The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1868-12-08
MORE BANKING C-4PIT4L.
The Great Want of Charleston.
Tc THE EDITOR OF THE NEWS.

| our cotton trade Dy Ou[ ueucloucS vi CaplIdl.
1t might be shown quite as clearly, that each
and every branch Of trade, and Of mechanical
and other industry, is equally affected by the
same cause. To do so would necessitate the
extension of these articles to an undue length,
and the writer thinks he may fairly assume
that enough has been said to satisfy every one
of the paramount importance Of adding to our
available commercial capital. The readiest
and most efit lent means of doing this would
be the establishment of bank with capital
of not less than 1,000,O 900.
Two objections will probably be urged
against the feasibility of this project. First,
that charter for National Bank cannot be
| now obtained; and secondly, that so large an
amount cannot be raised. B5th of these OBJ
jections can be readily refuted.
AS to our inability to obtain charter for a
National Bank, the writer takes the ground
that such q charter is not desirable; as he
would decidedly prefer State charter for o
bank of discount and deposit. The only ad-
vantage that can bo claimed for National
Bank is the right to emit notes Tor circulation.
The writer denies that this is really an advan-
tage.
The law requires that for every ninety
dollars of notes furnished by government for
circulation National Bank must deposit in
the Treasury one hundred dollars of United
States bonds. 1t is true that the bank receives
interest upon the bonds so deposited, and can
still use the notes received in exchange as its
banking capital. This privilege of drawing in-
terest from the government upon the money
invested iu bonds, and Of using the notes as
currency, is the bait that proved so attractive,
and rendered the National Banking system go
popular: but it is now found to have its disad-
vantages also. The circulation is subject to
tax. which is so much abstracted from tho in
terost received upon the bonds; but the great
est objection is that the capital Of the bank is
necessarily locked up in government securities
It ia we'll known that notes, when they once
pass into circulation, cannot be recalled at the
pleasure If the bank, and the original capital
is thus subjected to al the vicissitudcs that
NAV attend the national credit. The bonds can
only be redeemed by the return Of the identi-
cal notes for which they are pledged, and thus
bank cannot chlnge its investment. Should
they find that tho bonds were dopreciating in
value. they would still be forced to hold them.
Besides this, Congress may, ut any moment,
by amending or changing the National Bank
ing laws, entirely sweep away any apparent
advantage derived from the law as it now
stands.
We find that in Now York what are there
called security or trust companies-which are
nothing moro or loss than banks Of discount
and dcposit-are now preferred to National
Banks, their stock being preferred as an in
yestment. A National Bank is liable to all the
conditions and restrictions now imposed by
law, and cannot escape from other conditions
and restrictions that may, at any moment, be
imposed by change of the law. In word,
the capital Of National Bank, or such por-
ton, at least, as may be invested IN bonds to
obtain notes for circulation, is placod entirely
beyond the reach and control of the bank and
it's stockholders.
A bank of discount and deposit would
enjoy much greater freedom OF action,
and could realize its assets and close up
its affairs at any time that it might be the
wish Of it's stockholders to do 30. In addition
to regular banking business, advances could
be made to factors or planters upon produce
in hand. This is largo branch of business
which, in New York. is monopolzed by the &C.
curity companies. No safer business can be
undertaken, aud mono is more profitable to the
bank or offers greater advantages to its Gus
toners. Advances upon cotton, rice and other
produce. made undor proper restrictions, and
upon conditions of perfect security, would
afford Just the kind of relief that is most
needed, and would not fail to attract to our
city very larg, amount OF business, which
now finds its way to other and mora favored
communities.
Having but small cash liabilities to meet, it's
capital can be invested in longer loans, and aid
eau be given to enterprises Of great utility,
where temporary loans for thirty or sixty days
would be of no avail. The only cash liabilities
ofsuch bank would be its liability to it's depos-
itors, and by using only proper portion of its
deposits as capital, it could always realize from
it's maturing commercial paper the amount
needed to meet any sudden or extraordinary
demands of it's depositors. fuller investiga-
ton into the advantages and disadvantages
between the two systems, the writer feels sure,
would result in a decided preference being
given 10 bank of discount and deposit over
National Bank.
In considering our ability to raiso q capital
of s., ,00O, 900, we have two sources to look to
first, to ourselves; secondly, to the capital
lists of the North. First, as to ourselves; for
we must recollect that before we can appeal to
Northern capitalists We must show our own
taith by subscribing as largo q portion Of the
capital as our limited means will allow. 1t is
admitted that our merchants who have ready
money now need it MI for Tho purposes of their
own business, but if they could be assured OF the
establishment Of such a bank as is proposed,
they could well afford to invest no inconsidera-
able amount IF their ready means in lis stock,
as they would know that when they needed
money it coui be obtained from the bank in
the way Of discount. they arc nov forced to
keep in hand, the year rJuad funds which they
need Only ut certain Seasons, for the reason
that, if parted with when they could spare
them, they might not be able 10 realize them
when needed. The absence OF slificicnc3 Of
capital thus hampers what little We have. 10
use homely ustration: A and might, at
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