Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1874-07-21
THE OLD STATE BANK.
What 1t Did, and What Such an
Institution Might Now Do.
An Open Letter from COmptrOl-
Ter John &. Burch.
He Will Recommend the Next
Legislature TO Establish a
State Bank With 3d.
100000 Capital.
Memphis Appeal.

Memphis Appeal.
CONTROLLERS OFFICE,l
a. NASHVILLE, July 10, 1S74
Messrs. NJ. c. Galloway and Marcus j. Wright:
GENTLEMEN-In compliance with your
request, submit, in writing, the substance,
in brief, of my conversation with you,
when in Memphis, relative to the re-estab-
lishment Of the State bank:
| said that it was my purpose to recon-
mend to the next Legislature, as measure
Of revenue,
THE ESTABLISHMENT OF THE BANK
OF TENNESSEE,
with branches suitably located in the three
different divisions ofthe State. The first,
and, in my opinion, the only objection
which can be urged against this measure,
is the provision in the act of Congress
which imposes a penalty of ten per cent on
the circulation of all other than national
banks. That this provision, enacted as a
war-measure to sustain the credit of the
Federal government while the war was
fragrant, will now be declared uncORStitU-
tional, cannot doubt. Such a provision
under our constitution and government
cannot be enforced in times of peace
against an individual, certainly not against
a State. .-.- 5000.
To establish that this would prove a
wise measure of revenue and greatly re-
lieve the people from the burden Of taxa
ton, it is only necessary for YOU to refer to
the operations of the old bank. When the
capital stock Of that institution was
S3,6T9, 900 il could make
AN ANNUAL NET PROFIT or 100000.
Then, too, the Union and Planters bank,
with numerous other State institutions,
were in existence, having very large cir
culatiOn and business, and necessarily lin
iting the operations and profits Of the State
bank The ei culatiOn Of the State hank
and branches July I, 1871, was only ST.
6,13S.
NV plan would be to re-establish the
bank on the same general principles upon
whichtle old bank was established, max
ing its issues receivable for taxes and all
other dues Of the STATE. To procure neces-
sary banking capital, issue S5,000,000 of
six per cent. forty year bonds. To secure
a prompt sale and high price for these
bonds, / would not only pledge the
faith, honor, and credit OF the State
for the prompt payment Of both
principal and interest," would also apprO-
pirate and set apart the profits of the bank,
first, for the semi-annual payment Of the
interest on the bonds, and after the lapse Of
a suitable time / would, from the same
source, provide an annual sinking fund FOR
the payment of the principal of the bonds.
Thus. i believe. these bonds might be sold
for ninety cents on the dollar, and the sum
of S4,500,000 realized for banking pur-
poses.
In making this calculation as to the prob
able sale of the bonds, / take it for granted
that our next Legislature will not violate
the faith, honor and credit Of the State,
now pledged for the payment Of the princi-
pal and interest Of its bonded indebted
ness. Should be mistaken in this expeo-
tation, cannot foretell how yalueless Ten
nessee bonds and Tennessee credit will be
come. Under the old and safe banking
rule of issuing three for one, we could, on
a banking capital of $4,500,0O1, Issue
A CIRCULATION OF Sl3,j00,OO0.
In field demanding great banking facil-
tiles, and comparatively unoccupied, we
might safely calculate upon keeping SlO,-
100000 Of this circulation in active en-
ployment. | think it probable that at the
reasonable rate Of
SIX PER CENT. INTEREST,
and it should not be higher, every dollar OF
the circulation could be constantly and
prolitably employed.
quote the following from report of
Hon. Cave Johnson, tEen president of the
Bank ind 7 date Of February -, 1873.
..From the first Of July. 1853, to the first
Of January. 1885, the profits Of the bank
amounted TO Sl.3S4.OT2.45, making over
four and one quarter million Of dollars
made by the bank for tie use OF the State,
beyond its expenses. The bank has In
structed its correspondent IN New l ork TO
pay the Interest on any bonds Of the State as
presented, and keepS funds on hand for
that pur1pose. and paws the check Of the
Treasurer without regard 10 the amount VI
his deposits, leaving the treasury often III
arrears with the bank. rs il is on this day
10 the amount of SI20.00O." I'm addition
10 the aid thus afforded the treasury il may
not be amiss TO state that important facili-
tiles have been afforded 20 the community
by furnishing over fourteen millions Of eN-
change from the first of July, 1850, to the
first of JuIy, 1857, and that since the sus-
pension of specie payments more than a
million of dollars Of exchange has been
furnished the citizens at one per cent. pre-
MUM, whilst exchange was selling at from
five to ten per cent. The President and
Directors did not think II Just or proper to
take advantage Cf the Suspension
TO ENTORT EXTRAORDINARY PRICES
FROM THE PEOPLE.
'.The examination Of the profits of the
bank for the last four years will form a
more reliable test as 10 the future opera
lions IF the bank than at any former pc
riod. This examination, when taken in
connection with the report Of the Comp
iroller for the same time, induced the
President and Directors to express the
opinion Ia the General Assembly IN OctO-
Der last: whilst such number of banks
exist and such heavy liabilities of the Stale
are to De met. and such a arrangement of
tba currency, the aid of some banking in
st3tutiau 10 sustain the credit Of the State
seems Utmost Indispensable. IL
would not seem safe TO dispose Of the Bank
Of Tennessee aud leave The people exposed
10 tie c0ntFactions and expansions IN the
currency by the stockholders Of other banks,
"The undersigned still entertain the
opi..ion expressed 10y the President and DI-
ractors in October last, nor can be see how
the constantly increasing Liabilities OF the
State can be hereafter met without the AID
Of some such institution possessing equal
means and credit. Tie profits ofthe last
two and a ha'f wears show that the bank
may ba safely relied on 10 make between
three and four hundred thousand dollars an
nuall Without such aid the credit Of the
Statec0uld not be safe
WITHOUT ENHANCING THE Subjects OF
TAXATION
as well as increasing the amount, o. ~ 2