The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1858-02-13
Chsmb. r at Com mepce.


consideration tho suggestions Of the Governor and Bank
sunernteueenl in relation 70 amendments Of banking
| system.
Mr. MAURy the Chairman Of the Committee, submitted
the report stating al! the members had signed it, and
that they had great deal Of previous discussion
corning it, both in and out Of the committee The follow
| ing is the report
The committee appointed by the Chamber Of Commerce
on TIC 4h pst examine the alterations in the Bruking
laws of this State, recommended the Governor and
Bank Superintendent, beg leave to report as follows
The Governor nds that every bank in this State
required under adequate penalties TO keep hand In
oon not ess than % per cent oil all its cash Liabilities
elusive Of its notes.
The Bark Superintendent offers from the Cove rnor by
recommending 20 per cent Instead of rs per cent and in
suggesting that the banks cut Of this city be allowed to
| hold specie funds instead OF specie itself.
Although deposits in the country banks may be
small to make unmportsnt whether specie funds
specie held prefer the re urementof actual specie
III ell banks matter Of priucple and certainly if the
deposits in country banks so small the condition can
be no hardship to them
We wish the principle to be recognized by law tina,
rot less than certain propot of cash liabilities shall
be held in coin, and that this proportion shall not be
diminished the discretion Of any managers Of banks
1t unreasonable and unfair that the banks shall be
allowed to expand mprudently as they have done, aud
thereby given large dividends TO their stockholders while
bazaroiDg the suspension Of specie payments and
| lying the business Of the country.
The desirable proportion of specie is 20 per cent &C
cordng TO the Bank Superintendent 20 cent according
to the Governor 60 cent in the opno Of many Of
experienced bankers and merchants and by the Lou
Islam law. The Superintendent appears to have fixed
upon because the proportion actually held by the
banks IN this city in two years ending with the summer
1885, Between IS and 70 per cent The advocates of
80 per cent think will more completely insure safety,
while its opponents aege that SC large holding OF idle
capital will disqualy our banks for earning fair dividends,
and that the New Orleans banks only enabled 10 bear
335 per cent by the opportunities which that city
| sents for making profits in exchanges.
| The Governor recommends adequate penalties The
louisiana law provides the best possble for those are
best Which undo the damage while pursuing the offence
The penalties that recommend are ha. no loan dis
count shall be made By any bank VIII oh has been below
its required line OF specie Tor successive weeks by its
weekly statements, until restored to line; and in
of violating this provision the bank shall be wound
nfovent will he necessary, however, that country
banks shall give the Superintendent average monthly
ports Of their condition. or weekly scarcely
ry and that tie same penalties shall apply to them after
! month Of onence "a TO OURS after two weeks.
Our aim is to fix upon the largest metallic proportion
that the SOUND Interests OF banks will admit Of and
with this view we recommend not less than IS aud not
more than 80 per cent believing tina, either rate viii not
CEDAR wen managed banks from earning fair dividends
such as per cent when the value of current
celt. We must remark, prudent aud steady
banking will practically require the specie holdings
per greater than the legal rate say IS 80 actual
for rs cent legal and 80 So for 30 cent whereas
country banks will need less margin, and the bust
ness Of New Orleans admits of working their banks with
| out one of per cent.
Such law will possess the merit Of being self acting
ineligible and simple in ITSELF requiring macbi-
for it, 'ervsoD and yet OF meeting and checking
all those defects Of organization and administration in
which runous conractons and general bank suspensions
have their origin II by any accident the line Of specie
should be too low Ter single week. the proportion
could be d In the second week and the compul
sorry stoppagc Of discounts be avoided. The offending
bark will be detected and identified, and the punishment
fall upon alone, without excluding II from the Clearing
House endat gorng the money the depositors
over, without causing any unwholcsome alarm in the
onoer cay have incurred actual ssoVen"y ' SS
Of issues of credit Competition for deposits
by offers Of high interest will be checked for deposits
will brig with them the duty OF holding specie the
expense OF which duty and the penalty for neglectug
will reduce the question OF rate OF interest TO narrow
! limits.
Under the existing laws there is no punishment until
the extrs me offence of insolvency has been Committed
and then, the innocent and guilty suffer alike. The ondd
stakeholder aud the innocent deposor may be utterly
ruined without the least warning of danger but under
toe proposed Jaw there will be ample warning for them
end pr the community, Il the bank, as must always
| suppose, is managed with common honesty.
Penalties o.ten defoat their objects; aud II Is clearly
demonsable that the very severity Of the existing Law
contributed produce the bank suspension which had
been framed TO prevent for the intense alarm almost
oessary existing when the danger Of enfor log such
penalty approached terrified the deosors and drove the
| banks into an otherwise unnecessary suspension.
In fact, the proposed law will in great degree be to
commercial anG financial offences the dcsideratum of crim
nal Jurisprudence viz the prevention OF those is steps
Of misconduct which are ultimately productive Of extreme
We approve highly Of the superintendent recommen
daons that mortgage be received as secur; for
bank notes, aud that the old banks be gradually brought
under the law requiring security for notes but We 10 not
approve Of his proposition allow the business Of banking
to be commenced uon securities for $4,000 instead OF
| 100000.
Various projects have been suggested for preventing
recurrence Of the recent difficulties Among them
| Prevention Of banks paying interest on deposits.
Ina, DEPOSITS s ,eosd 90. be payse'c. y geld
| Limitation Of the rate Of bank dividends
| An eroimously large bank
Board Of Currency 10 supervise and regulate the
| banks, &c exc.
We think have already shown that the simple plan
Of holding gold against deposits will accomplish all the
sound and practical objects at which these projects aim
The legal prevention OF interest deposits s not recon-
mended by ht governor superintendent, and probably
because would ADMIT OF so many oyasons as TO be use
less IN practice hut practicable, we think all "
good objects will be attained by the Governors plan, and
are unwilling 20 couutcrance any restrictions OF ques
uOnable necessity.
Tire pa nepi u gold OF deposits chscs canno, be
| fused. Il would amour, 10 bank suspension.
Without Geny ing that some benefit may arise from
prohibition Of small notes under certain circumstances,
must admit tia, this measure has answered expec.
| taicn Ia Pennsylvania and undoubtedly II Is much
more IN rcan that notes should secured BY tho pledge
Of good bic stocks and undue issues OF bank credit
be checked by enforced holding of gold dspo
ss hsn thai small notes should be prohibited We think
such prohibition be Of little use in practice,
less enforced throughout the United States and therefore
we cannot recommend II.
A limitation Of bank dividends would be practically
| Just end IL not desirable.
very large bank would be useless the other hunks
are to be continued aud therefore mpraetcabe for
present beneficial ,nects
No Bard Of Currency required AZ Il plan Of specie
against deposits would bose actcg the present machinery
OF officers need no, be increased.
Much more might be said but II Is probably unneces
sary, as We caunot doubt that the Chamber will agree
with us 10 the following concusioLs-
The rccen' commercial and financial arrangements
qure measures calculated 10 prevent recurrence OF such
evils.
The present Ia most favorable opportunity for our
banks fun of gold merchants and traders have moi
yet embarked In large new operators, and of the
other States hate resolved upon atty banking lava
The plan recommend requires no combination OF
laws with the risk Of Their uncertain effects for has
stood the test 81 trial 10 lousaua Will not disturb any
sound existing interests II II SELF acting aud therefore
steady ia s operations for nothing that endar GER
currency Is left 10 the discretion OF any any body
Of men and untor Ne principles Of action the atnonsbe
bank expansion of July last could net have occurred.
We submit memorial 10 the leg stature for the approx
| al Ct the Chamber.
MATTHEW MarRY, ROYAL, PHt1PS
JAMtS BROWN, HENRY ". T. MALI,
a. A. low 7. PERIr
INV yosE, Fch. 10, 1853.
Upon motion, the report acorped
Mr. RAps1oW OBJECTED 10 NJ immediate adoption on The
ground that important paper TO be hastily
tihnrcd. IL. LnNoxrr. -adrh allnt a hrar hnh1in