Nashville patriot. [volume] (Nashville, Tenn.) 1858-1860, 1859-12-12
THE counrER NOTE sxsrEn.


SEE HOUSE OF REPRESENTATIVES, on wEDNEs-
DAY. DEcEMBER 1859, on TIE COUNTER NOTE
SYSTEM.
Mr.. DUDLEY. Mr.. Speaker: propose a
few remarks on the practical working of the
counter note system.
Nearly every member in this house will
tell you that he is in favor of the counter
note system, but when they are fnrther inter
rogated, we find the following variety of
views prevailing on that subject:
lst. There are some who>stick to the bank
bill of last session, which means that no
bank shall pay out any note not payable on
its face at the counter where paid out.
I'd. That no bank shall issue note not
payable at the counter where issued: that is,
the emiftance or first issuance of new bill
shall be payed at the counter where issued;
but the bill being once in circulation. and
coming in due course oftrade into the vaults
of OF her banks. il may there be paid out
3D. No bank shall pay out any note not
payable on its face where paid out: pro-
vided, any principal bank may pay out the
notes payable at its branches. but the priuci-
pal bank shall be liable to redeem such
branch notes.
4th. The issuance of all bank notes shall
be at counters ~here payable, but any princi-
pal bank may pay out the notes of its
branches, provided always that the principal
bank shall be liable to redeem all the notes
OF its branches; provided. further. that the
branches may pay out in addition to its own
counter notes such notes as are PAYABLE at
its parent bank. which it may have received
in due course of trade.
A 9th view entertained is that each bank
ing Institution shall make all its notes
payable at some central point and that all
branches may receive and pay out these notes
payable at the parent bank
9th. Any bank NAV nav ont the notes of
all specie paying banks of this State.
Ith. Some think that the banks should be
permitted 20 pay ont the notes Of all branches
whether chartered by this or any other State.
1t Is necessary to proper understanding
of any subject that we should attach the
same meaning to the terms used. Now, by
the word issued, we mean to emit the new
or fresh impression of a bank note or bill or
in other words the first time bank pays out
bill just printed and signed. After this
bill has once come into circulation and re-
turns in the course of trade 10 the bank and
is again banded to customer. this is called
paying ou. The words "pay QUE Include
the word tissue" but issue does not include
the words pay ont. Both terms are used in
section 1914 of the Code, and ia various bills
before on banking.
My amendment would not repeal the act
OF last session in ar ything except allowing
branches to pay out parent bank notes
which it may have received in due course of
trade, nor shall it conflict in the least with
the platforms the two political parties erect
ed aud stood upon in the last canvass.
don't consider these platformsSvery high au
thorlty, but then ii is smoother sailing to 60
with them than against them. The Opposi-
ton platform used the word issuance-which
means the first emittance of bill. To this
part propose to adhere. The Democratic
platform said, "tO enforce invariable redemp-
ton at their counters of their circulation"
Now this sentence does not prohibit one
counter from paying out notes payable at
other counters. But it simply says and
means that the law shall enforce or compel
the branch to redeem the circulation at
whatever counter it may be payable or be-
long. The platform says nothing about pay
ing out notes. 1t alludes merely TO their
redemption after they are paid out.
The mode propose would be acceptable
so far as l can learn, to all the banks. And
| think it very desirable to have all the banks
working under the same rules and regula-
lions.
The first class of opinion advocated is the
counter note system, as passed at the last
Legislature and now enforced upon the
Bank of Tennessee. For this system. [ fear
there is majority of this House. Let us
look for moment to the practical working
of this system. 1t says that no bank shall
pay out any note not payable at the counter
where paid out. This depriyes the bank of
the use of all notes OF all other banks. as
well as of all notes of the same institution
that are payable at other offices. Ii ikens
the bank TO a fish-trap: it may receive, but
not pay out. The best way to understand
the subject is to look at the actual working
OF the system. | understand from the officers
Of one OF the branch banks that on the Ist of
September they received about 80 900 count
err notes. signed and sent them by the parent
bank for circulation. The bank commenced
business on them. 1t discounted notes and
bills of exchange and paid out counter notes
for them. 1t paid depositCr's checks in these
counter notes, and in few days business all
its counter notes were paid out, and they be-
came scattered all over the country. and the
Office had nothing with which to discount a
note or bill, or pay depOStors check. 1t is
true, some few of these counter notes would
find their way back but so few as to allow
the bank to do little or no business. Suppose
"a customer goes TO a bank to make a deposit,
there being about $3000.0O0 of paper in cir
culation in the State, and only few thousand
of this are the counter notes of this branch.
the chances are that all or nearly all of the
money sought to be deposited will be payable
elsewhere. Tomorrow the depositor checks
for his. money, and the bank must paw the
check in counter notes, and so the bank is
continually swapping its counter notes for
other notes. / understand the branches of
the Bank Of Tennessee have not only been
compelled TO almost stop discountng notes
and bills, but have refused to receive de-
posits.
| will instance n case that actually Oc-
Cured. A man in GAINESVILLE had 81 600 of
notes on various banks, which he deposited
IN the Clarksvlle branch few days after
wards he wanted the gold in Nashville; he
drew his money out of the Clarksville branch
in counter notes. brought them to Nashville
and deposited them in the parent bank. and
ch, ckrd for the gold. The bank at Clarks-
willie could not use the first notes deposited
nor the Nashville bank the GAINESVILLE notes.
This makes the banks the public carriers,
and that without reward. This operation
will keep majority of the circulation con
stantiy in transitn, and prevent the banks
from being able to grant the usual accommo-
dalions to the citizens. Ii will take double
the circulation to do the same business
1t may be answered that TO permit the
bank To have more notes signed would OBJ
vlate this difhculty. and allow of the banks
doing its usual business. This would GER
iainly be unsafe both to the bank and com
munity. Per possibility more than IA legiti-
mate quantity might get into circulation at
one time. and the bank itself would always
be IN more danger from theft and robbery.
Mr.. Gantts bill for n bank code forbids any
bank 10 permit its issues to exceed 50 OF
paper to 81 OF specie and specie funds on
hand NOW u this hard money eounter-note
system operates To keep onc-half Of its circu-
latlon in the vaults and ia fransff where is
the chance for profit to the bank? III keeps
u silver dollar in the bank for one in its out
side circulation, what chance is there of
making more money than will pay expenses
aud bad debts.
Mr.. Trmhle's bill for the rc-chartcr OF
Planters and Union Banks forbids tire banks
10 issue or have prepared for issuance more
than one and one-half of paper currency TO
one Of capital stock paid. This restriction
combined with the present counter note
system, virtually confines them to seventy
Of nirnt IN In alnll..r Of