Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1857-12-18
GOVERNORS MESSAGE.
EXECUTIVE DEPARTMENT..
NASHVILLE, December Is, 1885,
Gsuasa.eu Of The Senate


Assembly, we we're met on every hand by evidences
Of an unusual degree of prosperity which prevailed
throughout the whole country. Our felcE, for a
number Of years, mad yielded abundant crops and
the range of prices gave assurance Of full reward
to each and every branch of industry and produc-
ton.
But within the last sixty days, we have witnessed
the suspension of specie payments by almost the
entire banking intistutions of our own Stale as well
as those of most Of the States of the Union; the
effects of which has been sudden and widespread
commercial revulsion-derangement of the ex-
changes and monetary concerns Of the whole coun-
try-seriously Gripping the operations Of trade,
and, great extent, paralizing the arm Of indus
try and enterprise.
Whilst 1t impossible for legislation to relieve the
people of these evils and disastrous results, yet
they may be, to some extent, ameiorated, and their
recurrence prevented by wise and wholesome legis-
latve provisions and restrictions.
In order that we may determine upon the proper
remedy, it is necessary that understand, if pos
sible the cause of the present panic and monetary
arrangement.
1t is shown by the Report of the Secretary Of the
Treasury of the United States to the Congress just
assembled, that on The. LIST of January, 1857, The
immediate liabilities of the banks Of The several
States were as follows:
Notes in circulation, S2l4,fto,oZ2 W
Amount due depositors, 230, 35l, 3o2 W
Aggregate immediate liabilities, 445,130,l74 OF
Against which, they had IN specie
in their vaults S58,S49,S8S VI
Making about Isl 66) seven dollars and sixty-siz
cents OF immediate liabilities Tor dollar in theii
vaults showing conc!usyely that the syslem through
out the whole Union is uRsouud, unreliable and
frought with a multitude of eyils-many OF which,
the country is now unfortunately experiencing =
The reports of the various banks in Tennessee s1oW
that on the LIST of January, 1857, their immediate
liabilities were as follows;
Notes in circulation, S9,O2l, 4at
Amount due depOsitors, 5,05l ,25G
Aggregate immediate liabilities, 14,l72, 7Sl
Against which, they had in specie in
their vaults, sos, ga
Making about six dollars of immediate liabilities,
TO one dollar of specie in the vaults
And, on the LIST of July, 1857, as follows:
Notes in circulation, 6,O86, 982
Amount due depositors, 545, l04
Aggregate immediate liabilities 1852 ,08G
Against which, they had in specie in
their vaults, S2,6IO,75l
N king about four dollars of immediate liabilities
tO dollarin specie
From these facts, it is evident that on the 1st Of
January, 1857, the banks of our own State had
reached point of expansion, dangerous to them
Selves and injurious the bestnterests Of the COM
munity; the effect having been TO cheaper cur
rency, and thereby greatly augmenting the prices
of every species of property to stimulate over
trading by offering suon inducements and facilities
for that character of hazard, that seldom fail 10
lure thousands of our citizens from the fields OF
labor and productveness, to the more inviting, yet
more dangerous fields of speculation; to encourage
ha bits of luxury and wssteful exravagance; and to
drive from circulation if not from the country the
precious metals-for it is well established law OF
trade that classes of currency, Of unequal value,
cannot circulate together the more valuable always
retiring from tine field Of unequal competition, 20
seek market where is properly appreciated,
and can be more probably invested
But, after having expanded this bubble almost to
the point Of explosion and invited their victims far
out upon the dangerous chances OF speculation,
between the LIST of January and LIST Of July, 1891,
they suddenly and violently contracted their circu-
lstion from nine to about six million OF dollars
Could the banks have stopped at this point, the
effect might not have been so great as not to be
overcome by the energies of our people, and the
wonderful resources of the country without serious
andlas But great expansion must ne
cessary have corresponding action; the contrac-
ton doubtless continued the ratio, from July
to the present period reducing their circulation to
point not far above S3,000O00-in the meantime
having suspended specie payment, leaving, as the
only alternative for the people IN their financial
extremes, an rredeemable aud deprecated paper as
their only currency or medium of exchange; pro-
ducing, thereby, general and great depression IN
the price of every species Of property, and almost
universal panic and distress
The history of our banking system has presented
from the beginning, one perpetual scene OF exPan-
sions and contFaetiOns producing, periodically, a
flush in the monetary affairs of the country, which
is invariably succeeded by contraction, panic and
pecunary distress. And as long the system is
continued as at present organized these scenes must
be of frequent recurrence. A paper currency can
be safe that is not the actual representative OF
capital.
Ii may be confidently stated upon the highest
financial authority, that paper currency OF more
than tWoof circulation to one Of specie, or three OF
immediate liabilities to note holders and deposition,
to one of coin cannot be sustained sound, con-
vertable currency. When the dispropOrtion between
their specie and immediate liabilities runs higher
than this, the banks are at all times liable TO be
driven suspension, if not to insolvency. and es-
pecaly So where the circulation is local, as it is
with all the banks in Tennessee.
Under the present system, bank notes do not rep
resent coin or capital Their issues are not limited
by the amount of metal IN their VAULTS for we have
seen many of banks issuing high as four five,
six and in some instances ten dollars Of their cir
culation for one in specie. Their notes are the
mere substitute for coin, which they have not got,
and their ability to redeem them is made to depend
upon their collections from their customers. The
ordinary trans actions between them and their GUS
toners being purely exchange of credits, the
customer paying premium Of from six to eight per
cent. per annum upon the credit of the bank.
Can this system furnish to the community what
they so much need and desire, sound, uniform and
conner i6e ereey2 For heamount Of currency Is of
farless Importance the people, than its uniformity
and soundness. And to obtain this is the great OBJ
ect to be accomplished if your legislation would
remedy existing evils.
But, can this important object be accomplished as
long as bank-notes can be multiplied at the mere
discretion of the maker and to any extent that his
avarice or oupidity may prompt? And which is but
too often multiplied, as we have seen, far beyond
the limits of prudence or safety.
This currency may pass from hand to baud as
circulating medium, and for time answer the ends
of trade aud commerce. but when the collapse comes,
as come it must, the disastrous consequences are
felt by every class of society The aborer is thrown
out of employment-the enterprising merchant is
crushed-the wheels of the manufacturer are stop
ped and thousands of industrious citizens involved
in irretrievable ruin.
Shall, by policy, longer contribute to these
fatal results The evil is upon however, and its
currence in the future only be prevented by Grad
icating the whole system, imposing such resric-
tons upon it, will effecually and certainly check
over issues and violent expansions and contracIons.
Whether it be thought that the banks by Suspension
have fortified their charters or not, no one doubts
the authority Of the sovereign power OF state 10
impose such additional restraints may be necessa
~ to secure an honest and faithful execution of
thetrust conhded TO them or to provide such
scurity IS may be deemed necessary against
the misuse and abuse of their privileges, pro-
yided these restrictions and provisions do not
conflict with any fundamental right, or defeat the
primary objects of the Incorporation The great
end and aim of the charters conferred upon our
banks, was to secure a sound currency, and any
legislation to this end, is, beyond all question: with
in the legitimate scope and power of the Legislature
1t is, however, believed that no sudden and raidi-
cal change of policy can be adopted without infict
ing serious injury upon the country and prolonging
# not increasing the distress
l respectfully recommend the passage of law
requiring
LIST. That the banks shall resume specie payment
upon day fixed, and as early as practicable; thus
liking our currency convertible, and reestablishing
,onfide Ice to some extent at least.
2ud. That from and after given day, ne bank
Or branch bank in the State, shall issue any bill of
he denomination of five dollars under, and upon
. given day, within reasonable time thereafter,
they shall issue no note or bill of the denomination
# ten dollars, or under; and, upon given day,
within reasonable time thereafter they shall issue
10 note or bill of the denomination of twenty dol
ars, or under.
3rd That upon fixed day, within a reasonable
line after the banks cease to issue notes bills of