Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1857-10-07

IN tne history OF banking IN tennessee ten or twelve
Of the Banks Of the State have suspended specie
payment The failure Of these Banks will result in
the loss ofmiHons TO the people, who had exchanged
their produce for the worthless circulation The
time has arrived when the legislation Of the country
should be brought to bear upon all these spurious
schemes and plans of originating what is commonly
called money, q mere paper circulation which pass
es for currency one day and on the next becomes
valueless in the hands of some innocent holder who
has exchanged the product of his field, or shop, or
days labor, for the worthless trash To the extent
that legislation be made to bear upon currency
it should be in making the circulating medium uni
form in quantity and value and thereby give all the
business transactions of the country uniformity and
stability, and should sudiOusly avoid all legislation
which win expand or contract the circulating med
ium. or diminish it in value As between the Banks
which have been incorporated in this State, the
Bank of Tennessee is believed to be in as sound and
healthy condition any other Bank in the State,
if not more so, and upon exhibit Of the business
transactions of the Bank since it has been under the
control Of the present able efficient and honest Di
rectory and President it will be shown that the Bank
has realized greater profits made fewer bad debts
and have given more general satisfaction to the pub
lie than in any other period of four wears snce
corporation. 1t is believed, however, notwthstand-
ing the institution has been well managed in the last
four years, and will show increased profits that il
would be safer and better and more profitable. in
the end, to convert the entire capital of the Bank
and all the real estate owned by it, into six per cent
Bonds, as recommended in my former MESSAGES
aud subsequently By the President and Directors of
the Bank. By converting the entire capital of the
Bank into State Bonds, the whole machinery now
necessary to carry it successfully might be dis
pensed with, which would result in a saving of some
thirty-fve or forty thousand dollars per snnum to
the State.
1t is the opinion of some, and NAV be urged he
fore the Legislature, that the capital of the Bank
of Tennessee should be increased to an amount
which would enable it to control the entire Bank
ing accommodations and circulating medium of the
State, and at the same time giving the President
and Directory of the principal Bank located at
Nashville, absolute control Of all the Branches
throughout the State establishing kind of central
power at the city of Nashville which, according to
their views of the business and wants of the coun-
try, could expand and contract the circulation at
pleasure. The entire circulation of Banks in the
State on the first Of January, 1857 in round num-
bers, was eight million dollars, (S8. 900 OOOl A
Bank, with the capacity to furnish eight millions Of
circulation, must be under the control of central
| regency; which central regency must always to a
greater or less extent be governed BY the influences
which surround It, To increase the capital of the
| Bank of Tennessee, and confer these additional
powers upon it, would be doing great injustice to
the other commercial divisions of the State each of
which would be more competent to Judge of its ne
cessies and conveniencies as to the amount of the
circulation required, than any Directory could be
at the city Of Nashville.
| If Banks are to be continued for the purpose Of
making and issuing paper circulation, it would be
but just and fair to give to each commercial divi-
sion the control of its own Banking accommodations
and all the circulation issued by Banks in each of
| these commercial divisions should be made redeem
able at the counter of the Bank where issued and
at the principal commercial point in each division
For instance, to suppose East Tennessee to consti
tute division; let all the circulating medium
issued by the Banks in that division be made re-
deemable at the counter of the Bank where issued
and at whatever point may be deemed the most COM
| mercial point in that division And so with the
Middle and Western divisions of the State. reoui
ring each of those principal commercial
points to make arrangements with the other
two for the redemption of their paper circulation
whenever it passed beyond the commercial bouuda-
~ in which it vas issued. An arrangement by the
Banks, upon principle Of this kind; would exert
powerful and salutary influence in making the Bank
paper uniform in value and quantity, when thrown
into circulation by each of the commercial divis-
ions, and at the same time leave each to determine
the wants and necessities in regard to Banking
accommodations in each commercial division
l have stated that the circulation of Banks in
this State the first Of January, 1857, was eight
million dollars. l will now add, that the entire
amount Of specie in all the Banks great and small
with which this eight millions of Bank paper was
to be redeemed, in round numbers was two million
dollars. The bare statement of this fact must be
conclusive TO all minds which are familiar with the
operations Of Banks, that eight millions of Bank
paper, resting upon two millions of specie cannot
be sustained whenever there is pressure or a de-
rangement of the monetary affairs of the country
circulation IN paper amounting to four dollars
for one in specie, cannot afford sound and uniform
currency. A circulation which can be expanded
from two to eight millions of dollars as the interest
and eupidity of the Banks may suggest, can never
be made uniform in quantity and value, but the
whole country must be subject to the increase and
diminution of prices fOF all the products of the
country, just in proportion their Bank accommo-
dations expanded or contracted. This state of
things is bad enough when brought about by all the
Banks, but to confer such power upon any one in
stitution, whether it be State Bank or otherwise
embracing separate and distinct commercial divis-
ions to be controlled by Directory in the CITY of
Nashville, is state of things which hope will never
be brought about by the Representatives of the peo
pie of Tennessee.
In recommending to your consideration the pro-
priety of winding up the Bank of Tennessee it will
not be inferred or understood by auy, that am in
favor of the creation continuance of Stock or
Free Banks. would be in favor of winding them
all up, it is practicable consistent with
the commercial, agricultural and mechanical wants
of the country to do believing as [ do that the
whole Banking system in the United States is FoUN-
DED IN ERROR and that all Banks having their origin
IN such system must, necessarily, contain the ee
ments of their own destruction and a general
ducing great injury in all the business transact
and morals of the community wherever they may
be located But to attain this end, will require
time and the exercise of sound discretion. The
work has to be commenced and we had as well set
the example by commencing with the Bank Of Ten
nessee, constantly and steadily progressing until
there shall not be Bank Incorporation left in the
State. This being once accomplished here, hoping
that a similar policy will be pursued and carried
out by oil the surrounding States, the crea
ted by their withdrawal will be applied by capital
lists in furnishing exchange for the commercial
wants of the community, and money in the proper
sense of the term sufficient to purchase all the sur
plus product Of the country. This will follow as
naturally and certainly water will find its level
on the surrounding atmosphere supply and fill up a
vacuum when created.
The strongest objection now urged to the winding
up of the Bank of Tennessee is that it is necessary
as fiscal agent for the State receive its revenue
and dsburse the same to pay the interest on State
Bonds that have been issued, or may hereafter be
issued, This objection when examined and reduced
to practical test ceases to have any force or so-
dity in it whatever | would most respectfully sur
gest that all the duties now performed by the Bank
of Tennessee fiscal agent in receiving and dis
bursting the revenue of the State and paying the I
interest upon State Bonds can be performed by the
Comptroller and Treasurer, the financial officers Of
the State proper, with equal convenience and safety
and at far less expense than it now costs to carry
on the machinery of the Bank of Tennessee
1t is matter of great Importance to the people |
of Tennessee that our State should be free from |
debt. If the policy l have recommended, should |
be adopted, the debt which accrued under the acts
Of 1856, and 1878, would be liquidated in a |
very short time We should then have no interest |
to pay in the Eastern cities, except on the Bonds
loaned to railroad companies, and would therefore
need no Bank or other fiscal agent TO make payment
at any place, other than at the office of the State
Treasurer
Under the act of 1852, by which the State cred
it was loaned to various railroad companies provis
ion made that the interest accruing on the Bonds
loaned, should be paid into the Bank of Tennessee
Fifteen days before it became due in New York
Surely any President of a railraOd company having |
the money to pay the interest on the Bonds issued
10 his road, could in less than fifteen days by buy
ing exchange from a Bank or Broker or by ship
ping coin, transfer the amount to New York or any
)ther point in the Union. This is often done now |
rs many of the roads have issued bonds which are
endorsed by the State, and the interest has been
promptly met, without any agency on the part of
he Bank of Tennessee. Our Merchants and Manu-
acturers must necessarily have frequent payments
o make In the Northern and Southern States. These
payments are made by purchasing exchange from
6anks or Brokers' and so long capital is employed