Western Reserve chronicle. [volume] (Warren, Ohio) 1855-1921, 1862-01-15
FH0LE NO. 1868

: small, among the people of this State
On this subject, there can be no difference
+ of opinion @
AS to the second Object-that of pro-
tecting the bill holder against loss, in the
event Of the failure of the bank issuing
it-I may remark, that this has been re-
garded 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 efectiDg this
have been proposed. The Safety Fuud''
system. first introduced In New York, has
proved an entire failure. The plan of
curing the circulation By deposit of
State bonds, and other securities, has not
worked satisfactorily, chiefly for two rea-
sons, the liability to depreciation in. the
securities pledged, and the delay incident,
to their conversion into money under the
most favorable circumstances. 1t is dur
ing the delay that the holder of small
sums suffer his loss. The plan of se1ur-
ing the note holder. proposed in the system
know as that of the State Bank of Ohio,
is to make all the banks. associated in the
system Of banking-and is often misappre-
hended, as to th's-held as fund for the
protection of the nOte-holder, bat for the
benefit of the banks themselves. The
Safety Fund" so 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 mani
gers, in case of the insolvency of any one
branch, to make immediate provisions for
the payment of the notes of sneh, in colu,
by requisition upon the solvent branches.
Thus in the exhibit above stated, the;
entire four millions of coin is liable for
the redemption of the notes Of any insol-
vent branch.
But this is not the onl ly means Of sus-
tanning the crsdit of these issues in the
event of a failure Every branch is re-
quired to receive the issue of such failing
bank. in paymtn. of all debts, at their par
value. This prevents their depreciation,
as they are current in any pant of the State
for this purpose alone 1t IS through the
operation of these two influences that the
principle of immediate availability, as dis
tinguished from that of ultimate security,
has been attained. whereby this system IS
distinguished from all others
The third object, that of apportiOning
the banking capital of the State to the
business wants ofits several parts or local
tiles, is one which can only be attained BY
periodical adjustments of the same to the,
changing developments in the business,
activity, energy and demand of different
communities. OF the;e the Legislature is
the best judge. ---.-.=.--.-
1t is due to this Institution that the
fact should be here stated that it has
always showed readiness to aid the State
in It's financial operations. and under the
administration Of my immediate predeces-
sor, at the time of the discovery of the
great Gefalcation in the Treasury, rendered
such efficient aid as materially assisted in
mr., teeling the honor and credit of the
Sfste Ithas also made liberal Investments
in tbe bonds,2f the State and of the Gen
eraI Government. ISSUED to obtain the
means of su2preasiDg the "zlstlng reOelhQn-
have looked to it and depended upon 1t,
and still do, as a certain source or greater
assistance, if circumstances should render
it necessary to call upon it.
Having thus called the attention Of the
Legislature to this subject, L viii Only
adj that regard it as one of the most im- r.
Dortant that can come before you at this
s,ssion, and hope it may be treated In the
,Ilm, unpreiudiced spirit in which all pure
" business questions should be acted upoU
md disposed Of | am aware that 9ues-
liens as to the constitutional powers Of the
Legislature are Involved respecting the
manner Of eff4csing the object here recon-
nended These 1 do not propose to dis
.uss, but submit with entire confidence to-
he wisdom of the Legislature in regard to
he mode and extent Of taxation required
lnder the Constitution and laws Of the
State. and other notifications which ex-
,erience may have shown to be necessary
II expedient sa1- p zf
The Secretary of the Treasury, in his 3
ecent able report to Congress, on the
inauces Of the Government, has called in
question the constitutional power of the
State to authorize the issue of paper
urrency by local institutions. lie also !
uggests that-th, exercise of this power
my be controlled by Congress under its
institutional powers to levy taxes, to reg
late commerce, and to regulate the value
coin. In the judgment of the Secretary.
be time has arrived when Congress should
xercise their authority. 1aiaB
Passing, for the present, the cOnsidera-
ions that the power TINS called in ques-
ion has been exercised by every State in
le Union, and this from the foundation
{ the Government to the present day; that
has been recognized and sustained by
le highest tribunals Of the country in
very department-executiye, Legislative,
nd judicial; that it has entered into and %
ceome incorporated with all the business
Of the people; and that the in
oduetiOn Of a new basis and system of
edits for thirty millions of people, by the
Immary removal Of one that has thus
zen established aud acted on, would be
tended with most serious difficulties un-
sr any circumstances, and especially un-
,r the existing embarrassments of the
all these considerations.
see the most serious objections to the
hole project in the means suggested for
5 accomplishment.
The Secretary suggests that the gradual
ithdfawal of the notes of private cOrPor-
ions, and the ISSUE, in their stead, Of
nited States notes. payable in Tin on
,mand, may be effected ty the exercise
: Congress, Of the power to levy taxes,
ii that moderate tax, gradually aug
outed, on baUk-notes. will relieve the
ltional from competition of local circula-
N. If the Government will furnish a
tier currency to the people than that of
cir local banks, no such process as that
a tax, gradually augmented, to the ex-
lctiOn Of the latter. will be necessary for