Fayetteville observer. [volume] (Fayetteville, Tenn.) 1850-1966, 1858-06-03
From the Nashville Banner.
The Exchange Bank.


While the discussions between the
various parties connected with the
carrying out Of the Free Banking
Law, with respect to the mismanage-
ment of the affairs Of the Exchange
Bank are read With great avidity by
the public, they afford very little con-
ISOLATION to the note holders, who are
vainly enquiring what is 20 be the
value Of this deprecated paper
Our own reflections upon this SUBJ
ject have strongly impressed US with
the belief that the notes of this Bank,
though not at present available, must
be eventually good. Leaving out Of
view what may be expected from the
principals--tbe owners of the Bank
land we understand they are men
of wealth, and regarded by those
who know them best as men of in
tegrity--we hold that the State is
legally and morally liable for every
dollar of this circulation, as endorser.
The provisions of the Free Banking
Law requiring a deposit Of securities
was made for the purpose of giving
currency TO these notes, and conf
dence in the solvevcy of the parties
issuing them. The State had dou-
bic purpose in view-to afford cir
culating medium for the pr ople, and
to create a market for her bonds
She therefore assumed the response
bility Of an agent, and in consiGera-
ton of the collateral security deposit.
ed in bonds by the owners of the Ex-
change Bank, endorsed the notes of
that institution, and upon the faith of
that endorsement, the people received
them. 1t may be said that the bonds
required as security for this circula-
ton were never deposited. Very
good. That is matter for the State
to look to. The issuance of the notes
was prima faae evidence that the
bonds were deposited, and whether
they were or not, the name of the
Comptroller, as agent of the State,
binds the State wherever it is placed.
1t WAS the business Of the State to
see that she was made secure before
placing her endorsement upon the
bonds. The Yeople could not be ex-
pected to know whether the law re-
curing the deposit of bonds had
been eyaded. Ii A.endOrses BIS note
in consideration of collaterals to be
deposited, and that deposit fails, the
failure does not affect AS response.
bility to the holder of the note
The case Is parallel one in an equi-
table, if not strictly 10 a legal point
Of view. The same argument will
hold good if it shall appear that the
bonds were deposited, and afterwards
distracted. The State, by her agents,
assumed the custody of these securi-
ties, and upon the faith of them, en-
dorsed the notes. If they have lost
them-if by carelessness and inatten-
ton to business, they have been left
to the depredations of dishonest per-
sons-this will not relieve the State
! of the responsibility assumed to the
people, who, on the faith of her en-
dorsement, have been induced 10
take and hold this paper.
We are unable to see any way by
which the State is to avoid this re-
sponsibility. To repudiate it would
be a death-blow to all Free Banks. -
If the State is to be permitted to es-
cape from the responsibility of The
business transactions of her agents in
Ione instance, she may escape in an
other; and there will be no margin
for confidence in any of her liabilities.
In view of these reflections, We
advise all those having notes on the
Exchange Bank not to sacrifice them.
We believe they will eventually be
redeemed, either by the principals or
endorsers.
SUICIDE Henry William Herbert,
extensively known throughnnt the |