Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1859-07-17

The various legal provisions by which the Banks
are governed consists principally Of general laws
respecting moRied corporations, partly of clauses
inserted in the charters, nearly all alike, bat which
it would have been better to have included in the
general lava. An examination Of thess laws and
the lessons Of experience would have enabled the
Legislature to select and msdify suoh of the exist
ing restrictions and to add new conditions, as in its
opinion was necessary aud proper; whether the sys
ten thus adopted contained few or many restric-
tiOns, that which was necessary fer the new assosa
ton was equally so for all the Chartered Banks
carrying on tina same business The object should
be that all the charters should merge in the general
law and the Law should be precisely the same for all
those engaged 10 tAe same pursuit."
The April nHmbsr of the Bankers Magazine, states
that there are 6 Of the chartered banks of the city
OF NeE York whose charters have expired, and who
are doing business under the general law There
| are five more whose charters viii expire in few
years; and there are two the Manhattan Bank and
the Dry Dock Company-whOss charters, like the
Farmers and Merchants Back Of Memphis are per-
petual, The charter of the Manhattan Bank, was
Struggled through the Legislature in the year 1893,
by AARON BURR.
A1V ieoS u tAO OAafJefS expires III 1000, wien
they must give the security for lheir issues required
by law, and do business under the general law, or
wind up their concerns.
The present unsecured currency of the chartered
banks in the State is IS, 100000 That which is
secured under the general law is S24, 000 600; so
that the whole of the paper currency of the State of
New York with the exception Of the Dry Dock and
Manhattan Banks-abOut one million), is abou.
thirtytwO Millions and is ject to Legislative con-
trel, just much as the Bank of Tennessee subject
to the Legislature of Tennessee 1t is believed that
the Legislature Of New York, under this general
Law, more legislaie for the destruction Of 8
particular and specified association of Bankers, than
it can against association of dry goods merchants
or commission merchants. Their protection is ia
the fast that their rights are not to be iuterfered
with or molestsd, except by slch general laws ss
may be passed, from time to time. Theyare placed
on the platform Of equal rights, just every other
business is with special privileges subject to the
"law of the land, under the Constitution.
Those who violate the rules of general law, and are
in default creditors GO into the hands of the bank
rupt law for liquidation, according to Laws whilst
the Legislature has the power 10 pass general LAYS
for the greater security of the public, they have
done from time to time, operating on all the exist
ing institutions just as they do on all other
tOns to suppress the whole system If they choose
to do SO.
A prominent feature in this system as original
ly framed and subsequently, amended, was in the
deposit of a specific fund in TIE hands of public
officer for the redemption Of the circulating notes.
and endorsement and issuance Of notes under the
stamp of public authority, so that if they were not
redeemed in ten days after demand, the securities
might be sold and the proceeds applied to the salts
faction Of the notes.
This is q most efficient bankrupt law. No bank
rupt law be passed by the general government
which would be 50 efficient remedy for the credi-
tors of banks as this. When these notes are issued
en- the faith of specific fund deposited for their
redemption, the legislature has power to prevent
postpone the application of the fund to the salts
faction of the notes 1t would bea violation of the
obligation Of the contract on which the holder took
the note. A bankrupt law by the federal govern
ment could only authorize the seizure of the effects
of the bank after default, and in all cases of COM
mon stock banks the owners of the stock could
vert the assets and remove them before default
Gen. JAMES I. DUsLAP, With deposited securities in
his hands, is the best assignee in bankruptcy that
could be called into existence.
But 'Phe bonds may be stolen :" yes States may
repudete their debts, houses may be burnt down,
ships may be sunk at sea, and volcanoes may de-
sroy real estate These are contingencies to which
all human transactions subject; but who so
stupid to assert that because the security bond of
public officer may be stolen, destroyed By fire,
that therefore is better not to take any security at
| h g ~.
United States, with an almost total loss of thirty
five millors of stock; it was the loas of two mil
lions in New York by fraudulent and insolvent
banks it was the losses from such sources in ssis
sippi and Arkansas to Maine, that Induced the
Legislature to adopt the idea Of requiring deposit
of security to protect the nOte-holdsr and after
trial of eight years, the Constitution of that
State required that "the Legislature shall provide
for the registration OF all bills or notes put in cir
cuaton as money, aud shall require ample security
for the redemption of tho same in specie" An ex
ample which has been since followed by Virginia
Louisiana, Florida, Indiana, Michigan Connecticut
Massachusetts,, Missouri, and ether S.ates But
not content with security, the Consultation provides
that the stockholders in every joiat stock assoca-
ton corporation issuing bank not y Of any KIM
of paper credits to circulate as money, after the
first dsy of January, 1850 shall be Individually re-
sponsibe TO the amount of their respective share or
shares for all its debts and liabilities of every kind
contracted after the FIRST day of January, 1856"
Here we fad the Constitution of the State Of New
York declaring that after given date all the own
Of bank stock in all the corporations and pint
stock associa ions then existing in the State should
be Individually responsible for all their contracts
entered into after given date The law of 1888,
originally adopted, did not hold the stockholders
individuality responsible. This exemption, as it was
vide departure from the principles of free govern
men 80 it has been from the foundation one Of the
greatest sources Of mischief in banking.
"Pers onal responsibility to the whole extent Of
their fortune" says Mr. GALLATIN, sis the condi-
ton common to all Free Banks who have been per-
mitted to issue paper currency" This example of
New York in regard to individual responsibility
has been followed in Maryland, Massachusetts,,
Con necticut, Virginia, Indiana, Rhode Island Ilii-
nois, Ohio Louisiana, Michigan, and other States.
Massachusetts, the session of 1858, passed act
entitled L" An Act 10 increase the Specie in this
Commonwealth" This act required all the banks
now existing in Massachusetts to keep in future
given amount of specie See Acts of 1858.