Arkansas true Democrat., 1857-12-01


 in New York and other States than we can at this moment readily count up and the losses the laborng classes have thereby sustained, have been very great We shall uuderrate these losses, if we suppose them to have been only ten cents in the dollar on the notes of such free bank, twenty cents on such another and thirty cents on such another. The brokers may have realized TO- 80, or 90 cents in the dollar on the winding up of these institutions But the working men could not wait till the bank controller, bank commissioner, or bank super intendent, as the case might be, could sell the stock or the bonds and mortgages on the basis supply the wants of his family, the working man had to sell the notes of the |" free bank' under the panic created by the news that the said free bank had stopped payment.
 If bank notes are to continue to be the mo- ney of the country, we want something more than security for their " ultimate redemption," three months, six months, or a year hence.- We want security for their immediate redemp- ton whenever presented for payment. This security is not to be found in State stocks, or in bonds and mortgages.
 But even supposing that system could be devised by which the prompt payment of all notes could be assured, even that would not of itself give us a sound monetary system. The notes they issue are but part of their current credits. The deposits and the sums due to other banks are, with many of these institu- tions, the most important part of their promises to pay. For these the free banking system does not even profess to provide any special security
 But even supposing such arrangements to be made, that not only all bank notes, but all bank cheeks, and all bank drafts, should be promptly paid in specie on presentation, even then we should not have a sound monetary sys- tenn. Failure to discharge their obligations promptly in specie, is, by no means, the greatest evil paper money banks nflict on a community. The chief objection to the currency they issue is its t,lstabiAty-its eternal fuctuations--now raising prices and now lowering them--now by expansions involving men in debt, and now by contractions making it impossible for them to pay their debts. Through fluctuations of cur rency all the natural relations of supply and de- mand are thrown into derangement, whereby the community is subject to incalculable losses
 Unless paper money can be made as stable as metallic money, paper money ought not to take the place of metallic.
 The " free banking" system has done much harm.
 lst. In multiplying the number of paper mo- ney hints, and thus multiplying the number of cormorants that batten on the industry of the nation.
 2d. In increasing the amount of small notes in circulation, it being chiefly for the fabrication of small notes, that |" free banks are created.
 Sd. Even on the supposition that paper mo- ney banking is theoretically correct Ca supposi- tion that may be indulged by way of ilustra- tion,) there is no room for banks of issue. ex- cept where the people have money to deposit and business notes of short dates to offer for discount. The free banking system has led to the establishment of banks in places as re- mote as possible from the seats of commerce. those locations having been purposely selected, n order that every possible difficulty might be thrown in the way of presenting their notes for payment.
 4th. The free banking" system, by creating new demand for State stocks as a foundation for banking capital, has given an artificial value to such stocks and thus involved the States more deeply in debt than they otherwise would have been.
 5th. The " free banking system, by inspir- ing false confidence, has added millions on millions to our paper currency, and thus con- Tibuted not little towards bringing on the present crisis.
 It is system admirably adapted to fair wea ther. That we admit. But when we embark our all in ship, we want that ship to be strong enough to withstand storms and tempests.- That free banking can never do.
 Look at the absurdty of the thing. At the date of their last report, Nov 29th, 1856, the !" free banks" of Illinois had pledged for the redemption of their issues, $4,590,OO0 in Mis- souri bonds Hardly year has elapsed. and the banks of Missouri have suspended specie payments. In these banks the State of Mis-. souri has deposited all its funds, and if it can pay the interest on it's bonds it can pay only in the paper of its suspended banks. But 1t has not enough even of these, and now, late in November, the legislature is busly engaged 'n devising new revenue system to provide for the coupons due on the first of January
 It is beautiful system indeed. Debt piled upon debt. The debts of States which cannot pay even the interest on their debts in specie. are made the capital of the banks, and on this debt capital the banks issue debt money, which people in business are compelled to take or go without any.
 Even as regards providing for "the ultimate redemption" of the notes issued, the system has proved failure. In support of this we adduce the following quotation from report made in 1855 by the the superintendent of the banking department of the State of New York:
 There has no bank failed in this State hay. ing circulation secured rhoVy by public stock of this State New York and of the Tinted states, the circulation of which has not been redeemed at the par value thereof. and in like uianhef, without interruption so that the notes ioSt nothing of their efficiency and value in circulation until actual redemption.