Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1859-07-21
The court Of Appeals Or new york ON
bank Charters.

In the case Of CUaTIs rs. LEAYIrr, decided by
the Court Of Appeals of the State of New York in
1913, 4 sNIrH's Reports, s. Us to &c found re-
view Of the progressive stagss of Improvement IN
the legislation Of that State IN regard to Banks
IT IS. in substance, as follows: Banking was an
open business and rot franchise, before the res
training act of 1901. Ia 1871, the Bank Of New
York was iaeSrporated Is was the model OF about
forty others chartered pror TO the year 1925 They
wee unresIricte5 except as TO creating debt over
three toon Of capital Ook subscribed and paid,
and we're not to deal in merchandse The carren-
~ was then unprotected. Il was mos, imperfect
The daiy of the government to protect the public
against a lebased currency, and the wisdom Of not
interfering With banking or lite other departments,
exchange aud dePosits) was not then understood.
The prime evil Of the system was the excessive issue
ola paper currency with no security for lis redemp-
tiOn-citng Governor CL1SroN's message to the
Legislature in 1927.
In 1897, IL was required that the whole capital
stock should be paid in. The evil remsined
touched. The whole furd paid in was in their own
hands. What, asked MccULLocH, in his work on
Banking, prevents them from sbstrac.ing it when
ever they choosei
In 1923, an act was passed to prevent and remedy
the evil of the insolvency of manied corporations
The great vice'of the system was untouched by the
provisions CT this act. There was no limit TO the
power of creating debt. Excessive issue' of cur
reney might slill be made, and there was as yet
specific provision male 70, the note-holder The
safety fund act of 1929, took feeble step in the
right direction 1t added some stability to the cur
rency, bat the fundamental principles of the old
system underwent no change; and The new one soon
exploded by its own inherent vices.
Thus far since 1904 banking had been a monopoly
by force CT the restraining law Ia the year Is 81
these monopies became intensely odious, and no
moro special charters we're then ever afterwards
granted. The Legislature reduced banking to
private business except in the department Of Great
ing circulating medium, and as private business,
left it Without restraint control as other branch
es of business Circulating notes could only be is
sued before by chartered banks, and no plan had
yet been adopted which would open the franchise TO
ell and secure the redemption Of the notes. This
was accomplished by the act of 1888 At that
period the abest theorists and writer's in England
and America had asserted the duty of the Govern
meBt to exact absolute security for the circulating
medium, the policy of leaving banking in all its
other departments, like the trade in merchandise
entirely free TIE previous system, so often amend
ed had fallen in the crisis of 1887. All the forms
of special charters and al the regulations and codes
which made up that system were before the Legis-
lature and received their special consideration.
They we're all discarded and policy entirely new
was adopted. The cardinal principle loas TO render
the circulation absolutely secure. This was acccm.
plished by providing for a deposit Of stocks and
mortgages in the hands Of public officer for their
security, without which notes were to be issued.
The next grand idea was to lears. banking in its
| other departments deposits and exchange) with
the feEest possible restrictions to be carried on as
any other business. This was accomplished. These
were the great festGres Of the organic act Of 1885,
and they were vide departures from all legislation
prior to that period. The currency was guarded
with twofOld security, and the business of banking
to deposits and exchange left to individuals and
partnerships at common Law. Thus, in the simple
contrivance of e1actiDg security to be deposited
with the government fer all circulating notes. and
causing the notes to be issued with the government
stamp, we have paper currency which has been
favorably tested for two years.
| Gov. MORGAN on BANK CHARTERS. present
Chief Executive of New York, Gov. MORGAN, in his
last message, states that this system ''hsd worked
far more satisfactorily than aoy previous system
in that State; and in proof of that statement, he
cites the fact that in the eases Of the failures of
stock banks, the losses had beea to the extent of
fifty per cent, whilst during the late crisis, the
whole loss in the STATE, by secured currency was
| only s., 500.