Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1878-07-21

colonel John Z. Burch:
DEAR SIR-Yours of the fifth instant, pro-
pounding certain inquiries touching the CAPT
tai stock of the late Bank of Tennessee, its
operations as a fiscal agency of the State,
and as furnisher of reliable circulating
medium and liberal system Of loans and
discounts to the people, is received, and from
data at my command, l will endeavor to re-
ply. On the first of July, 1857, by thepub-
lished reports of its president, made biennial
ly from the date of commencement of its
operation, its capital was So, 361, l31 A, and
the amount of its notes then in circulation
81 ,51S, 1863. At the same date its outstand-
ing loans amounted to 81, 507 $50 80. Until
within a short period prior to 1861-the out
break of the civil war-the notes of the Bank
of Tennessee were equivalent to specie, ex-
cept in several temporary and general bank
suspensions throughout the country. The
net profits of the bank during its existence,
amounting to several millions of dollars,
were paid into the treasury of the State and
disbursed by the proper officers In payment
of the current liabilities of the State. Upon
this subject Hon. Cave Johnson, In February,
1858, then president of the bank, in his re-
port, said:
From the first of July, 1858, to the first of
January, 1858 the profits of the bank amount
ed to 81 1884 or As, made by the bank for tae
use of the State, beyond its expenses. =
The profits OF the last two and half
Lied on to make between three and four hun
dred thousand dollars annually. Without
such aid the credit of the State could not be
safe without charging the subjects of taxa
ton, as we'll as increasing the amount, or by
sacrifice of the value OF stock now owned by
the bank"
The State was the sole owner of the bank.
Its directors were appointed biennially by the
governor of the State, and confirmed by the
senate. A majority of them were invariably
chosen from the political party of which the
governor, for the time beng, was a member;
and this system produced frequent changes
in its presidency. 1t did not, however, lead
to changes of policy in the general manage
ment of the institution, nor did political af-
hllations or antagonisms affect its course to-
ward individuals. In the twenty-one years
of my connection with the bank, | can recall
no instance in which question was asked as
to the political opinions of an applicant for
accommodation. The bank furnished loans
at four months on notes, and from four to
nine months on produce shipped to New Or
leans and other markets. The rate of inter-
est charged on notes was six per cent, and
the same on bills, with an additional charge
of one-fourth of one per cent. per month for
exchange. From the first of July, 1855, to
the the first of July, 1857, the bank furnished
exchange on New York and other points to
merchants and others to the amount of $l4,-
092,O 900, somethingiover seven million dollars
per annum.
In reply to your inquiry, whether it is de-
slrable or practicable to re-organize the Bank
of Tennessee, or to create a similar institu-
ton for the purpose of aiding to relieve the
financial exigencies of the State, and of the
people of Tennessee, the first branch of the
question scarcely requires an answer, if the
second can be answered afhrmativey. The
statements above furnished exhibit the bene-
fetal operations of the bank for a period of
4la,, R,x,n a.
agent of the State, and as a financial corpo-
ration of high character issuing a sound cur
rency for the people, and extending an ample
line of loans. 1t commanded confidence
through all the political and monetary huctu-
ations OF the time, and its work, and the
then financial condition of Tennessee. which
it so largely contributed to induce and up
hold contrasts strongly with the present de-
pressed state of affairs, and the niggard
bank facilities now permitted to the people.
If such an agency be again possible, certainly
the necessities, alike of the State and people,
never more demanded it. A brief exhibit
will show the contrast referred to. On July
l, 1859, the bills and notes under discount by
the Bank of Tennessee and the Union bank
of Tennessee and Planters bank of Tennessee,
amounted to 50, 255, 282. These three banks
had in circulation more than six millions OF
dollars. In addition, there were many other
banks in the State-all issuing notes, and
see notes of banks in Kentucky, Virginia,
Alabama, North and South Carolina, and this
was not esteemed, nor did it prove redun-
dancy for the wants and the business of the
people. On the twenty-niuth of last month,
by their published exhibits, the four banks in
Nashville had $842, $40 of notes in circula
ton, and the amount owing to them on loans
and discounts was 81 ,9O9, $50 20. This his
tory of the former Bank of Tennessee, and
these figures, exhibiting the existing deplor-
able deficiency of currency and banking ac
commodations, present strongly the desira-
bihty OF such an institution, and | have no
hesitation in declaring it as my Judgment
that if a bank Of the State can be created
with sufficient capital, and organized free
from whatever errors experience may have de-
monstrated in the former will prove meas
ure of financial wisdom which will aid large
ly In extricating the State from its bonded
burden, and contribute freely to the monetary
relief so urgently required by all classes of
the people. The practicabiity of establish
ing the bank we are discussing, I'M
der present circumstances, is ques-
ton OF some difficulty, but to my mind it
is not lnsurmountabie. Involved, as it I'M
fortunately Is, with political considerations,
those who will first be called to move In the
matter will perceive many imaginary noun
tains intervening, and there will be those who
will interpose Fictitious obstacles. The first
real difficulty is to be found in section 81, of
article 2, of the State constitution, which
prohibits the State from becoming the owner
in whole, or in part, of any bank. If the
general assembly, which will meet in Janu-
airy, 1879, be so minded, the question of call
ing a convention to revise the constitution
can be submitted to the people under section
3, of article 9, and to expedite the matter,
delegates to a convention might be chosen at
the same election-the convention to assem-
BILE or not, as the result of the vote might de-
49,, low II, Ab,l =
| stacle might be removed within three months.
| The Federal fax imposed on bank-note circu-
| lation offers no formidable difficulty. In tie
first place, the probability Is that this will he
repealed, possibly at the coming session of
| congress. A measure to this end is now be-
| ing concerted throughout the country, and
| will be powerfully presented by welghty lDttu-
ences and upon sound reasons of public policy.
| THIS tax was adopted originally as a war
| measure, intended to foster and up
hold the Federal financial pol
icy at that critical period. Its
necessity has passed away, and its con-
stitutionahty is gravely doubted by eminent
legal ability, as in derogation of indefeasible
rights pertaining to State governments. 1t
| was one of a seues of measures contrIved to
| centralize and energiZe Federal power at an
alarming crisis, which will not bear the test
of rigid constitutional construction. This
! fact may be deemed so assured, that If the
|
bank, if established, might proceed to issue
its notes, and refusing to pay the tax, have the
question carried through the Federal courts.
The force of public opinion at very early
day will very certainly consumrnate the re-
moval Of this obstructing feature by congress.
In the question at this stage this point need
not be regarded. But it may be asked, how
can a banking capital of sufficient quantity
to make the institution effective for the OBJ
jects sought be procured? My plan would be
| to issue specific series of bonds for bank cap
tia, pledging the profits of the bank to prompt
ly meet the semi annual interest on them, In
preference to all other demands. These can
be negotiated at par l0ithOm doubt. those who
hesitate at the practicability of doing so, take
but superficial view, think. The failure to
pay the interest on outstanding obligations, the
course pursued by the last legislature of the
State, and the erroneous public sentiment to
some extent propagated among people so
greatly depressed by financial stringency, has
very sensibly depressed the credit of Tennes-
see in the money centers. But notwithstand-
ing these, 1t is not irrerievably lost. Very
far from this is the fact. Capitalists know Of
| the actual wealth and resources of the State,
and estimate properly the doleful muttering