The Lansing state Republican. [volume] (Lansing, Mich.) 1855-1874, 1859-03-08
.ur GENERAL BANKING LAW OF
THIS STATE.
ATTORNEY GENERALS OFFICE,
EeLrn0Iu 26. 1850.

i,;ef statement Of my views respecting tn
s,,ent of circulating bills which bankin;
;ns;tution under our general banking Law
NAV NAV lawfully issue. | have had occasion t.
Ioi into the subject somewhat more critic
,llv and, as heretofore suggested. will now
rressnt my ideas more fully. The princi
ne i insisted upon by the State Bank
r Detroit, which has just gone into opera
,;on thai Ii, general banking law allows ;
i,nt with however limited a capital t.
scouire aud deposit with the State Treasur
o. an unlimited amount Of State Stocks
and to demand and receive from him cor
responding amount Of circulating bills
And the contrary Interpretation which We
lave put upon the statute - al ...tcrpreta-
,ion which limits the amount Of such circu
h,ior bills to threc-fourtbs Of the amount
0f stocks deposited (ess FIVE per cent - is
srepuously Denounced by this bank and its
f,;erd ds. and declared TO be an "annument
Of the law itself.
Certainly should regret to give the law
such a construction As to expose me to so
serious change, and beg to trouble you
fra few moments while state the reasons
for my conclusions
Section one provides that the aggregate
amount Of capital stock Of any such asso-
cation shall no, be less than $4,000 ;"
which, by section six, they may increase to
apy amount they see tit What is the cap
nal stock" Of the bank Plainly and in
dubi,ably the money which its charter au-
tborizcs it to use as the fund for iransacting
It's corporate business. Ii cannot be held
to mean goods and chattels, lands or .cne-
nents, nor bonds and mortgages. nor any
other description Of property or choses in
action but CAST, tangible, palpable aud
available as such. The cash may. it is true,
in the course {, { business, become invested
in any such property; but still as the cor
pOrate fund to serve as the basis Of future
operations, it must necessarily be cash
OF this, i: appears to me, there can be no
denial unless on the part Of those who be-
Eeve that banking can be safely conducted
upon the basis OF some property or securl-
ties less certain ard available than gold or
silver or their equivalent | confess my
self not to belong to that class, and think
the experience Of the people of this State
has been sufficiently paiEful and impressive
to teach them the correctness Of my general
definition.
Now section one declares that three
fourth of the capital stock of any bank may
be invested in public stocks as security for
circulating notes - that is, upon the plain
est principles Of construction, the bank is
permitted, instead Of holding these three
fourths Of the capital in cash, rs otherwise
it should be obliged to 10, to invest them
in public stocks, which, without such per
mission, it could now do The clause plain
IL requires the cash to be raised in the
first place by the bank, and then allows it
to be invested in public stocks. 1t is not
difficult to perceive the reasonableness OF m
opposite construction ! and does not the old
common sense maxim apply lncinsio "ni-
as enciusiO est aiteriuS , And who can
infer from this language permission to in.
vest not only the whole of the capital stock
Of the bank in public stocks as security for
its circulating notes, but to invest in the
same manner an indefinite amount Of mon
ey over and beyond the capital allowed by
the charter!
Section two requires the person or per
sons organizing such bank to make, unde
their hands and seals, a certificate in wrI
ting. which shall specify among other thing
"the amount Of the capital stock Of suc'
person or association - while section 81,
requires them to record certificate of an,
increase of the capital stock III the office G
the Register of Deeds of the proper count.
and in the office of the Secretary Of State
Thus the amount of the capital stock be
comes legally ascer;ained and fixed. Ii
law it can be neither more nor less; or, t
speak more plainly, the bank cannot owl
or use, as capital stock for banking purpos
es, greater amount Of money than tina
which is expressed in these certificates.
say cannot own, because as a corporation
purely creature os the statute, it can pos
sess no faculty, and can exercise no powe
except such as is impaired by law; and
would be an atfront to common sense t
pretend that moneyed corporation whc
BY statute is qualified and enabled to own
capital of 100000, may at its option all
without consent of the government. Ow
and WELD one Of 100000, 600. Ii /:
then clear that bank Of capital {
100000 cannot own capital beyond tha
sum; and if it cannot own If. it cannot al
quire it or use it Why, because II
charter does not permit it. and sue
an acquisition and use would be held b
the courts as legal cause of forfeiture an
custer. Every lawyer who has passed h'
yond his a. B c. in the law of eorpor;
tons knows this
Well, then. If bank cannot own, or a
quire, or Use any capital beyond the amour
mentioned in its certificate, how IT may
asked, is it to acquire State stocks 10 a
amount erceediag that sum Suppo'
It's capital to be sle0,000, and that il HI
The amount on hand in cash, as the statu
coRtemplates The statute allows it TO i
sest $4,000 Of the Sl00,o00 in Sta
stocks "os security tor as ciycltlatin
notes. This clause, or rather the esta
isaed rules Of judicial Interpretation, fo
olds 1t thus to invest greater share Of
~pltal; for the permission to invest to tn
extent implies prohibition to 90 beyoI