Edgefield advertiser. [volume] (Edgefield, S.C.) 1836-current, 1857-04-08
From the Charleston Evening News.
THE BlNES And THE USURY LAWS.

From the Charleston Evening News.
THE BlNES and THE USURY LAWS.
In relation to the operations Of the banks Of
this State as exhibited by their late Returns,
we called attention, few days since, to four
distinct heads. The first was: "The increased
and increasing tendency of our banks to contine
their operations to a broker and kiting business
in domestic exchange. The effect of this on
their legitimate business and on the business of
the country" A few plain facts and comments
will illustrate this head.
The banks of the interior or country banks
lend money upon drafts Or bills, drawn upon
Charleston or other cities They discount or
purchase these drafts, because under the pretext
Of what is called exchange, they can charge
rate of profit, which on a simple loan would be
usurious, and bring them in conflict with the
usury laws The city banks deal in the same
broker business on private bills drawn upon
New York and other places. These drafts or
bills whether drawn upon cons snees of pro-
duce sent forward, or for the accommodation of
parties, with or without an endorsement, then
denominated kiting, are usually on time, as for
thirty to sixty days, at the end of which they
mature and must be paid. They are often paid
by the proceed: Of another draft OF kite, under
going the same operation. 1t is notorious that
it is now common practice to require men,
wanting loan Of money, to put their paper in
this form. In addition to interest, there is
charged ,Jc;' taclange, from quarter to half
per cent. for thirty days (at that rate for
shorter or longer time,) according to the pre-
tended difficulty of exchange, or rather accord
ing to the scarcity Of money, which the banks
have been enabled to produce. They have
great control over the amount of money, as they
have been given almost unlimited power in the
matter of the nature and the regulation Of the
currency and of loans. Their rate Of profit is
thus increased to 0 and l2 per cent, and as
they arc continually turning over their means
by compound at short periods, it amounts per
annum to Is and 20 per cent. on those means.
We will speak of this eXorbtance in another
article, in connection with usury and the uSury
laws, and its i'll effects upon tue interests OF the
people of this State. Even quarter per cent,
and sometimes more, is charged upon cash
draft, payable at sight or Immediately, although
it furnishes the bank means to sell its own draft
against the fund at the premium Of another
onarier. There need be no surprise, therefore,
that the majority of our banks pay net profits
of from to - per cent, besides laying up
surplus fund, detraying the salaries and expenses
of their establishment and restoring casual los
Sos in business, and all which amounts from
to s per cent. more on their capitals. Yet the
| hi.Il EXPENSES and enormous profits OF these
institutions a cDmc out of the people, and fall
| upon their property, productions and industry.
tS,c!lsis tae immense cost of q monetary ma
chinerv. rot at all necessary i'll such forms and
ntoti,s 70 the currency, the commerce or the
protuc;iyrncss of li,c State. Simple anu lcgtl-
| mate lanking is q useful institution, but " hen
it become: as Elc fiolls Us ours, it is a burden
and q wr.,i... Wat compensation to tue pco-
,lc uf our State ;iucs it give for its actual or
assumed privilege. and nDneyetl dcspotlsm
All the cpnnr, banks and Il number in the
city have come 10 cunlinc thcnsclve, almost
entirely to this Illicit and shaving trade i'll
money.
In the bank Returns, these operations are
! indicated uncr the heal of /" Domestic En-
change
We have sFoken Of the increased and in
crcasing tc:nlcEr" to these operations. We VIII
illustrate hv comparing them at different perl
! otls and also IL comparing them with icEiti.
mate discounts ur luanH which are indicated
under tic head nf notes discounted on person.
al security" Let Us take the month o. fcbrua-
r. lii lS03 s.lEi i"oi
Total Of Banks $3.50 1891
! Notes discounted mn per-
| Sonal security. .;lG.6a5,21i.nu Sl0Gil,Sil.uO
Domestic ExclIaus,. i.aiS.Sl7.nO l',ofS.l'S,"o
! Il will be observed that while legitimate accom-
mediation remains ;l,out tic same figure: the
shaving business ;:aS nearly doubled. Tic pc
riod of lSj was -illilar t. tia! OF 1899; AMI II
will be remembered that in 1854 the .Nr'rS en-
puscd the lGonstrnn5 action OF the banks III
these matters Let it he noted how the evil
practice has extended; hut can we much blame
them, if the people and Legislature tlmldly ac-
qlliesce
In the two forms Of discount the total amount
in 1855 WAS $lS,5G4, ,09l 90, and in 1851 is $780,
rs 10000. This indicates large increase in
general trade and in the demand for money 1t
is further indicated by the circuaion-7, ,O5G,-
! GOO, in 1855, and - 10000 in 1857. But the
disproportion in the mode of operation, Is the
i,nportant fact under the head we are discussing.
| In 1855 the regular discounts were over twen-
tv-tiyc per cent. greater than the exchange bu-
siness, yet in 1851 they are fifty per cent less.
By the Returns for this last February, the
whole capital Of all the banks is put down at
IA. S37 ,6i2-actually less than the amount IN
which, their fictitious credit has assumed to IN
, vest of itself in domestic exchange!
The people of the interior or country sul!er
most from these ilcsitmate operations. "ut
the following table, for February 1857, will tell
its own story.
| r,- D.,L. N,,es discounted on Domestic &c.