed, comforting
many conveniences and advantages, and that their
managers have displayed prudence and patriotism
on important occasions. But this neither proves the
system wise sound. nor the mode of management
prudent or safe to themselves the public. Ex-
perience has incontestably proved that at times
when bank facilities are most needed by their Gus
toners and the public, they the least able
to grant them, and when least needed, their
ability is greatest When money panics and
full occupation in taking care of themselves,
and instead Of supplying their customers with the
facilities to which they have been accustomed, the
latter called upon for contributions to sustain
the banks themselves, and if they do not make them
both fail system producing such results is neither
wise safe, and ought not to be continued. Legs-
lators have contrived and enacted many statute pro-
visions to guard against these evils, but all have
proved Intellectual to avoid them. Some States have
required the capital to be paid in before commencing
business and issuing bills. This has often been done
by borrowing the amount, that there was no real
capital. Others have required mortgages to be filed
with public officer security for bills obtained
of him. to be issued by the bank. These mortgages
seldom produce half their face and billholders lose
largely Others require like deposite Of State stocks
These are often borrowed, and constitute a debt
against tho bank, and bholders frequently suffer.
However contrived, these securities do not secure
and protect the depostors and other creditors the
stockholders and the former often suffer and the latter
lose their whole subscription to the stock No legs.
laon has yet provided securities against these evils
They lie too low to be reached by any of the pres
ent legislative remedies While individuals daily
called upon and required to pay their debts, whether
due to individuals, banks, the government, and
their property seized and sold without reference to
sacrifice consequences if they do not pay prompt
ly, we have seen heretofore nearly every bank,
and now many of them boldly refuse to pay their
upon their comparatively helpless creditors and the
people, thousands of whom may be sacrificed in their
weakness to bank account of its COM
bined strength. We have seen laws passed to pro-
tec banks against their creditors who might resort
to suits to assert their rights The Legislature OF
New York in 1897 passed one denying those who
sued banks for small sums the costs payable by in
divduals, while they required to sue all corpo
rations in court of record where they would neces
sariy accrue to very considerable amount Fortu
nately this subservency to banks led provisions in
her constitution to prevent future like legislation
These constitutional regulations are the principal
cause why most, if not ALL of the New York banks
sustain themselves, and pay their debts like indi
vduals and thus protect measurably the public from
loss.
The constitution provides "Debts due from COR
porations shall be secured by such individual liza
bility of the corporators, and other means may be
prescribed by law"
1.-THE legislature shall have no power to pass any law
sanctoning in any manner directly indirectly the
suspension of specie payments by any person. assooia.
ton, corporation issuing bank notes of any descrip
ton"
In of insolvency of any bank banking asso-
ciaon the blhoders shall be entitled to preference in
payment all other creditors of such bank assoca
ton
These are salutary provisions, and now produ-
cling good effects. They the bill-holder, if he
wait for his pay until he obtain it in tie man.
provided by law, but not the depositor. Nor do
they protect the public against panics and insolvency.
nor their consequences. bank may raise hundred
thousand dollars, and procure that amount in bonds
and mortgages stocks, on which it can obtain the
quantity of bills to be issued and payable by
itself This, with the liability of the stockholders
may the blholder But this does not pro-
tect other creditors against failures nor
revulsions. The bank takes its bills and exchanges
them for endorsed notes of it's customers 1t is clear
that it has no money to redeem with If confidence
is shaken it cannot pay faster than it collect the
notes it has taken for its bills If it collects them and
pays up it's circulation, it will force its customers
to sacrifice themselves to itself. The public
viii be drained of money, property fall, and the
rich made richer and the poor poorer. If the bank
stops payment instead Of making sacrifices to meet
it's debts az in reouired Of ;ndy;l,,l. IL. ,.,, -