The times. [volume] (Richmond, Va.) 1890-1903, 1892-10-05
STATE RANK IssUEs-rBE BALTIMORE
hIfN.


Co. chat tho managers Of the soundest
Of our State banks favor the repeal.
These gentlemen know perfectly well
ubat they are about Their institutions
GRO sound and making money. III they
mt ont circulating notes and should fall
% nov a sincle one with coin on demand
their credit would be gone and their IN
situations would have to go into liquida-
ton There is not the slightest danger
that banker managing solvent, money
making bank would put out notes that
he was not amply able to protect ana
thus run the risk Of converting his soiid
concern into a bankrupt affair. We re-
Gently discussed this matter with the
cashier Of the strongest State bank IN
| the State and he said he thought, under
free banking. he would be able, by degrees
and in time, TO work out an amount OF
notes equal TO his capital. What bless
ing that community would receive from
this increase to its sound circulation.
And there is no danger that irrcsponsi-
! bic banks would be started up. lrrespon-
| siblc banks belong to boom times ana
boom communities But the United
States are all settled and conservative
communities now If the wildcat
bank attempted to put out its notes no
one would receive them. Such State
bank notes as were issued would
be put out by the present banks which
are all managed on business principles,
or by new banks that had abundant re-
sources at their backs and honest CON
servative men to manage them; and, with
the modern developments Of telegraph
and express, the notes would return to
the banks so quickly after they were
issued that the banks would find it ne
cessary TO keep themselves always pre-
pared to redeem them. The case then is
this: the advanced state of social pro-
gress would make it impossible for wild
cat" banks to get into business. The
sound banks would put out notes, but the
facilities for exchange are so far deve-
lopcd that these would find it necessary
to keep themselves always prepared to
redeem their notes, which would make
and keep them circulating at par.
That excellent and influential journal,
the Baltimore Sun, has come out very en-
phaticaliy in favor of the repeal of the
tax, but it is astonishing to find how it
mixes up error and truth in its argument
for it. In a recent editorial it says:
A correspondent is informed that the
toto Lnre ls- "a
| than the Constitution. The Bank OF
North America and the Bank of Massa-
chusetts existed before the Federal Cor
stitution was formed, and there is no
limitation placed by the Constitution upon
the power of the States 10 grant charters
TO State banks 1t was 50 held by the
Supreme Court in the case Of Brlscoe
against the Bank of Kentucky. That de-
cision declared the power TO charter
banks belonged 10 the States as an mel
dent of sovereignty. The Democratic
party. as the defender of the reserved
rights Of the States. has long favored
reduction of the tax of 10 per cent. upon
the notes of State banks, imposed by the
act Of March 3, 1860. and reimpOSed by
the act of July l, 1866. The object OF
the tax of 10 per cent. was TO compel the
State banks to buy Government bonds
and become national banks, since the
| ownership OF Government bOhuS - Z" PAN,
reunisite 10 the issue Of notes by national
banks. The purpose. in fact, was 10
force the withdrawal of State bank notes
nv making their circulation unprOftable,
| not because they were not SOUND cur
rcncy. hut because the conversion OF
State banks into national banks WouId
create a large demand for government
bonds. In the case Of NeaMe against
Fonno the Supreme Court reversing
former decisions) held that Congress
could restrain by its act the circulation
of State bank notes That decision. how
ever like other recent decisions. was dlc-
tated bv political considerations. ana IL
EXPRESSLY conceded the right of the pe0-
nle to demand a return to the State BANK
system.
The mind Of the writer of this para
gr3ph was penetrated by some rays Of
correct light touching the subject but
on the whole. he Inexperienced the true
hearing of these rays so completely thal
no had as well have had no information
Mt all Consequently, he has made a
most provoking melange of truth and
fiction. The Democratic party has not
long favored a reduction OF the tax OF
10 per cent. on the notes OF state
hanks. Agitation for this has only re-
comfy commenced, and 1t was com
menced by Republicans as well as by
Democrats: chiefly by Republicans. The
demand for it was put into the Demo
cratic platform of 1892, but that is the
first time it appeared in national Dem
ocratic platform.
One would suppose from the Sun
mention of the case of BriscOe VS.. the
Bank. that the issue in that case was
the right of the States to charter STATE
banks. But that was not the issue. The
State of Kentucky was the sole Owner
Of the bank in that case, and 1t was
contended that in view of this fact it
notes were to be considered bills OF
credit" issued by the State, which the
Constitution forbids the States to issue
1t is true the court states in its opinion
that counsel in their brief had disputed
the right of the State to charter any
bank but it also states that that conten
ton had been withdrawn, and that Il
is. therefore. not to be considered as IN
volved iu the ease.
The Supreme Court did not reverse
former decisions in NeaiZe VS.. Fenno
Tue whole matter as it came up in tina
case was novas res. The objection:
made in that case to the act of Congress