Daily Nashville patriot. [volume] (Nashville, Tenn.) 1860-1862, 1860-11-29

ton without legitimate basis but fortunately
for the country, such institutions have an
ephemeral existence, and bring disgrace and
ruin upon those who manage them.
The true mission of the Banker is, as said
above, to furnish the means Of moving the
products Of the country, and his charges for
this agency give profit sufficient to induce
| the capital of the country to seek employment
in this channel. In other words, the Banks
are but the common carriers of the products of
the country.
When the producer fails, these great vehi-
cles of trade have nothing to do, and on the
other hand when from any cause they fail, the
products Of the soil cannot be moved, or are
| moved at ruinous rates to the producer. The
loss must fall, however, in either case upon the
producer. In the one case, from a failure of
return for the expenditure for his labor; in the
| other from diminution of price, resulting
from failure in the means of transportation
| from the home market to the market of con-
| sumption.
Beside the existence of something upon
which to operate, there must exist, in order to
enable the Banks to fulfil their legitimate mis-
sion, public confidence. Both causes, the fail
ure in the crops and failure of public conf
cence-the belief in the minds of many that
the country is on the verge, if not in the in
| cipient stage of revolution-co-operate at this
time, to produce a state of pecuniary embar-
rassment, alarming and distressing to all classes
of society. few facts will better illustrate
my meaning. In examining one of the Branch
Banks at Memphis, l found that for some time
previous to the date of my examination, the
| Bank had discounted cotton bills to the extent
of about two hundred and thirty thousand dol
lars per week. The bills taken were based upon
| actual shipments of cotton bought at fair rates,
drawn by first class men at home, accepted by
| first class houses in New Orleans, having but
thirty days to run, and yet such was the condi-
ton OF things, that the Bank, thus furnishing
| the local currency with which to pay for the
| cotton at Memphis, had to stop this line of dis
| count almost in whole, and why? We will see
by following the basis of this operation (the
cotton) TO another market When it arrived
at New Orleans, the Memphis buyer, placed it
upon the market, and his purchaser buying
mostly for foreign markets, must obtain the
| local curry at New Orleans with which to pay
for it, by selling to the New Orleans Banks his
sterling bills, drawn upon credits furnished him
| by his foreign correspondent.
New Orleans having but little foreign trade,
unless these sterling bills find buyers in New
York, (the great focus of our foreign com
merce,) it is manifestly impossible for the New
Orleans Banks to furnish the local currency
with which to pay re Memphis buyer for his
now no market in New York for Sterling bills,
except at 'sruinous rates. The par of Sterling
| Exchange is, | believe, 1921; the present
selling rate at New York is about SO, an actual
| discount of IL per cent, when it only requires
| about one per cent to bring the coin from Eu
| rope to New York, rate of discount SO ruin
Gus that operators cannot and will not stand it.
Thus the Memphis buyer cannot meet his bills
and must renew or go to protest, and the Bank
| furnishing the local currency with which the
planter is paid at home, is driven to protect Its
| circulation to use the gold in its vaults and
wait the uncertain result of the original draw
| er's operation for replenishment of the metal
thus distracted ManifesLv no Bank can keep
ont and protect a circulation with the stream OF
metal thus flowing all the while out of its vaults
and none returning. If, however, the depresS
ing influences now operating upon the trade OF
the country did not exist, the Memphis buyer
would find a purchaser in New Orleans, the
New Orleans buyer would find sale for his
sterling exchange with which to pay. And with
a credit in the Banks of New Orleans, equal tO
the amount of circulation to purchase the cot
ton at Memphis, in favor of the Memphis Bank
(which could be ordered home in gold to re
place that used to protect the circulation used
in the first purchase, it would again be in cir
cuiatiOn to take other bills and furnish the
buyer with home currency with which to pay
the planter for his cotton.
Thus would be produced an equilibrium in
the ebb and flow Of the metallic tide. Bnt,
owing to the disturbing causes above referred
I to- there is a damming up of the commercial
stream at New York, the reflex action of which
is total destruction of public confidence, or
more properly speaking, OF public credit, driv-
ing home the notes of the Banks for redemp
ton, causing the Banks to stop all discounts,
and forcing them to collect the money due
them upon notes and bills previously discount
ed This again causes the debtor class topush
their creditors, all resulting under forced sales,
to loss in the price of property amounting in
the aggregate to a sum greater than the
value of one good crop, and this too at a time
when the country is struggling under the previ-
ouSly imposed burthen of partial failure in
three successive crops.
The article of Gotten is taken simply for the
sake of illustration; the same facts obtain with
reference to all the other staples of the State
1t will be observed, however, that in every case
the loss falls on the producer. The buyer,
having TO sustain loss of eleven per cent. on
his sterling exchange in order to obtain the
local currency with which to purchase, will OF
course buy, and can only afford to buy at a
rate of price proportiOnately reduced. Thus,
/ again repeat the loss falls on the labor Of
ing the true basis of all peeunary prosperity,
a depressed pecuniary condition must follow in
exact ratio with the depression of the great in
dustra basis.
There is still another cause, deducible, it is
true, from those already given, but which es
them worthy of especial notice. By reference to
the Bank Code, section 9th, it will be seen that
each and every Bank in the State is required to
keep on hand an amount of specie fund equal
to one-Td of its entire liabilities. 1t is further
provided that in case this specie fund shall fall
short of this proportion, for forty days. then
all discounts shall cease until such proportion
is restored The Bank of Tennessee and the
Union and Planters Bank had, on the 1st inst,
in round numbers, two millions of specie funds,
and their immediate liabilities, in deposits
and circulation, were five millions Of dollars.
From this it will be seen that they were emit
tied to an increased circulation, had the coun-
try been in condition to receive it, of one mil.
lion of dollars. But suppose five hundred thou
sand dollars of deposits and circulation were to
return to the Banks for specie and specie funds.
Then the Banks would hold one and half
millions Of specie and specie funds, and their
liabilities in circulation and deposits, by law,
would necessarily have to be reduced to four
and half millions. For every dollar thus
turned to the Bank for redemption, the Bank
would be compelled, in order to keep in line,
to collect three dollars from its creditors.
You are doubtless aware that all of the Banks
of the State, except the Bank of Tennessee,
Union Bank, Planters Bank, Shelbyville Bank
and the Bank of Middle Tennessee, at Lebanon,
deny my authority to supervise them upon the
ground that il is an infringement of their vested
rights. l mention this fact to account to you
for my failure TO refer to the condition of any