The weekly pioneer and Democrat. [volume] (Saint Paul, Minn. Territory) 1855-1865, 1859-10-21
The Radical Viciousness Of Western
Banking.


Banking.
From the experience which the people of
st. Paul have had of the singular institu-
tons which go by the name Of Banks, we
would think that they would begin, by and
by, to feel some little want of confidence in
them.
We should really like to know-and in
all honesty, we ask any one who does know
to tell us-what good these banks, as they
have been constituted and operated, have
done the business men or the business inter-
ests of st. Paul. What capital have they
contributed to the monetary facilities of the
city which has not been thrice engulphed in
the yearly aggregate of bankruptcies-the
bottomless pit which sooner or later yawns
under all the iron-gated vaults and burglar
proof safes, into which the simplicity and
credulity of men ever entrusted the largest
or smallest deposits?
Every one will recognize the convenience
in mercantile transactions of corporations
of men, holding large amounts of capital for
the purposes of loan and discount and as
agents of the business community in the
movements of exchange; and this is the
primary function of banks. Coexistent
with this, practice has existed for centu.
ries among the commercial classes of Eu-
rope, and been generally adopted in this
country, to entrust their cash receipts and
other valuables to the care of wealthy deal
ers in money and the precious metals.
These were at first goldsmiths generally
Jews-and the first depositors were families
going on some temporary journey, and who
sought in the strong boxes of these rich
smiths place of security for their money
and jewels. The convenience of common
repository for large sums of money soon
made the practice general among business
classes; and by and by, when the practice of
loaning money for interest began to be
transferred from obscure and detested
usurers to respectable corporations created
by law upon basis of associated capital,
the vaults of banks became the strongholds
in which the boards of merchants and
tradesmen were deposited. But it is only
in comparatively modern times that these
deposits began to be regarded as anything
but the sacred private property of the de-
positors, placed there solely for safe.keeping,
usually at some trifing charge to the owners.
1t was only when the enormous wealth of
these banks, and the circumstances of their
constitution made the proceeding perfectly
safe one, that these deposits began to take
the character of loans on call to the banker,
who derived his compensation for keeping
the money safe by using it in his business
transactions.
But this arrangement, it must strike every
one, is very different thing from that one
of the modern systems of banking which pre-
walls most extensively in the western dis
tricts of the United States--and of which
the whole country at one time or other has
had ample, and, one would suppose, conclu-
sive experience. 1t is one thing to use de-
posts in the active operations of banks
which rely for their capital upon re-
sources entirely independent of the calls
of depositors quite another to bank as
most western bankers do, almost wholly up.
on their deposits. There have been sew
eral instances in this city, where with
cash capital of less than one thousand dol
lars, persons generally strangers, have gone
into the business of banking, and pursued it
for time with every show of success, their
resources increased by large accumulations
OF deposits, and their solidity guaranteed by
extensive investments in lands and houses and
mortgages. till in the very zenith of their
apparent prosperity, their customers wake up
some fine morning to find the door of the
bank closed against them, and their hard
earnings in the hands of an assignee And
of those bankers who have had the reputa.
ton of going into business with larger pri-
vate resources, and regarded generally, per-
haps with some truth, as monied men,
almost all have, in the long run, involved
those who have trusted them in the inevitable
catastrophe, which sooner or later demon
strates the radical viciousness of this theory
of banking. 1t is simply one of those innu-
merable expedients which American inge-
nuity is particularly fertile in devising for
making money out of nothing. For it costs
absolutely nothing to bank after this fash
ion. When people are credulous enough to
intrust their deposits to any concern which
can get trusted for gilt sign and card in
the papers announcing that "bank" has
been established, it is not difficult to get
coin enough and bills enough together in
short time to make reasonably imposing
display on ground Of black velvet gaudily
glaring through plate glass front. And it
has been learned from experience that it is
quite profitable and not unpleasant to deal in
other peoples money-much more pleasant