Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-09-07
STATE BANKS OF ISSUE.

The suggestion for revival OF state
banks of issue is met with 4 great deal
! Of favor. but not that degree of favor
they really deserve. II is customary TO
speak with some contempt of this sys
TEN Of banking, because a number OF
those banks were mismanaged and their
notes fell below par, and some OF them
failing, their notes became worthless.
The banks dropped into disrepute on
this account. the public remembering
the failures but thinking nothing OF the
successful ones.
Careless legislation and loose laws
are responsible for the bad odor in
which the state banks were held. In the
Western states-and at that time Hi
noi5 was the lar West-very little care
was taken TO erect safeguards for the
protection of the public against wild
cat" banking. In some OF the states
there was not even q requirement that
any part OF the subscribed capital
should be paid M. An association OF
persons obtained charter for q bank
of issue, and went to sending out their
notes among the people, that from the
beginning had no value. because there
was nothing behind such notes. OF
course they soon deprecated and We're
never redeemed. But in other states,
where the banking laws were carefully
Il IT hon L.
was good money. The Indiana state
bank. with Hugh Mccullough at its
head, emitted notes thai never fell be-
low par. and at times they carried a
premium. After some experience and
amending OF the banking laws. New
York and Massachusetts brought their
state money up 10 par, and kept it there.
If the history Of our state banks goes 10
prove thai there Is danger OF loss to the
public by the circulation CT their notes,
it proves as well that this danger may
be avoided where the legislatures use
proper care in the enactment of laws
TO make the issue safe.
CWhen the national banking system
was brought forward the primary OBJ
iect was 10 find takers for our bonds.
not 10 provide 4 system for 4 national
paper moncy. Before bank could be
established, bonds had to be purchased
on which to base the circulation. This
caused the bonds 10 be taken. But the
state banks still stood in the way, com
peting with the proposed national
banks, and lessening the demand for
national bonds. To put this COMPETE
ton out of the way, a tax OF 10 per cent
was imposed on the circulation Of state
banks, which closed them at once. The
capital that was invested in them was
soon put into national banks, and
Chase's great scheme for floating the
government bonds was success.
There is no longer any need Of arti-
fetal inducements for the purchase OF
our national bonds. They are sought
after, and premium is paid for them.
They do not now derive any support
from the national banks, nor do they
need such support There is no longer,
then, any need to fear the competition
of the state banks. and no reason why
the tax on state bank circulation should
be kept up. Let congress repeal this
law, and let the states take such action
as they choose. Il they authorize banks
Of issue, the notes of such banks must
compete with the national bank notes,
the legal tender notes, and with gold
and silver. If they are not prime they
cannot maintain themselves. To main
tain themselves they must be prime.
We do not believe anybody in Texas
would hesitate to take at par bank
note issued by state bank that had Sc
cured these notes by a deposit OF state
bonds, school bonds, or even approved
county or city bonds. And possibly,
also, safe investment could be found
in such plan for the school fund that
now lies locked in the treasury vaults
al Austin. withdrawn from circulation,
contracting the volume OF currency, and
doing nobody any good.