The daily phoenix. [volume] (Columbia, S.C.) 1865-1878, 1866-05-12
COLUMBIA. A.,...'
Saturday Morning, May IL, 1855.
National Banks.

public attentlOn TO the manner IN
which these institutions are organ
lied. This bank, it appears, was
public depository, and by its failure
the Government has lost $400, 900,
and other depositors- all the funds
they had committed to the reckless
spectators who had the management
of the institution.
According to the law creating na-
tional banks, if they do not violate
their charter, there can be no failure
among them. That law provides that
no bank shall be permitted to issue
greater amount of circulation than
ninety per cent. of the par value of
the Government bonds deposited with
the Comptroller of the Treasury, nor
issue circulation to q greater amount
than the capital actually paid in.
Moreover, each stockholder is indi-
vidually responsible for all contracts,
debts and engagements to the amount
of his stock. The law further pro-
vides that no loan to any individual,
firm or banking house shall exceed
one-tenth of the capital actually
paid in. And still further, an
other stringent provision declares
that-if the directors shall violate, or
knowingly permit any of its officers
or agents to violate the Act referred
to, the charter shall be forfeited, and
every such director shall be held
liable in his personal and individual
capacity for all damages that may be
sustained by any party in consequence
of such violation. The bill further
provides that at least three-fourths
of the stockholders shall have resided
in the State one year next preceding
their election as directors, and be re-
sidents of the same during their con-
tinuance in Office. The Washington
Chronicle, in commenting on this
failure, says: t'Every director of n
national bank takes a solemn oath
that he will, so far rs the duty de-
wolves on him, diligently and honest
ly administer the affairs of such asso-
citation, and will not knowingly vio-
late. or willingly permit to be vio-
lated, any of the provisions of the
law That there has been open and
gross violation of law in this case is
evident. If the directors were igno-
rant of, they were criminally negi-
gent of their sworn duty. If they
knew of it, and assented to it, they
are responsible to the extent of their
means for every dollar of loss sus-
tanned by depositors, stockholders, or
other persons. It is difficult to frame
more stringent provisions for the safe
ty of 6 bank than are found in the
national currency Act. If bank
fails in spite of all the safeguards
thrown around it by law, it can only
be through the grossestt 111is1nanage-
ment or by downright fraud"
1t is clear to us, therefore, after
reading these provisions of the law,
that whatever depositors may suffer,
or whatever penalties directors and
stockholders may be liable to, the
note-holde' is perfectly safe, and if he
holds a note of such bank which
has failed, he has only to present it
to the comptroller of the currency
for redemption.
The system, however, is defective
III some way, as this failure shows.
The capital of this bank was only
5000, 900, yet it is reported that !.
party in Baltimore had borrowed
from it about $500, 900. Therefore,
there must be some side-door for
fraud, and faithless board of direc-
tors OF officer can swindle all the de-
positors in any bank, by lending their
money to stock gamblers or others on
whose profits they most probably
depend. AS we have little or no
specie for q currency, and must
have some kind of paper money, let