The times. [volume] (Richmond, Va.) 1890-1903, 1892-11-18
FRIDAY. NOVEMBER 10, 1892.
SIX PAGES.
LET THE PEOPLE DO THEIR OWN
BANKING.

No candid observer can doubt that In
the Southern States IT least, there is an
insuficiency OF currency for the demands
Of business here. The case mentioned by
Senator Morgan last spring in the Senate
silver debates, of a lady in Alabama. who
owned one of the finest cotton plantations
in the State, but was unable to borrow
$4,000. is no exceptional one. The excep-
tional case is that of the farmer what
ever may be the value Of his lands and
stock, who can borrow money. This
proceeds from the fact that the National
banks are at the commercial centres, that
their managers. In the nature OF things
cannot know personally the individual
farmers. and that they will not make
loans TO parties whose means are in lands
and stock, unless they know them person
ally, and can trust to their personal IN
tegrity. The need of the country, In the
South certainly, is local banks that can
issue currency to supply local needs. The
need is of banks whose managers know
the people who dwell around it, and who
will lend money to those entitled to credit
who cannot borrow now, whatever their
lands and goods may be worth. These
banks will never arise in proportion to the
demands for them until they are permitted
to issue their own notes, because banking
can never be so profitable without an
issue of notes as with such issue.
The Times has frequently argued that
one simple measure will afford to the
public absolute security in handling these
notes, and that is that they should, by
law, be made a first-lien upon all the as
sets of the bank issuing them. This would
make them a first lien upon deposits. as
well as on property belonging in its own
right to the bank, and, with honest mana
gers for the institutions, would make the
notes safe almost beyond peradventure.
In a very able and elaborate article al
ready quoted from by us, the Daily Com
mercal Bulletin maintains that this meas
ure would ensure to the public absolute
safety in handling the notes, and 1t is
evident that the percentage Of loss
through bad notes, with such provision.
would be too triAing to be worth consid-
ering.
The fundamental error besetting empi-
rics. who consider this matter. is an idea
that State banks are founded for the ex-
press purpose of proving failures. This
is as far from being the case as anything
can be. II a system of State banks were
inaugurated, each one would be started by
men who hoped and expected to make
success of it, Failure is the last thing
contemplated by them. II any should
fail, the failure would be due to misfor-
tunes and not design.
The reflections Of hasty thinkers on
this subject are all colored by the ex-
perience of this country with State banks
In the twenty-five years preceding the
war. But that was a period during which
the immense territory OF the West and
Northwest was being settled and built up.
The whole Western country was one
broad area Of blooms" State banks
started on the expectations OF the result
OF Blooms" as towns started on them.
Inc pOOulS DufSt, ana many towns
failed, as many banks failed. We have
seen the same experience repeated in
Virginia within the past few years. I'm
sound banking was, to a great extent, the
Inevitable consequence of such condi-
fion OF things.
But matters are very much changed
now. There Is no more new country
growing up. The whole country is old
staid and settled. The banks that start
now start as conservative institutions I'M
der conservative arrangements. These put
out no notes that they are not always
prepared to redeem in coin, because fall
ure to redeem one note on demand means
bankruptcy and ruin 10 the institution.
We may safely trust, therefore. IN the
demands Of the situation for sound hank
Ing now. Let the Government take its
hands or and leave the people TO exer-
else their natural right In their own wav
and the laws of evolution will do the rest.
Inc parental idea that the Government
must look after its citizens and keep them
from harming themselves is as odious
ana as unphiloscphical when applied 70
thar currency as when applied TO any
ethss situation In life.