Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1859-02-13

mere private paper, and banking private pursuits
and that no one need take such paper if he did not
choose to do Every body knows, however, says
he, " that practically and in fact, they are legal
tender, and that the bulk of he people are without
the power to refuse them 1t is not received by men
Of business Alone bat by every class Of individuals,
many Of whom from heir situation in lfe are
necessarily unable to form an estimate of the sOli
diy of the different banks whose paper is in cireu-
aiion. Such persons are unfortunately, the seyerest
sufferers by the failures Of banks The paper comes
into their bands part of HE money Of the coun-
try, and it is quite much the duty Of the govern
ment TO take measures that this paper shall be
what it processes 10 be, that it should take mea
surss to prevent the issuance of spurious coins
deficient weights CT measures"
The requirement. Of security, he says had been
objected to on the ground thai it would lock up e
portion of the capital Of the Banks. This isan
rOr-ihe Oaly effect in this respect would be to
force such banks as issue notes to provide supple
mental capital, security oger and above the cap
ital required for conducting their business. But
this supplemental capital would not be unproduc>
tive; if it consisted in real estate the would
receive the rents aud profits; if of government
stocks, Il eg would receive the interest due them,
whilst The fact being known that they had given
this security would give additional confidence in
the sOdity of their bank Uuder his state Of ihngp,
adveniursr5 without capital, and sharpers anxious
to get themselves indebted to the public, would find
that banking was no longer field in which they
could iuiioioasly enter"
The arguments Of this writer. and the testimony in
the House Of Commons did not succeed ia England,
there they had already individual liability and
a bankrupt law, and no notes issued under S25
But his arguments came to the United States and in
1888, the year after the disastrous bank failures in
N York this suggestion in favor of the security Of the
creditors Of blrks adopted by the legislature of
York in their free banking Law of 1888, commend
cd TO the Legislature by Mr.. Marcy, then Governor
of the State. The pre-ezisting system, called the
Safety Fund System, which required all the banks
to pay a tax Of half per cant Annually on their
respective stocks for The redemption of the notes Of
broken banks, and adopted on the recommendation
of Mr.. Van Buren,, had provided a sufficient fund
for the purpose, but the imposition of two millions
of tax the solvent banke to redeem the notes of
broken inks 10 1887, created much dissatisfaction
and broke down the system. They therefore adopt
ed the plan Of making each banker give security for
the redemption of his notes.
The Free Banking Law of New York, defective as
it was, in not requiring more than 124 per cent.
to be kept on hand, and in the permission il ex-
tended to the issuance OF notes low as FIVE dollars
was yet grand advance on the preceding system
The laws which authorized the vending of notes as
business was extended to all. 1t was therefore
just, equal and in conformity with the principles
of our constitution which prohibits mOnopolies.
Il provided for the government Of this trade as all
other trades are by general aud standing laws
The law was in all its parts, subject to total repeal
or partial notifications. It therefore exploded the
old system of vested corporate rights and enabled
the legislature from time to time to avail itself of
the public experience in correcting abuses, amend
ing defects in the law, in putting down entirely
the whole system if Injurious. 1t provided that
competent security be lodged in the hands of pub
lie officers for the redemption of the notes and
prompt remedy by sale of The securities for the sat-
isfaclion of them 1t provided for the registration
of the notes and Endorsement of them by the public
officer, so that the public would know how much was
out and the value of securities responsible &C. The
Convention which amended the Constitution in 1916,
provided that the legislature should have power
to pass any special charter, except for municipal
purposes that all charters sheuid be subject re-
peal that the legislature should require the registry
of all notes issued and that individuals engaged in
banking should be individually responsible to the
extent of their respective shares after the exhaus-
ton of their stock. This altogether the grand
est triumph in the legislative history of the Uni
ted States. There can be no mere independent
sOvereignties within the limits Of the State of New
York