The times. [volume] (Richmond, Va.) 1890-1903, 1892-12-14
STATE BONDS AS SECURITY FOR
STATE BANKS.

Mr.. Shackelford writes The Times the
following in answer to our recent edi-
torial. We shall have something to say
/ in reply tomorrow:
! To The Times:
| Your editorial upon my letter, concern
| ing the deposit of State bonds TO secure
circulation of State bank notes, ques-
tons the constitutionaity Of the State
lending its credit to any person or cor
poration. 1t is true that section IL of
article X. Of the Constitution says: THE
credit Of the State shall not be granted
TO. or In aid of, any person, association
or corporation" There Is nothing I'm the
Constitution to prohibit the States GER
tffying through its Treasurer that the
States bonds are deposited in the Treas
ury TO secure the notes of the depostor.
1t would in no way bind the State further
than she is already bound. For security,
that no more notes are issued than the
bank or banker is entitled to; have the
notes emanate from the State Treasurer
engraved under his supervision at the
expense Of the bank or banker, and run
ming somewhat as follows, with suitable
designs thereon:
s. s.
The Bank, or A or b. banker,
Of Va,
VIII pay on demand to Bearer the sum
OF dollars lawful money Of the
United States. OIere give date)
-, Cashier. -, President.
hereby certify that there is deposited
in the Treasury Of the State of Virginia
Bonds OF this State, in trust, to secure
the payment hereof. ,
Treasurer State of Virginia.
And let the act under which issued be
stamped on the note.
This need not be Objectionable to any
friend Of national banks, as IL would in
no way interfere with them, but only
increase the volume Of circulation. AS
to your objection that the purchase of
bonds would necessarily tie up a great
deal of money, and that the banks could
not make such profitable use Of their
money, l viii remind you that they will
be drawing interest on their State bonds
all the time, and having an equal amount
for business enterprises, In shape of cir
culation, what can be more indefinite or
more liable to abuse than the unrestricted
issue of notes based on the apparent
wealth and character of the issuer? Ex- |
perience proves that reputed wealth often
disappears under pressure. and that many |
whited financial sepulchres are filled with |
the wrecked fortunes of trusting people. |
People will be slow to deposit money |
when they know they are putting IL up |
as security for the undertakings OF the !
bank with others. Richmond has tasted |
Of that, along with the rest Of |
the world, of late.
Now, l know the -ditor Of The Times
to be an able writer and financier. and |
fearless in advancing his ideas. BY the
way. / do not believe we would have
gotten a settlement speedily with the
English bondholders but for an editorial |
Of his criticising their delaying the set
Element and warning them Of the dan
ger OF trifling with the patience Of our
people; 1 cannot but feel that he is
advancing his State bank notes theory
simply as the old parson made certain
move, ito try our faith" or, perhaps,
by going so far as to make the whole
hing fall through. Respectfully,
GEORGE S. SHACKELFORD,
Orange Courthouse, Va. Dec. TO- 1892.