Nashville patriot. [volume] (Nashville, Tenn.) 1858-1860, 1859-10-06


'iedium of exchange.
The Constitution of Tennessee prohibits |
our "passing any law for the benefit of in |
lividuals, inconsistent with the general laws |
Df the land; or any law granting to any indi- {
dual or individuals, rights. privileges. im- |
munities, or exemptions other than such as
may be. by the same law, xtended to any
member of he community who may he able to
bring himself within the provisions of such
law: Provided always. the Legislature shall
have power to grant such 1hartersof iacorpord-
ton as they may deem ezpedie7a for the public
GOOD"
This clause of the Constitution forbids the
passage of any act of incorporation. except
such as are :" ezpedie,,t for the public good" =
The primary, leadi z. aud controlling OBJ
jeet mnst be. TO promote the intrrPststs of the
publ,c-not those of the isdiViduaEs incorpo-
rated. srf "
Yet the effect Of the charter is, to clothe
the individuals with powers and special pri-
yileges usually highly beneficial to them,
and from which the balance of the communi-
ty are excluded. One of which is, in bank
ing corp, rations, the privilege of issuing
two or more dollars in paper for every dollar
of their actual capital, with the whole amount
of which they discount the notes of indi-
viduals at the rate Of six per cent. thus real
izing from twelve to twenty-five per cent. per
least profitable part of their business, for
they realize vet much larger profits in
the purchase of bills of exchange. To
illustrate which, take the case of the Plan
ter who draws his bill upon New Orleans
at thirty days; the hank discounts the hill at
the rate of six per cent. per annum. as inter
est in addition to which it takes one per cent.
from the whole amount Of the bill as ex-
change. thus making the simple item of ex-
aLa to ,lx,ay
add the items Of interest and exchange to-
gether. and it makes eighteen per cent. per
AMMAN as the profit which the bank charges
upon the loan of its notes, and If 1t issues only
two dollars of its notes for one OF specie, II
makes the round sum of thirtysiX per cent.
per annum which the bank realizes upon its
actual c0paoI while individuals who do not
enjoy similar privileges, can only realize six
per annum upon theirs.
But the profits of this transaction do not
stop here. for at maturity. the bill of ex-
change is paid by the planter in New Orleans,
and the fund placed to the credit OF the
bank. upon which it draws its check, which
is sold 10 the home merchant al premium
of one per cent. which il repeated monthly,
makes another item of profit of twelve per
cent per annum add this to the items of
interest and exchange originally taken from
the hill and it swells the profits upon the
actual eapilot of the bank to forty-eigbt per
cent.
Now when the public part with these priv
ilegrs by comforting them upon individuals,
The good CT The public is the sole object to be
accomplished, according 10 the plain rule
laid down by the Constitution. and the great
est care should be- taken at all times. that
this should be secured and certainly it will
not he contended that this can be done by
anything less than securing TO the people
convenient. sound uniform, and convertible.
currency; and all must agree that the
larger the sp, Gle basis in all banking cor
porations. and the more complete the con-
troll which the people have over them for the
purpose OF checking their eXcessps. the sound
er and more uniform their currency, and
consequently, the greater probability of their
promoting the public good: and surely the
corpOrators cannot object to any restrictions
and reservations necessary to the accomplish
mcnt of this object For they are bound,
not only by the plain letter and spirit of the
Constitution, but by every consideration of
+ sound policy, pnbiic justice and common
honesty to furnish TO the community a cur
rency as sound, Uniform, and reliable as the
one which they dsplace. a currency which is
at least the representative of, and not the
mere sub tstute for, specie. one which is at
all times convertible into coin at the will Of
the holder.
But has such been the history of banking
under the present system in Tennessee?
They have, in many instances, issued as
high As four, six, eight and even ten dollars
of their paper for one in specie.
They have made their notes payable at points
the most remote from the place of putting
them in circulation, for the purpose of re-
tarding their return upon the bank for pay
ment, thus depreciating their paper and max
ing it less valuable tn the holder.
They have expanded and contracted at will,
causing injurious and disastrous fluctuations
in trade, and affecting the price of every man 8
labor aud property. .saHa Hl
And not unfrcquently, actuated by a spirit
of srlfish avarice and cupidity. they have
flooded the country with their circulation. 10y
which they have stimulated overtrading
wild and reckless OBSERVATION-DISCLOSURES OF
luxury and extravagance, and induced thou
sands of our population to abandon the fruit
ful fields of production. for tn" more tascina-
ting vet more hazardous fields OF specula-
ton and when they have reaped the full
benefit of large business. and the bubble
can be expanded no farther. public conf
dence becoming shocked. and the country
threatened with commercial Revision as one
of the Legitimate fruits OF their conduct. they
have quietly closed their doors and said to
the victims of their policy We extend no
farther accommodations we have suspended.
and will not even pay the notes you hold
upon us. Thus leaving in the hands OF the
ppople n deprecated and rredeemabe paper.
as their only currency-the losses by the de-
probation of which, fall upon the industrial
classes, who are usually the note holders
while the banks avail themselves of the de
probation by transmitting their available
means to some one of the commercial cities
of the North. and charging their note holders
from To 10 per cent. premium for exchange,
or in other words, they first appreciate their
own paper by refusing to pay IT, and alter
having appreciated il, they buy it up at from
3 to 10 per cent. discount, paying for 1t In a
check on New York instead OF gold.
Now, when Banks redeem their paper in
gold. You can never be under the necessity
of paying higher than about I of one per
cent. for exchange upon any point within the
Atlantic States. For exchange is always
worth Just what it will cost TO transmit the
gold to the place of payment, and gold can
be transmitted from Tennessee to any COM
mercial point within that limit at a cost of
about / OF one per cent.
The country is now just recovering from a
period of abont ten months suspension of
specie payments. upon the part OF all the
banks in Tennessee. in which every bank in
the State was selling exchange at premium
OF from three to ten per cent, except the
Bank of T. nnessee, which furnished exchange
to the extent of her ability throughout the
whole period of suspension at premium OF
one per cent.
These are some of the evils of our present
banking system. under the practices Of our
most solvent banks, to say nothing or the
millions of dollars which have been lost to
the people of Tennessee by the failure and in
solvency of others. not sufficiently guarded
and re- trictrd evils to which the community
have been compelled to submit, because those
cOrporations are clothed with. and fortified
by, irr pealable charters which enable them
thus to outrage the public interest with i'm
punity. aud to defy the whole people aud the
Legislative authority Of the State. For un-
der the present system. when you have passed
bank charter. and the company has organi-
zed under IT, IL is held by the courts. that
there is no power in the government To abol-