Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1857-10-20
luspEEsIor OF rHK s.KK OF rEENBssEE.

he suspension OF our DIG STOCK o1uAss o
especially the Bank Of Tennessee, has caused
various and conflicting comments, on the streets
and IN the public press. On the abstract righi
Of a bank to suspend the payment of it's notes
in cola aud silver, we think, there can be no two
opinions. The whole theory Of banking l.
based upon he presumpaO9 that the liabilities
Of banks are psysbe on demand This 1t is
which gives currency and confidence to then
operations AM circulation. A bank note II
supposed to represent an equal amoant OF coin
which the holder can convert at hs Pieasarem
to lus bass. Bat we all know from eXPerieno'
that this lhsOry of banking is sounded in e.
For." 70 qaste the language Of Gov. JoHNsoN
II we are not ( lily @pSs1ed'' in this fact, v
are soon ma ie aware OF 1t ia a hasHcial paul
ike that which has recently sezed upon u
country. Ths bank s7atemsntsthemsskes sho'
that only a small portion of the notes are rel
resented bg god aad silver. The larger oa-'
Of these bauk-bflIs are represented BY endorse
notes Of individuals, payable atsixty or ninety
DAYS. by no es OF other banks aud BY Ss't
bonds, which only time can convert into avail
able funds for the redemption OF their issuet.
These items constitute the "~sssets" of h.
banss, and whenever a panic arises and a rI
il made upon them, they find their specie &C
count Unavailable to meet their circulation,
which is payable on demand and may be can
cslled on sight.
Whatever may be the theory OF banking
this lie uudoubtedly its practical operation
The only alternatives Of the banks, then, in =
monetary panic, are either to pay out all their
coin, press their debtors to speedy settlement
upon the maturity Of their notes and grant NJ
renewals, relying upon the ultimate soiveney
Of the other banks whose notes they hold auo
upon the sale of their bonds, for ultimate
Liquidation, or to suspend payments themselve-
and grant a similar indulgence to their debtors
thus saving both themselves aud the community
from immense sacrifices and challenging tn
confidence Of the country in their ultimate sol
yency and ability to meet all their Obligations
Such is the ,h-Ory Of banking, and such ~
its inevitable tendency. On the one hand, i
holes out The idea that bank issues are as goot
as sold, and on he other, its whole history De
monsrrates thai these issues demand the pro
tecti0z Of a suspension Of payments wheneveI
financial hurricane overtakes them. And s.
it must ever be, Otherwise there would be n.
prof. OF advantage in issuing bills, if the bank.
were required to keep on hand the full amour
in specie. A portion Of their assets must b
held in bonds, notes and other bank issues
which in crises are unavailable, or they WOul
not bank at all.
What We have said only proves that it is an in
sFitsble incident Of the banking system that ID.
very best banks must suspend payments III
fact speaks poorly for the system It lie in
deed sufficient 10 cause the people to rise u
and rspudiate these Institutions for the future
It proves that the system, as it exists, is
radical error and ought to be abolished. ]
speaks trumpstsd-tOngusd against the practice
and shows that the whole theory is false.
But it does not argue against the issyitabl
policy. which is incident to the system, {
saspsnding payments in certain coLtingeneie.
slch az that which has happened to the couI
try. The Bank Of Tennesses found itself SUI
rounded By ~tottering banks and failing firm
l. found the brokers and sharPers getting il
notes ans sending them to its counters 10 specJ
late out Of the people by drawing gold and eel
ing It at a heavy premium. If it continued
pay out to these shsrpers, it must ineyitsbl
get to the bottom Of its specie treasure befOl
i. could cancel it's circulation, and the bslanc
OF its notes would then be wholly discredite.
because the balance Of its assets are UnaVai
/ g 1t must also press heavily upon il
Z btors BY enforcing the payment Of every no.
al it natures. If then it was forced 10 su'
pend, is Suppression is the legitimate result I
the Banking system. Against that system Il
MS direct our 4nstbemss. i is wrong, frsudJ
lat, erroneous and unjust. Its theoTy is falls
and holds out false lights to he people. B.
the policy is inevitable under it, so long q
the people and the Legislature eountensnce
in suy Of It's forms II We would avoid Il
evil, we must abolish he banks and lear
that, whatever MAJ be the theory, banks then
selves are forever subj'et to these Tsrulsiou
suspensions md regulations.