The record-union. [volume] (Sacramento, Calif.) 1891-1903, 1892-09-21

his way to some distant point of the
Union to circulate the legal tender cur
rency,' as he calls it, of the State of Indi-
ana, for he has located his bank in some
corner difficult of access, where no bank
ing facilities are required, and puts his
notes into the hands of persons who will
have no ready means of demanding their
redemption" The Governor of New
Jersey made similar report, and that of
Ohio was quite as antagonistic to State
banks of issue.
The New York Tribune, in a recent ar
ticle, tells the story of the Farmers Elk
change Bank of Gloucester, Mass:
1t was organized with a nominal capital of
81 100000. of this S19, 141 Sc was paid in.
Inc directors subsequently withdrew their
subscriptions 10 the amount of $4,000 rs,
leaVlng S3,OS II for working capital A
gifted financial genius bought out eleven of
tho directors for 81 300 each in notes of the
banks issue and proceeded to administer the
affairs OF the institution himself. After he
had borrowed from the bank S760,265 on
personal security it broke for some unac-
countable reason. The outstanding bank
notes IN circulation were estimated at $780,
GOO, no exact record having been kept. To
redeem this there was carefully boarded in the
vaults just $50 46.
Not all the States were so lax in their
laws as Indiana, New Jersey and some
others, but the best OF them were weak
compared with what they should have
been. New England, after a time, set up
the Suffolk banking system, by which
the 500 banks in that region agreed to
keep balances at the Suffolk Bank in
Boston, which was made redemption
agent for the banks. This system saved
New England a great deal of distress,
but could not make her notes Of par
value. New York set up a deposit Sc
curity system to back the bank issues.
Some States provided an inspection sys-
tenn, but nearly always when the In
spector arrived there came also few
bags OF coin by the same stage, to make
| a showing" and they went on to the
next town with the Inspector to do duty
at the next bank.
1t would require columns to describe
the operations of free banking in 1857,
when the failure of an Ohio wildcat
savings institution precipitated the
impending crash, and the great panic of
1857 set in.
In the war period the 10 per cent. bank
tax law was passed by Congress that
proved prohibition of State banks of
issue, only one surviving it, the Me-
chanies' of Brooklyn, which still has a
small note issue out.
The Democratic platform of Mr.. Cleve-
land proposes the repeal of the 10 per
cent. tax provision, which means to open
the door for the possible renewal of the
| old-time swindles. True, many States
profited by the experience Of 1857, and
have put on checks and guards, and Cali
| fornia is one of them. But not all States
have acted wisely. for loose State laws
remain, and some have none at all upon
the subject; and the repeal would con-
stitute the temptation to manipulate Leg
| islatures, to permit all hands to go into
the banking business, to the confusion
and loss of the working people especially,
who cannot give the time and Skill neces-
sary to keep track of counterfeit bills,
discounts and deprecated notes.