The Washington union. [volume] (City of Washington [D.C.]) 1857-1859, 1857-10-17


Union subscriptions and advertisements the District
Columbia
THE BANKING SYSTEM, IT'S DEFECTS AND
ABUSES CoNTNUED KAN,
The banking business is overdone in the United
States. There is no legitimate or salutary employ
ment for great portion of the hundreds of millions
of so-called bank capital which is mere fund
for speculation and extravaganza. Almost every lit
tie village, containing half dozen retail shop
keepers has its bank, great portion of the loans of
which is employed by the directors and officers in
spechlations and monopolies Of some kind or other.
The first act of nearly every State, before tits
fairly out of the eggshe is to authorize the creation
ofon or banks as convenient fund for specu-
laton. This is the signal for the people to mad.
Property at once fictitious value, and, in
stead of being appropriated to the useful purposes of
cultivation, is banded about from one hand to an
other, increasing like rolling SNOWFALL; and
so long as they continue to whip the top it huns
most unsteady We read in the newspapers of
sudden rises in the value of property, which
make mouths water, in some out-of the-way
place never known to fame before and Of sales
of city lots in the wilderness that exceed their
prices even in Wall street We hear of some fortu-
nate man becoming millionaire, but we hear moth
ing of the thousands who have wasted their time and
money, and been ruined, by chasing the unsubstan
tial bubble. The catastrophe is uniform. The top,
being no longer whipped makes few gyrations, and
rolls away in tangent. The banks close their DOORS
the officers evaporate, their paper promises become
worthless, being represented by no value, and the
good people, having had their frolic, commence the
world again where they ought have begun at first
Whenever the affairs of insolvent bank
are laid open to the public view, find its
commodations in great measure monopolized by
the directors, officers, and few favored individ-
uas The public, the surrounding country, receives
no benefit from their solvency and when they be-
come insovent those who were not permitted to
dance are called to pay the piper The benefits,
such as they are, are shared by the few; the inju
res are felt by thousands. .l
The whole system is, in fact, open to the most
enormous frauds and impositons. The very founda
ton il imaginary and delusive, as will be seen by a
brief examination The laws of most if not oil the
States, prescribe that before bank commences bust
ness the whole or certain portion, of its capital
"shal be paid in or secured to be paid" Now, how
of cases, if not generally? By subscriptions to its
stock represented not by the payment of SPECIE but
by the notes of hand of the subscribers deposited
with the bank, with the understanding that payment
will not be required until perfectly convenient
This is considered sufficient basis for bank
custom house oath; the cashier swears the capital
is paid in, or secured to be paid, and them on the
credit of one species of paper promises, the bank
proceeds to issue paper promises of its own, and
incur debts from three to five, and sometimes ten
times the amount of its bona yfds capital. Of the
manner in which subscriptions to the stock of
banks are sometimes obtained the following is a
very common example: A friend of ours
once called upon by person ofshigh standing in So
ciety, and small distinction in the church, with
request to subscribe to the stock of a bank newly
authorized by the Legislature. On his declining to
do So the gentleman, as an inducement assured him
that if he chose his subscription would be consid-
cred merely nominal, and that he would never be
called upon to pay any of the instruments they be-
came DUE tits known that such subscriptions are
not unfrequently resored to in order to fill up the
bank capital and we verify believe the person who
made this proposition was not aware that he was not
only himself party in fraud on the public, but So
Letting another to become an accomplish Transac-
tons of this kind not uncommon; they accord
with the code of bank morality and may be justified
by scores of precedents. capital thus paid in or
secured to be paid, is good enough 'to by -
But the more clearly to exemplify the soidity of
the basis of the present system of banking, let us
present an example or two samples of all, or a
considerable portion of the rest. Here is one of
them the Bowery Bank, in New York, which has
lately suspended, after a succession of most COM
Portable dividends We give its own statement:
Capital -------------------- 1886, 600
specie Z5,39S
Forty dollars in loans and discounts--that u.s. is
sues of paper dollars-to of specie. Here comes
batch of them all in like the four-and twenty
fddlers. The Rhode Island country banks have sus-
pended and present the following satisfactory state
ment: .s....., .ts, CD. u.HN =. .ar,a #rlF
Capital stock In the aggregate -s6 616,l51 80
Bits In circulation ------------- l,OZ9,S24 30