The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1878-07-24

| Sir to One. a Nantucket IdW. New, 1ork !:
G.P. PUTNAM's Sons. 1873.
For sale by WEST, JOHNSTON d co.
A Word About Scottish Banking; and
why We Might do Likewise.
| 70 the Editors of the Dispatch:
| Some DAYS ago you were good enough to
cav that your friends go. and F." were IN
favor OF a return to State-bank issues. Ihey
are indeed; for exactly ho,o we in Virginia,
and the South in general, are to make any
particular Roadway with money az nara 10
get MS it is under the misunderstanding sys-
tenn is altogether 100 much Tor our ar,tnnie-
tic We have no sort of fault to find with
those banks because they charge high rates
they cannot do otherwise and eXist-but
we want some other arrangement b!
which both lender aud borrower will
he able to live and thrive; and, to
our mind, this arrangement is found
exacuy in restoration OF our old State
banks of issue. A glance at the census re-
turns will show bow we advanced IN wealth
under the operation of those banks prior to
| 1861; but we need not stop there. We pre-
sent an example from another quarter, and
it is precisely in point: we refer to the Tree
banking Of thrifty Scotland. The following
facts and figures appear in late report
| made by Dir. Samuel +. Cooper, United
States Consul at Glasgow, to the State De-
partment at Washington:
"There are eleven banks in Scotland,
with their branches, under special charters;
capital, $4,000, 900; circulation, $4,000
600; =, deposits. S342, 100000; gold held,
81, 900, 600; silver. S3,000,000. The circu-
| lation of each bank is unrestricted. 1t Is
only required to redeem its issues in coin
and to hold a certain proportion OF coin in
reserve. Only about five per cent. OF the
currency is coin, four tifths OF which is sill
yer. Paper is universally preferred TO coin,
which is never called for except for special
uses. Laborers are paid in silver. which is
preferred because OF lis smaller denomlna-
tons. A pound note is the smallest issued"
We hope those who read this communica-
ton will seriously consider the import OF
the above extract. The time is at hand
when they may do it with profit. We are
certainly dying with dry-rot as things stand
now, and without some relief the future
will show two failures to one in the past, II
not general bankruptcy.
| Scotland has population OF $500, 900;
Virginia, by the last census, had 1925, 900.
Only one foulth OF the area OF Scotland is
available for production. We are not far
i
available. II S29,000,000 OF circulation is
found to work we'll in Scotland, it is not
seen how Virginia would be hurt by hay
ing it in like proportion to population, say
SlO,OOO,OOO Our circulation is less than
$4,000, 600. Neither is it seen why such bank
ing inVirginia should assume the "Wild cat'
character, which appears to be unprecedented
in some quarters. The samemen who man
age our present banKs, insurance compa-
MES, and other corporations, would manage
these banks; and the general credit those
men sustain for conservatism in their bust
ness affairs gives no particular evidence OF
the presence Of "wild CATS" We cannot,
in fact, see why their service in the direc-
tory of State bank should suddenly turn
them into thieves.
Major Daniel, in the admirable speech he
delivered during the last session of the Le-
gislature on this subject OF State banks, re-
ferred to these institutions in Scotland, and
submitted the following from Patterson S
Science of Finance:
"This system Of freedom lin bankingl in
Scotland bore noble fruits. One after an
other, ut considerable intervals, as the mon
etary requirements Of Scotland increased,
large banks aroSe-poweriul companies
\ whose capital and proprietary furnished an
ample guarantee for the notes which they
received. This was the natural result CT
the system OF perfect freedom. Left TO
themselves, the banks and the public settled
the matter without difficulty or mistakes.
Large bank companies arose, because the
public naturally preferred to deal with such
establishments. Under
+ this perfectly free system not q single note
holder or deposition IN Scotland euer lost a
shilling by The taiture Of any 6ank."
Il II. 80
c., admitted on all hands to be business
man of the highest order, held the follow
ing language in paper be read at the So
cial Science Congress last year: 1.-THE
| Scotch banks of issue seem to have furnish
| ed the type for the southern banks, and sim
| ilarity Of circumstances produced a like
success in both places. Under the system
! OF banking referred to the banks issued
their demand notes in exchange for the
time notes discounted or the exchange pur-
chased, upon calculation that the currency
requirements OF the community would keep
these notes in circulation longer or shorter
time. A reserve OF about thirty-three per
centum was held in coin to meet such calls
for redemption us might occur. This eX-
change OF corporate for private credit is en-
tiTely legitimate and sound. Whatever risk
there Is in 1t is covered by the capital
OF the bank. 1t is in effect sys-
| tenn OF credit-mutual insurance. Such
| banks of issue are especially necessary in
agricultural communities, because there
money capital is always scarce; and they
are especially successful in such communl-
ties because agricultural pursuits are not
SD sculatiye. Every mans condition IS easy
and accurately known; his ability to pay Is
assumed by the visible progress OF his crop
towards maturity; and the use he makes OF
the money borrowed is necessarily patent.
Hence the prudent conduct OF such a;bank
Is matter OF will only The way isfplain.
Not only are such banks peculiarly adapted
to agricultural communities, but no other
hanks are suited to their needs. ALI agri-
cuIturlsts are presumed to have their. cap
| ital invested in land, animals, and other adj
tinncts to the farm, and they only need
money to defray the expenses OF ma
king the crop. 1t is quite as legitimate
! in q farmer to borrow money for this pur-
nose from bank as it is in q city contrac-
| tor, or manufactures, to borrow the means
TO complete contract. Each pays when
his harvest comes. There Is, however, this
difference that all the contractors In city
do not want to borrow simultaneously, nor
for the same period; whereas the wants OF
all the farmers in q county are alike, W hence
lie resnlts that q snail amount OF money goes
the rounds ct the contractors and aceommo-
dates all; but the farmers borrow together
and pay back together. There Is another
difference. The money lent ID d city to "a
returns tnto bank in the shape Of deposits
by b, G, and ID; whereas money that goes
into the country passes 4. from hand
10 hand. and performs a circuit be