The independent press. (Abbeville C.H., S.C.) 1853-1860, 1857-10-09
Ran1y aud RanlIinp

A writer in the Charleston Mems thus dis
courses upon the evils Of the present system of
Banking in the State, which he attributes TO
the low rate Of interest fixed by law and the
improper organization of the Banks:
"Mv opinion is that the origin Of the whole
evil lirs in the to" low rate of interest fixed Iv
law as the maximum which the Banks can
Charge and in the improper organization Of
the Banks. In the first place. what are Banks
"a partnership of individuals. who have invest
ci their money in that particular business
with view of getting fair interest for the
uSr Of the same. Now, itisa moral impo*>i-
bi'ity that the Banks. restricted I" charging
six per cent. for loans, can he carried on ut
heavy expense, and leave IL fair return to the
s;ockh"lhcrs. They must seek some other
sources OF profit than the simple iiScnuniing
of paper They are therefore tempted into t"
establishment of n,.cnc cs uhr"nI where they
Use their bills i'll purchasing exchange and other
paper, thereby creating large circulation of
their bills, to provide for which they are ne.
c"ssarily compelled to keep large fund nnl
curtail their "rcrntious ut ho.Ec. This business.
whilst il may br attended with large profits, ia
Nc"n'luctcd ut great risk. An agent abroad is
instructed with the purchase of thousands Of
dollars of paper drawn by AMI Oh parties ell
trcl s. unknown Ia the Bank here, whilst the
strange anomaly is presented of the same
hoard of Directors, who have given such unlm-
,
the discussion OF the paper of parties in our
midst, and whose daily operations can be seen
nnL Judged. Again, thc Banks tempted I"
dealing largely in exchanges at home III pre-
frrercncc t" business paper. 1t isa w"ilkn"wn
fact, that bills Of exchange are passed l."
par,irs who if they wished To purchase of any
merchant on Il credit, could not do SO for one
fifth oft!ic amount
"A-ain the desire for profit in the Banks
leads T." ilI""itlmatr operations and u prrnci"us
system of kiting, which lowers the moral tone
.,f the business coininunitv. Paper pavnbl,.
here of tn. most un,lnubtrd character will hr
r."c,cl: but the paper will be received
II: collateral security for the draft made lrav-
abb. in New York. which has no basis II
| buy on. hundred bales of cotton aud ship it,
to New York, and draw II bill against it. that
is exchange: but If draw Il draft n lrirnl
here. PAYABLE in New York. where neither nn:
,ny friend have any funds or property TO meet
il. il is Il Kite, anl these are the kind OF opera
i:ons that have hccn fustcrcI and encouraged
by omr Banks
! .ln not blame the banks f." these kinds of
operations, a> they are, in n measure, forced in
I" them 10 earn enough t"rav their expenses,
aud give fair divided to their Stockholders
The fault lies will, the law, which Restraints
them i'll one point anil gives them unlimited
license in others They can only charge six per
cent, upon discounted paper, hut can charg"
any rate which they can eXt"rt on exchange.
They naturally will seek that Investment Of
their funds whicl. promises the largest profit.
My REMEDY is, that the Legislature should
operate hanks of discount, deposit anl circu
lation from banks of cXcl,nn"r That the
banks of discount should he allowed To charge
| interest ut the rate of eight per cent, per an
nun, (as IS charged in some other STATES }
should receive deposits and issue bills. but
not lie allowed to deal in exchange or have
agencies out "f the State. That exchange
banks should he established to deal exclusive.
~ IN exchange, and allowed to exercise none
other "fihc functions of banking. Ianking
would thus become simplificd. and its cxIen-
scs mulch reduced. There would l". no need
"f corpse of officers to keep complicated nc.
counts with agencies abroad, nor of travelling
Presidents ut high salaries, Banks thus or
ganiz"d. w"nll, if we'll managr,l yield r"gu
lar Il vilcnds to their stockhu,rrs Of eight per
cent, per annum. not likely to be Impaired by
heavy losses. Their dividends should he re-
strc'cd {" "i-ht per cent. :: they should not
he tnHc'l by the State or city. but each stock
holder he liable t" taxation on his stock the
same "a on any olh,r r,crcntv.
Garry ont these rrinci l'uls-lct our bank
ing capital be used for the hcmch, of our own
people, and am satisfied I'LL classes would b..
gamers thereby. Our banks would pay rcgu.
lar remuncraive divi'lenl., anil their bu.
hess he carried on at onc-half the risk and
trouble 1T Is mt present. Cur merchants
would he enabled to carry on the legitimate op.
"rati"n- of com mcrce without fear of being
suddenly checked by every panic from abroad.
The real estate owner, the mechanic, and all
classes Of the community, would be able, on
g"o,l security, to obtain molrratc loans fur
the improvement of their property and carry.
ing on business. and all would tend to the all
vancenicnt oft!e interests and prosperity OF
CHARLESTON.