The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1878-09-16
The OLD Statc-Banlx System.
.F'." ScpTEMBER u, 1878.

Editors Dispatch: l have read with much
interest many of your ably-written articles
in supnort of currency redeemabe IN gold
and silver, and have been much Sratifed at
vour earnest advocacy OF that which is so
Clearly for the best interests OF the people.
regret, therefore, that we differ somewhat
| in regard to one OF the questions pro-
Rounded by "a. S. B." in your issue OF
Yesterday. You admit that there is not
enough capital in Virginia, and must there
| fore admit the necessity for using what
there is to the best advantage. Before the
war. when Virginia had, as you admit,
vastly more capital than at present, the issue
| of three dollars OF bank-notes for one OF
coin was not found to be too much for the
wants OF the people. Why, then, would
you now, when every interest IN the
State could be advanced by the use OF more
currency. restrict its issue to 90 cents Tor
every 800 OF Government bonds, when, II
the banks held the gold for their Govern
ment bonds, two dollars in currency, ut
least, for one OF gold could be safely issued?
But for the tax OF ten per cent. per annum
on all bank notes, other than national bank
notes, would the misunderstanding system
have been adopted after the war? Would
the. country have submitted to tax so
clearly unconstitutional had it been attempt
ed before the war? Was not the law enact
ed rs 4 war measure. to force the then eX-
| isting State banks to purchase United States
Government bonds, that the Government
might limit the issue Of greenbacks so much
as possible, and avoid the evils OF deprc-
ciated currency, with which we became so
| familiar on our side OF the lines during the
I war?
Asa war measure the misunderstanding
-.
act was success; and at The North, where
they have q superabundancc OF capital, 1t
answers very well now. But the great want
of the southern States, in my opinion, IS to
be allowed to charter banks, with privileges
to enable them to use their limited capital
to the best advantage. but so restricted in
the issue Of currency as to keep it 1T par
within the State. If the notes of Il bank
situated in our State should be below par in
another State it would be for want OF
knowledge abroad as to the management OF
the bank and its ability to redeem its issues;
and il the effect OF such want OF confidence
should be to confinc the notes to home
circulation 50 much the better. Borrowers
out OF The State would nst then compete
with men worthy OF credit in the State,
who are now restricted in their legitimate
enterprises by the want OF such accommo-
dation, as their property and credit should
command; and you are mistaken, Messrs.
Editors. in saying that call men OF this
class can get money now Many negotia-
tons made at the North (reStrlcted, how
ever, for want of confidence, which would
not be wanted at home) would convince
you to the contrary. You have several times
called attention to the undcniable fact that the
issue OF more currency by the Government
would not help those who have no values to
exchange for it, nor would it benefit those
whose securities would be unknown to the
officers whose approval would be necessary
to obtain loans. I would therefore place
good currency within the reach Of those
who have good security to offer for it. II
the bank issues could be doubled in the
southern States the rate OF interest would
not rule from eight to twelve per cent,
while the same time loans at the
North can be had at five to six. The change
of base for currency from Government
bonds to gold and silver would nccessitatc
no such Inconvenience rs the withdrawal OF
deposits and the closing OF the banks. The
change from a specie basis at the North to
the national-bank system was made without
any such disturbance; and as to the cost Of
banking, the profit to the banks, with two
dollars Of currency for one OF gold, would
be rs large as under the national-bank sys-
TEN. with less than ninety per cent, for
they must keep reserve in greenbacks.
Many OF your readers, I think, Messrs.
Editors, are of the opinion that ga. S.
BIS" inquiries are in the right direction.