Cleveland morning leader. [volume] (Cleveland [Ohio]) 1854-1865, 1862-01-07


This exhibit shows the Institution as haV-
ing on hand more than fifty per cent of It's
circulating notes in coin in its vaults and
subject to its order; besides an amount,
greater than its entire circulation, in notes
and bills discounted.
aU thus particular in referring 10 the
present condition of the State Bank, not on
ly because it is the chief banking institution
of the Sate, and furnishes nearly our entire
Ohio currency, but from the fact that think
the time has arrived to determine whether it
is expedient to continue its existence beyond
the period for which it was originally char
tered and, if expedient, to take the necessa-
~ steps for that purpose. The charter OF
the bank will expire in four years from the
first day of May next The sixteen years of
its existence have afforded ample opportunity
of testing the question whether the objects
proposed to be attained 10y its authors have
been accomplished.
These objects were
First. The furnishing a currency to the
people of the State, convertible into coin at
the pleasure of the holder.
Second. The securing of this currency in
such manner as to protec. the holder there
VI G-sd1l4sb 4Oaoi III Ll0 ofcub VI u lhlluEb Ol
the hank which issued it.
Third. The securing to the several sec
tions Of the State fair participation in the
privileges granted by the Act.
As to the first object, all must admit that
it has been fully attained, the issues of the
bank being treated as equivalent to coin in
every business transaction, large or small,
among the people of this State. On this
subject there can be no difference of opinion.
As to the second obiect-that of protect
ing the bill holder against loss, in the event
of the failure of the bank issuing it-I may
remark, that this has been regarded as the
great problem to be solved, on the success of
which depended the fate of any system of
banking that might be adopted. Various
plans of efecting this have been proposed
The ''Safety Fund" system, first introduced
in New York, has proved an entire failure.
The plan of securing the circulation BY a
deposit of State bonds, and other securities,
has not worked satisfactorily, chiefly for two
reaEons: the liability to depreciation in the
securities pledged; and the delay incident to
their conversion into money under the most
favorable circumstances. It is during this
delay that the holder of small sums suffers
his loss. The plan of securing the note
holder, proposed in the system known as that
of the State Bank of Ohio, is to make all
the banks, associated in the system, liable, to
the full extent of all their means and assets,
for the issues of each Branch. Ithes 'TSafe-
ty Fund" but that fund is not, as in other
systems of bsnking-and is often misappre-
hended, as to this-held as a fuud for the pro-
lection of the mole holder, but for the benefit
of the banks themselves. The "Safety
Fund" 30 to speak, from which the note
holder is protected consists of the entire
capital, assets and means of all the branches.
and it is the duty of the managers, in case Of
the insolvency of any one branch, to make
immediate provision for the payment of the
notes of such, in coin, by requisition upon
the solvent branches
Thus in the exhibit above stated. the en-
tire four millions of coin is liable for the re-
demption of the notes of any insolvent
branch.
But this is not the only means of sustain
ing the credit of these Issues in the event of
failure. Every branch is required to re-
ceive the issues of such failing bank, in pay
ment Of all debts, at their par value. This
prevents their depreciation, as they are cur
rent in any part of the State for this purpose
alone. It is through the operation Of these
two influences that the principle Of immedi-
ate availability, as distinguished from that
of ultimate security, has been attained,
whereby this system is distinguished from ali
others.
The third object, that Of apportioning the
banking capital Of the State to the business
wants of its several parts or localities, is one
which can only be attained by periodical ad-
justments Of the same to the changing de-
velopments 10 the business, activity, energy
and demand of different communities. OF
these the Legislature is the best Judge.
It is due to this Institution that the fsct
should be here stated that It has always
showed readiness to aid the State in its
financial operations, and under the admins
trstion of my immediate predecessor, at the
time Of the discovery of the great defalcation