Knoxville weekly chronicle. [volume] (Knoxville, Tenn.) 1870-1875, 1874-07-29
THE STATE BANK SCHEME.
COntIusfv Objections strongly Pre-.
scented

We publish the following letter, con-
corning the subject covered in our
headlines above, which explains itself:
EDITORS CHRONICLE: Poor Tennes-
see, is with all her virtues and far
searching craftsmanship, exceedingly
unlucky. Improvident legislation IN
volved her in heavy Indebtedness.
Upon the oft-repeated promises of
Governor Brown, that he was equal
to the emergency and was prepared to
engineer our State finances to a safe
haven, we elected him Governor.
He evidently felt the magnitude of
the sponsibilhies resting upon him,
and made an honorable and statesman
like (?) effort to redeem his pledges:
First by tdriRg suits before magistrates,
and lastly by the funding tniquity ;
but both these measures, though wise
ly conceived and faithfully executed,
having failed to accomplish the desired
end, his Comptroller is now before the
public in an elaborate argument in
favor of the establishment of another
State Bank. He outlines his
scheme, which, briefly stated,
is this: The State to issue five million
dollars of her coupon six per cent.
bonds, sell them in the market, and
invest the proceeds in banking upon
this capital the bank to issue and put
thirteen million five hundred thousand
dollars of its notes in circulation, etc.
This scheme is liable, think, to many
good and unanswerable objections, and
among others the following:
First. The bonds to be issued and
sold to obtain capital to begin business
with could not be sold for more than
VI In tho dollar n N q
loss of two million dollars in the sale
or the bonds at the outset.
Second. Money obtained on this basis
would be equivalent to borrowing al
ten per cent. for the purpose of bank
ing, in addition 10 the loss in sale Of
bonds, and this no banking institution
on the earth could stand.
Third. Such wild and in,
judicious adventure by the State
would break down her credit
and destroy the little respect and conf
dence which intelligent men still retain
for her craftsmanship and capacity t
extricate herself from her present
finsncial complications.
Fourth. The thirteen million five
hundred thousand dollars of STATE
Bank circulation would be and remain
at discount of from ten to twenty pc
cent. in comparison with par currency
It's circulation would be almost entirely
confined within our own limits, anC
in this way derange our commerce,
with other States, place us at a grea
disadvantage, and entail losses on GU
people and internal trade.
Fifth. Such Bank would inevitably
become a political machine, and woulC
be manipulated by the dominant party
more in the interests of party and o
politicians than for the public good.
Sixth. 1t would be a prize to bt
struggled for at every recurring cleo
ton, and used TO corrupt the ballo
box and influence elections.
Seventh. 1t could not be established
without amending or UiOLdtinq tn,
"new Constitution" which wisely
prohibits the establishment of a STATE
bank.
Eighth. The ten per cent. United
States Government tax required on the
circulation proposed to be issued
would amount TO one million three
hundred and fifty thousand dolIan
per annum equal to forty-iive pei
cent. on the actual capital employed
and 1t Is believed that even under the
skillful and judicious management @
Governor Brown and Comptrollel
Burch, this amount could not be real
lied from its business; and II not, tn
bank would, sooner or later, be forcet
into bankruptcy.
Ninth. After demoraliziHg tn