Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1860-02-05
BANKS AND BANKING,
REMARKS OF
HON. BENZ. J. LEA.
Representative from stewart,

/
In the House Of Representations, January II, 1861
AIr. Speaker: Notsshaving consumed much of tn
time of this body during the session, hope ma
be excused for giving my views the general mer
its OF the bill now before the House.
It is well known, sir that the Constitution of tn
United States provides that no Legislature shall
pass any law impairng the obligation OF a contract
and that it has been decided that bank charter il
s contract and could not therefore be changed il
any Of its material provisions Il is also vel
known that the Supreme Court Of this State, il
1888, in the case Of the State the Union Iiank
declared that the charter established contract by
providing thai in consideration Of the privileges
granted in the charter the bank should pay an an
| nual bonus Of one half Of one per cent and that
tha stockholders had purchased and paid for ihe
privileges therein, and that no further tax could
| be levied the privilege. Taking this estab-
lished Law, wish to guard against the possibility
/ Of making contracts with the stockholders Of banks
J HhiCh may prevent future Legislatures, which may
/ assemble here, from making such changes in the
bank laws Of the State the public good may re-
quire The 29Lh section Of the bill, vixen taken in
connection With The 9th section, which declares
that the banks shall pay as bonus for tie priyi-
legs OF banking, one half Of one per cent, may
leCVe the powers Of the Legislature in q stAte of
doubt on the subject On subject Of such vital
importance TO the people, the action OF the Legisa
ture should be clear, explicit, and free from all
doubt | regard this as the most important Of all
the measures If reform tuat has been suggested a
reform without which none other can be effected ia
future for a long term of years. propose there
FORE in lieu Of the 29th section, the following:
Be 1t enacted, That the powers and privileges of
banks AMI banking companies chartered within this
State shall be subject such general laws as the
Legislature may from to time time enact.
/ advocate also the striking out the provision in
regard to tho bonus so as to guard sgsinst the pos
g urrHi of tn
the conclusion that this Legislature has the right TO
make a contrsct with stockholders Of banks to
lneuish the right to increase the tax on the pTiy
lege of banking, if the public necessities demand
H. If this were so, the Legislature would have the
power to relinquish the right 20 tax banks altogsth
er, and .hus throw increased tax on land, slaves
and other property and privileges subject to taxa
ton. If you have the power to deprive suoesed-
ing Legislatures Of the right TO tax banks, you have
the right to exempt land, slaves, and one aher
another Until all the sources revenue are placed
out OF the hands of the Legislature, and the means
of the government all disposed CT If the Legisls-
ture incorporate ten millions CT capital, and by
contract for fifteen years exempt this bank capi-
tai from any tax the next succeeding Legislature
has not the power this Legislature has, Tor they
have no power to tax ten millions of capital. It's
power as a legislative body IS impaired and reduced
The Constitution declares that al poEeris Inherent
in the people 1t declares that all legislative pow
dependent on the people"
Il declares that the people have the right to meet
to instruct their representatives IN the Legislature
1t declares that all power not delegated shall re-
main with the people, and be and remain inVioate.
These show Mt Speaker, that ours IS a govern
ment based on the viii of the people, and that the
powers of each Legislature all delegated Posrs,
10 be exercised and used from time TO time, not to be
parted syih reduced totally destroyed any
all rightI subjects Of legislation. This was the unan
imous opinion Of the five Judges Of the Supreme
Court of Ohio But, sir it is said that the reser-
walton OF power TO regulate banking companies
chartered is unreasonable and unjust, and ought
not to be INFESTED on, IL is equivalent 10 making
contract and yet aO wing the Legislature power 10
annu the st pleasure alter the terms of
it. We are asked what justice there is IN proposing
to rent man a house for five years for FIVE hun
dred dollars, and then asserting that you, the
owner of the house, should have the right to take
possession Of the house at any time, or 10 alter the
terms of the contract.
1t is difficult to see any force in this sort of ar
gumene If the stockholders in a bank take the
stock by writing down their names in a subserip-
ton book they can assemble the neat day or year
and abandon the contract by declaration TO that
effect There is q want of mutually, an essential
element Of a contract They are not compelled to
DO any thing. You cannot compel them to discount
a note for one dollar although you offer endorsers
worth one hundred thousand dollars You cannot
On deposit You cannot compel them to sell you one
dollar Of exchange it matters not hcW e1Orbitant s
price you offer for 1t. 1t has been remarked that
thew are bound 10 furnish the citizens of the State
a sound convertible currency, and that that is the
consideration the part Of the banks. II is true
they are required to make their notes exchsngelble
for gold on demand, but they not bound issue
any notes 81 ALL or to furnish any currency convert
ibie or not convertible. They may 20 on or stop
wbenaver they please. Where is your bill in
Cbancery to compel the stockholders 10 execute
their part of his contract? Where is your indict-
ment using privileges granted? Whereas yoUr
action for damages IN not discOUnting notes or
bills? 'sWho ever imagined" says Judge Story
..thst & bank was compelled to discount note or
bills or was liable to indictment for not using the
privileges grained"
bank charter is constantly treated as a contract
by which stockholders bound by various stipula
lstions until their charters expire and that they
are bound to appropriate their stock faithfully
to the discountng notes and bills according
to the tenor of such stipulsti0ns. Yet, find thai
the circulation Of the Union Bank few years
since was about million and ahaf aud at the last
report about 5000, 900, aud have they they the
power sir, 10 continue to reduce their circulation
until il is entirely Withdrawn, and before the
muuity would have time TO organize other banks to
supply the vacuum, and prevent the injury they
would intiiCt the people. Yet, this charter scon
stantly held up as sacred and inVIlaObe contract,
and if the Legislature proposes retain the power
which the stockholders undoubtedly have it is said
the State wishes to hold them to Ghe performance
of their obligations and yet, be free to annu the
contract itself
Oae Of the a5lest Judges in the United States
(CampbsU, of the Supreme Court Of the United
States) says Of bank charters: "Iheact is enabling
and permissive. It makes it lawful for persons 20
combine and to conduct business in particular
manner L. forms no partnership for the State;
,vnlo IN NH orc no
ton of industry AMI capital according TO its scheme
IL grants license under certain conditions, but is
nowhere corrective The Supreme Court of Ohio
unanimously declare that bank charter is a law
and not contract But sir, so far as my argu-
ment is concerned care not whether it be contract
or not assert that the Stale should have the same
rights over the contract tie stockholders have If
the banks have the right to withdraw their capital
and quit business at any tune, the Legislature
ought to stand on the same platform and have
the same rights II one man, s,r, rents house from
another and insists that he shall have The right to
deliver I'D the house whenever he chooses on the
payment Of rent for the time he has had possession
/ is there anything which savors of oppression If
| the owner of the house ssks to be placed on a
footing ofequaliy by resinicg also the right 10 take
/ rossession of the house when his interest demands
! it. and discharge the balance of the rent?
When the States OF Pennsylvania, Virginia, Mis-
/ souri and others have said in their constitutions
and laws. that bank charters should be suhjee, to
repeal at the will Of the Legislature have they
| done anything more thaa place themselves on a
| footing Of equality il power aud right with the
| owners Of banks.
The owners of the Bank of Shebyvills have the
right to quit business when they choose and what
violence done to the principles of Natural right
if the Legislature insists it did, do retaining
similar right to put an end to its chartered privi-
i leges if the public intest demand it.
This power Of legislative control is no new move