New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1892-09-04
THE OLD STATE BANKS.
WHEN FINANCIAL CHAOS WAS EVERY
WHERE.
DEMOCRATS WANT TO GO BACK TO THE OLD
SYSTEM WHICH PROTECTED FRAUD
AND DISHONESTY.

Among the things which the Democratic parry pro
poses 10 do II It gets the National "oNe'"''i w
IFS hands again IS repeal the present TAX VI ~ pc
cent on the circulation Of bank notes by eta'e o'n
Men whose business careers do not eN"h" o"'N '
~ mr. mare can have no conception of the cohdl'loh
of affairs which existed when Low Jaw '
opcrat,ng under the differing laws OF ''''s 'o
,rs eoodnc the country with their party co'oreu cur
-oncv Nothing was certain about the money " mo"
cot for his goods and labor in those DAYS 'N''P Wv
uncertainty OF its value Discount wa '"c '"i, :"
oil transactions In which lankiOtes Hsu'cu' ~"
hanks had more than a local rputauol' anu eN'''
,,us a man sold a barrel Of apples he was liable 10
oo,,.o 81 hill nm some Texas Indiana bank OF "Ihch
no had never heard of whose solvency liz hau ho
or,r,o. and which might never have had any bona
fde existence whatever.
4 bank could be started In many states on paper
md wind capital Of $4,000 or even S-''"'o'
would suffice. The subscriptions to the caW'i' S'"'H
world he mid in note, given by to Is ana ihuorsu
hv e all three Of whom were probably partners III the
enterpise only enough money was med'd 10 pun
nm nm Office and cneTavc the bankno'es' Inc
,orr notes oven for subscriptions would he
navahlc at the new bank and were paid In the DAMN
ro,os issued by that infant institution Tie no'es
ucrc forced into circulation by all SORTS OF 'o'eh'S
The great thing 10 float them ana ~ "i,''''''
so they would not come back Tor rc"rrP'"", ~
r,sh this ban;,s in widely distant localities W 'uld
pXCanCe nOte-. Agents "'"i" ~ '''' 49,
ING states TO exchange notes for Others at hotels ana
s,oras Loans would be made III" express "ilpnh
,,o, that the notes we're not to be put out near the
bank making the loan ,..,,o,
As a necessary result there was ihHehN" i''"''
or loss In money transactions. Nc"-i"rN 'N'""''3
ues frequently quoted nj % per cent premium" !"
lrIoaco Tho Ncv.Yorl discount the bills OF The
hest known southern and Western BANKS was io',
10 to Gig per cent. The bills issued by small
honte in those localii,s though the banks were
,erfccy sound and OF good rcpIte In their re>p''c
towns would only be taken n from 10 ~ pr co''
discount This was account OF the general "n
certainty and distrust. That this feeling was NOT
rnwarraned Is shown by the following S'"''"''"''
taken from a message Of the Governor Of Indiana on
/ the formation OF banks in that COMMONWEALTH
| 9r,o snecpIntor comes 10 Indiana with n bundle
~ not,s in one hand ana the stock In n" other In
twenty four hou-s he Is his way u some dN''"'
ror,ion ~ ,hc Union 10 circulate what he denolnAo"
a legal tender currency authorized by III" H'a'e 'i
Indiana lie has nominnlly located MS bahh III SIM"
remote part Of the state, difficult &" access "h'r'
he Knows that no banking tidlte' are required and
intends that his notes shall 60 into IN" hauds oil
persons who will have no means Of demanding 'n"'f
redemption.
A Governor Of New Jersey said officially " In many
ca,cs onr banks thougA osiensibly located IN Ne"
Jersey have their whole business operations conducted
| by brokers In other Stntcs.'
Was II To be wondered AZ tHt bil'hs "'"h' w
caeIonnlly? The TURNER'S Exchange Bank OF
Gloucester Mas was an old-timc example. IL va,
organzcd with "A nominal capital OF III 100000. or
| this s1e1Il SO was paid in The directors snbso
ouenlv withdrew their subscriptions to the amount OF
| $4,000 10 leaving S3.06l IL for working capital
| A Gifted financial genius bought ont eleven oil inc
directors for 81 800 each In notes OF the banks issue
and proceeded TO administer the affairs OF the ihsu''
| Non himself After he had borrowed from the bank
[ brok n
accountable reason. The outstanding bahhno'cs IN
circulation were estimated at sjeOOoo exact record
having been kept To redeem this there wa care
fulIv boarded In the vaults Just $40 40 Alas Tor inc
.mo ~ Ward and Ives, What can this degenerate age
| show 70 match that specimen Of hnan'enhg'
q, co1rsc all the States not so loose as lhdi-
| m, and jersey In their banking laws. The evil
rchtcd itself 10 n certain extent, and the oder states
| tried various LED .latve remedies. In Ne" hhehhd
| ,hat was known as the suffolk banking system gre"
| M This was voluntary agreement by whch hh III"
200 hanks I'm that part Of the country Kept balances
| at the suffolk Bank In Boston ana Innde mat Ddhh
their redemption agent Banks which refused 10 JON
I'm til. arrangement had acceptance OF her notes re-
,,sed ny the confederated banks and were compelled
| - ,i, or r,ttbdraw their circulation. This system
! ~ tho Ncu England banks a reputation for sound
| moss throughout the country
| Nev York organized by lnw State banking de
orment and required banks to deposit therein stocks
| and
ah hank failed tie Controller realized on the deposit
and ssitIed all claims and outstanding notes 80 nr
a, ,snact,on hi, the nature Of the Investigation may
no anpreciaed from the old tradition that the r0ao
that brought the commissioners also bore the gold
| v"%"sa nrcsrnce was 10 prove the solveDcy Of the
| hank when ito vaults were Inspected.
| Each banknote bore on It's face promise 10 pay
A specified amount. presumably In specie. but This
promise largely fiction T'sre was q courtesy
allied on one another redeem their notes More than
that. The hanks would combine and boycott any Ill
| advised Individual who insisted on having gold for
| OF course tie rules OF courtesy violated when
| the banks got fighting. Then one Institution would
buy all notes Of It's enemy that could be gotten fo
the express purpose Of making run On the bank ana
went heavily Into this business In Us efforts TO brenl
the New York CITY bank soId large ar, amounts o
psee Of demanding gold OF the New York hanks fol
| he notes thus obtained and so rnining them i
lessly on Europe that there wasn't time TO send notices
81 the drafts and OF them went to protest. Tri
srn hank nj fifty cents on the dollar and then %
| We~s with n carpetbag stuffed full to get them re-
The Suspension OF specie payments was frequent
occnrrence Banks would suspend aud resume with
| a Bit In fact they would pay dividends to theiI
stockholders earned by money deposited with then
the depositors. compelling them to accept their dis
put an annual tax Of 10 per cent on the circulation o
All other than National banks. This caused al stat
| TANK OF brooklyn. which still has 5000 out
| Th. present platform Of the Democracy, with tn,
perennial asInnity Characteristic Of that party pro
pemovaI Of the state Of things described above. %
course it is te that the older stats know more nbon
,,at their own laws would render impossible repeti
don Of gienntlc frauds such rs wer" disclosed In h
,os, mortem examination Of the Gloucester Bank. 70
| Instance lint there are States with loose law,
or none at all the subject, rs the recent bursting o
on oklahoma bank shows. where chceh' Is the Onl,
rannIslte for starting n bank The cheap and ready
| convrrtbility Of currency which now results from
tho Treasurer OF the United States being the redemp
uon agent for every National hanknoe. the express
age on the notes being paid by the bank OF issue
| could not obtain with Independent state systems
| Evcrv merchant would again become n walking calcu
iator OF discounts. and the laborng man, who can
keep the Of banks all over the country, wonld b