New-York daily tribune., 1857-09-30

Rejecting our free-bankiDg and security system,
Pennsylvania, and the Southern States generally,
have ATTEMPTED TO secure the sounoness Of their
currency BY the old fashioned policy Of restricting
tie number of banks, to which they have added the
policy of prohibiting the issue OF notes under five
dollars, OF the circulation Of such notes issued by
banks of other States. To judge by what is now
happening these precautions do not succeed in ac-
complshing the object intended. Nor, when we
look at the reason Of the thing, is there any ground
to expect they would. The rock on which banks
usually make shipwreck is the very same rock
which furnishes occasion tc most other bankrupt
cies-the contracting of obligations dsproportion-
ate to their capital and other means The idea OF
preventing this result by limiting the number OF
ba1 ks, and granting the privilege Of banking as
spe cial favor can only be founded the expects
tion Of thus keeping the banking business III the
hands of limited number of men OF wealth aid
saeacity, who will have too much regard for their
own interest and who are habituany too cautious
and conservative to adopt q reckless, headlOng
course But it is much easier and safer where
tie thing is possible, to place yourself under the
protection of the inevitable laws of commerce
than to rely upon mere human prudence and wis.
dom; and the effect of opening the business
Of banking to free competition plainly is to
reduce to minimum the amount of busi-
pess beyond the amount of its capital actually
paid in which any individual bank is able
to do Besides, as the number Of banks competing
for the business of any given district ncreases, the
banks grow much more watchful over each other.
When there is enough and more than enough for
ALL each goes on its own way, leaving its neighbors
to do the same thing, till all get under crowd of
sail, as in the case Of the Pennsylsania Banks,
which, the moment gale begins to blow, especially
if it comes on without warning, they find it impOs
sible to take in half rapidly enough for their own
safety. But where the amount Of business to be
done Is limited, the banks with solid capital and
resources are driven to the adoption Of methods
like the New England and New-YOrk system of
country bank redemption, and the clearing houses
of Boston and New York, to prevent any one bank
from running of with larger share Of the business
than its capital and means fairly enttle it to- aud
hence very great strength is added TO the banking
N.tem of Newly and New.England, not shared
b, those States which adhere to the policy Of hm-
ting the number Of banks.
If the operations Of the New-YOrk and New Ea-
gland Banks were limited to New York and New.
England, the existing system might be said to be
nearly perfect. The great danger to our banks is
the temptation to them, being cut off from Over-ex-
tension at home, to epdeavor to expand their busl-
ness in the West and South Our New-York banks,
fortunately, BY the wise and just precautiOn Of
oblsipg them to deposit security for all the notes
they issue, are checked even here. The New
Eueland banks, on the other hand, free from any
such check on their issues, are tempted, in addi-
ton to their regular and legitimate business at
home, to GEEK q circulation abroad, which the
Suffolk Bank will not return constantly upon
.hem and as to this matter to put themselves into
the same position of hazard with most of the banks
Of the South and West Here is very strong
reason why the New England States ought to adopt
our system Of requiring all the banks to deposit!
in the State Department smp'e stock security for
their notes Were this done, no bank could under
take this business Of getting up foreign eirculs-
ton in addition to its circulation at home, without
first depositipg reserved fund out Of which meaus