Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1859-02-09


its engagements this stock is liable and each ndi
not what may be the uUpaid debts of the corpora
ton. Every corporation created By the legislature
exempts the stockholders from personal liability,
unless it be otherwise expressly declared 1t will
be SEEN therefore, that in the creation of our banks
ing establishments, owned by individuals, We have
followed the model of the Bank Of EOglaEd and
have not retained the saving feature in that system
of joint stock banking to wit: the individual Ia
billy of each person as partner at common law
for the whole debts and engagements Of the cons
pany This is done with the avOwed purpose oil
encouraging the subscription of stock to banking
corporations, and to induce them to enlarge ana
expand the amount of their circulating notes, ana
to snake money plenty" When the corporation
is sued and judgment rendered for the amount Of
deposits received promsOy notes issued the STOCK
of the bank may be subjected to its satisfaction and
when that is exhausted there is no other resource
This action Of the legislature in ezemPting the lndi
vidual property of the persons composing the corr
poratiou is subverson of the natural equality oil
the citizens for the supposed good that may grow
out of this exemption, which is an abundance OF
" how much be eau loose, aud knowing that his
homestead and comfortable Subsistence is exempt
ed from any liabilities the bank may incur, all un
easiness is removed from his mind in regard to 1t
and he becomes comparatively more enterprising,
more liberal in his issues, nay, more reckless. If
be has subscribed 81, 900 and paid in five hundred,
he may secure the interest on one thousand, or
sixty dollars the use of FIVE hundred, II
the concern can push cut suffeieney OF its notes
He is stimulated to excessive action, both by
the desire TO make great profits his stock, and by
the elamor for mere money which ezists at nearly
all times. can banks" said Mr. Biddle, "have
constant tendency to lend too much, and this ex-
empdon from individual responsibility is one OF the
leading causes of the expansions and inevitable con
fractions in the amount Of the circulating medium
which is Consistently subverting the standard OF
value, deran ging the business of the country, and
producing the destruction Of banks loss TO the note
holder, and spreading bankruptcy through the
country All this mischief is inflicted on the CONS
munity, whilst the banker may sit securely in his
homestead with comparatively little loss. If there
be a run on his bank, and a suspension, he stands
ready to purchase his own notes at perhaps fifty or
twenty cents en- the dollar, by agents. As the notes
NAV be for the payment of dollar and therefore
are scattered over the country in the hands OF
multitude of PERSONS uniformed OF their value
and possibly payable at remote and inaccessible
points, no body has enough Of them to authorize
suit and they can in almost all cases be bought up
by the banker at heavy discount on their nominal
value and perhaps on their true value, If they be
regarded as mere evidences Of debt Now 1t IS most
evident that the first step to be taken TO secure the
community against deprecated paper and bank
ruptcy, is to place the banker on the footing Of
ether traders He must be held responsible to the
last arthing of his estate and be made to feel that
no can be ruined by reckless Issues well as the CONS
munity. This chartered right extended to the
banker to lean his credit to very great extent be-
yond his capital which is prohibited TO others, and
which exempls him from serious loss, gives him an
increased power and influence in the use of his
MEANS but like most departures from equal rights,
it not unfrequeuy operates to his injury by dimn-
ishDg his personal vigilenee and economy, and
holding out temptations to him TO commit fraud with
IMMUNITY.
When there is a large joint stock bank, owned by
many small stockholders, the dangers resulting
S~--N-b
dangers arise from principle of human action
which readily suggests itself to the commonest un-
derstanding The bank is necessarily conducted by
agents, most of whose interests are comparatively
small Agents rarely conduct business with as
much economy vigilance, or fidelity to the interest
of the concern they would we're it their own They
have less interest in the success Of the adventure
They will loan money to fsvorites and adventures
when the principal Mould not. They will advance
money to promote persOnal aud local objects, when
the principal would not They will employ su oOrdi-
mates from favoIitism, Who are not trustworthy,
whom the owners of the stock would not employ.
They will permit the funds to be stolen or emoezzled
by their neglect and inattenion, when the vigilance
of the owner would prevent it. They will attempt
TO promote their personal popularity with the COM
munity by large loans and the stakeholder by a
heavy business, when the stockholders would not.
The various stockholders knowing that they are liza
bic each for fixed amount, perhaps only a small
one, pay bat little attention to the concern, except
to give vote once year in the cleo ion Of officers,
and it not unfrequendy happens that the concern is
a state of great embarrassment, if not insolvency,
before they are aware of errors in its management
or fraudulent practices in the agents.
McCulloch, in his work en- Banking, page l57,
saws: There is no foundation whatever for the
supposition that the mere fact of bank consisting
of fifty or hundred instead of i've or ten partners,
repders il worthy of confidence or is any security
that il will be better managed. The PROBABILITY
seems in fact the other way. few wealthy in
dividuals engaged in banking or any other sort of
business, must, if they would protect themselves
from ruin. pay unremitting attention to their con-
Germs, aad act in q discreet and cautious manner.
But tie partners and managers of joint stock con-
Germ act under no such direct and pressing respon
sibility The former, indeed seldom take the trou-
BILE to inc are fully into the business Of the concern,
ard the responsibility of the managers is of very
different kind from that of an opulent individual
whose fortune is responsible for every error and
false step he may commit. The recent history of
the Northern joint stock bank, and of various other
associations, sufficiently establiehes the truth Of
what has now been stated. The fact that
there is numt err CT partners in joint stock bank
and The consequent notion that though its affairs
were to get into disorder, Of them would be
able to make good the claims upen 1t, tends to pro-
duce circulation for the notes of these establish
ments, to which they may be very little entitled.
They in truth, furnish very great facilities for the
penetrating Of fraud both upon the partners and
on the public And even when best managed and
resting on an impregnable foundation, they may
and do issue in excess, and thus produce those uc
tuations in the amount and value Of the currency