Semi-weekly standard. [volume] (Raleigh, N.C.) 1853-18??, 1858-11-16
For the Standard.

am obligedto the Fayetteville O6serrer for pub
fishing and calling public attention to the plan of
bank recommended by "A Citizen, :" Like the gen
temen who edit that paper, 1 may say, that write
:" for what believe to be the good of the State"
think that in some things am smiseonceived,
and that the Editors have not duly calculated the
probable profits of the bank. My purpose was to
be brief and it is not unlikely that may, for this,
have become obscure.
As the subject is interesting, shall offer few
observations on the article of the Observer.
l. 1t is objected that the plan would not be
tempting to capitalists"
The Observer, submit does not give due weight
to the fact that by far the largest portion of capital
in the State brings to its proprietor, at this time
net annual interest only of 81 per cent. Yet the
decided preference with the mass of intelligent cap
itaiss evcn is to lend at that rate rather than take
30 year bond. Many are investing their money
at the South and West, personal security and
mortgage, at Z, 8, 9 and 10 per cent. Still the
gacious capitalist feels there is security sat
home," and he is DESTROYS of some place there in
which he may vest and supervise his capital But
proceed to the estimate of profits.
If per cent. be made the actual operating cap
ital of 81 600 O00 the per cent $500 900 worth
of State bonds added will present an entire profit of
$4,000 which is s2-5 per cent. per share to each
stakeholder in the entire capital of 100000 that
is each corporator will be entitled to 25 per cent
his share of 500. If 10 per cent. is made, it
gives to each share Is per cent That such div
pected is shown by all our past history of banking
l know many prudent men who would prefer to take
stock in such bank. rather than remove their
money to the south and west and obtain, they
can with great ease and little risk, per cent.
9. GA Citizen" proposed that the bank should
purchase and hold $500 coo of State bonds shortly
becoming due, until they were gradually redeemed
by the State at the rate of $50 900 year. The OBJ
lection is. that by this process that amount of the
States capital ariU lie locked up.
| do not admit the conclusion. If by the opera
ton proposed that amount of gold and silver would
be withdrawn from circulation, not furnishing even
the basis of paper issue, but drawing an interest
of six per cent, it would indeed be the deadcst cap
ita that ever had key turned on it. But the ope-
ration is only purchase by association of indi
vduals, from sundry individuals scattered hither
and thther; of their State bonds, and holding them
as they were previously held, except that they are
to be paid by instruments of 100000 each year until
they are all paid. Suppose one capitalist now own
ed them all, and by agreement he should consent to
receive of the State ten bonds of $50 600 each,
payable one bond each year, could it be predcated
of this transaction that the State had locked up
$500 900 of its capital? When pay day came around
could not the State either supply the amount by the
issue and sale of new bonds the Observer
proposes to do, or by money raised by taxation?
1t is unnecessary for me to express here my Opn-
ion as to the mode which the State ought to adopt
in redeeming the deferred bonds But if this were
the place, should not hesitate to say that there
ought to be more show of vitality in fiscal
energies than the payment of the mere interest on
our bonds and an everlasting struggle to defer to
the next thirty years the payment of few hundred
thousand dollars due, contracted ten and TWEEN
ty years ago. No policy in finance would sooner
break down an individual and none can be more
to shake the credit of the State. However, if
the bank shall take them up now, the State can
adopt, when necessary, any advisable means to pay
them off as they demanded.
3, The ObseJrPT objects further against the Dlan
of Citizen, that 1.-The State itself borrows all it
puts in pays ~ per cent. on what it borrows and
comes in for full share of the profits of the ndiyid
will be more than per cent l am not certain
ual investments which the writer seems to expect
that comprehend the nature of the objection The
better way of answering it, therefore, is to restate
much of the plan seems to furnish the ohjcc-
ton: The entire capital paid in is to be 50 800 0G0.
With this sum the bank purchases 100000 worth
OF State bonds and operates 81, coo, 900 in bank
ing. Its profits per cent on the bonds as long
as they are held and the sum made on the business
of banking. The entire profits after laying aside
the excess beyond per cent 81. 800, 600, di
vided among the stockholders according to their
spective stock interest. The objection shapes the
operation into a loan of $500, 0UO to paw off that
amount of State bonds and $2OO,O0O for other pur-
poses, making sum total of 100000, on which an
interest of only $780, 600 is paid by the State being
II per cent. only.
1t is true that the loss of interest at per cent is
$l2, 600; but this is intended as bonus for the
charter, and in lieu of taxation. And the only
question of interest to the stakeholder is, whether,
after this drawback, per cent. can be realised. If
it can, it matters not to him how large may be the
boon to the State. In my view, the greater it is,
the better is the plan.
4. a Citizen proposes that "as the bonds shall
be redeemed, the amount paid to become stock in
the bank" The Obserrer objects that this language
implies THAT the State, when redeeming this debt
and taking up its bonds is to receive BESIDES stock
in the bank to the amount of 5000, 900" The plan
declares that the money paid shall become stock IN
the banh," and not State stock in the bank. But
will not take turn at criticism with the Observer ;
if the language be susceptible of that meaning the
Observer does me but justice when it supposes !
could have designed no such thing. The plan in
tended to make the proceeds of the bonds take the
place of the bonds in every particular except that
the bonds were not to be the basis of discounts the
change intended was that the proceeds should con-
stitute such basis. But the ownership of each was
intended to be the same; that is, the bank was to
be the proprietor well of the proceeds as of the
bonds.
5. The plan of GA Citizen proposes to give the
State the contingent fund the expiration of the
charter.
The Observer objects that this is very high tax
Be it So If the stakeholder is secure in eight per
cent, he ought to be satisfied; and it is the intent
of the plan that the State shall have only such con
tngent fund as shall remain over average of eight
per cent.
am gratified that the plan has attracted the at
tention of the press; and trust that it will be fair
ly and impartially canvassed and its errors expos
ed 1 think if the Observer had understood "a
Citizen" as he now explains himself, some of the
objections to his plan would never have been raised
However, let the matter be pursued for it is clear
that large sum must be raised in cash otherwise
and new bank established, or the present Bank O.
the State recharted and every patriotic citizen who
possesses one good idea the subject owes it to his
| State.
The O6seroer very truly says that capitalists will
not embark in any bank loaded with restrictions and
fettered with iliberal provisions. Bit it is equally
certain that they prefer however I'LL ,era the pro
| visions NAV be that they be certnin 11eeiae and