The times. [volume] (Richmond, Va.) 1890-1903, 1893-04-23
STATE BANKS OF ISSUE,
With State Banks as the Basis Of Circula
ton.


The following article appeared some
months ago in a Lynchburg paper. By
request IT is reproduced in these columns:
Few people properly appreciate the SUI
preme importance of that pant Of he
national Democratic platform which IA
vors the abolition OF the prohibitory tax
| on State bank Issues. All that was bad
in the system as 1T existed in ante-bellum
days is recollected and its benefits are
forgotten. The fact Is overlooked that
the world has made immense strides in
the last thirty years, and what was pos
sible in 1850 is in many cases practically
impossible now The chief DIRECTORS 10
the rehabilitation Of the system state
that these notes were inconvenient for
the purpose of travelling, being subject
ed to some discount They forget the
immense service these notes performed
at home. 1t is submitted that travelling.
while important, is not one OF the chief
objects Of life. 1t is stated, and with
truth, that the notes OF some OF these
banks were sent 10 remote districts for
the purpose Of circulation, SO that 1t
would take a long time to get them
back to the home bank for redemption.
That could not happen now, as In thirty
years railroad and Geographic facilities
are now such that the home bank could
be communicated with almost anywhere
in the United States in twenty-four
hours, and the notes presented in ten
days. The advancement Of mechanical
science has completely met and demolish-
ed this argument, which formerly had
great force.
AS the condition Of affairs now stands
New York has a per capita circulation
OF two hundred and seventy-two dollars,
while Virginia has less than twenty-five
dollars. Our rural population, including
all classes, but especially the farmers
and mechanics. are practically without
any banking facilities. 1 state 1t as prac-
tically true that it is probable that not
more than per cent. Of the rural popu-
lation have any bank accounts under the
present system. 1t Is also true that the
present system, which Is a war measure,
IS about TO pass out of existence as soon
as the national debt is paid. Two-thrds
of that debt has been paid In the last
twenty-five years, or about that amount,
and the national bank notes have been
RAPIDLY retired for long period or ume.
Stern and imperious necessity compeis
the inauguration of a new system at an
early date.
With this preface suggest the follow
| ing as a practically safe system: Ihere
are now in Virginia, or soon VIII De, III
round numbers thirty millions OF VIZ
| einia State bonds, a little over twenty
| three millions Of Virginia century bonds
| carving two per cent. interest and the
remainder in Riddleberger three per cent.
bonds. III. .,,o,o
| Let State banks be chartered with these
bonds at their market price as the basis
of circulation and allowed to issue notes
| TO the extent of ninety per cent Oh tne
| said market price, the bonds TO be de-
posited with the State treasurer for the
| redenntion OF the notes. In addition 10
| this make the stockholders Of these banks
| liable for twice the amount of their STOCK
| subscriptions Of the note holders. Nouiu
! NOT these be good notes? II not why not /:
7 invite the most careful criticism and
! challenge a successful answer. III any
| bank failed the note holder would nave
the bonds in the hands OF the state
treasurer with a ten per cent. margin
! ovar their market value in his favor,
which could be readily converted into
| gold. He would have the personal creult
| Of the stockholders in addition. Eacn
note should state on its back: RMS note
| &c secured ty Virginia State bonds de-
posted with the treasurer ana Is re-
| deemable in twenty years from the
| day Of (here insert the dates) In speCle
| its equivalent. Let all th' N''"'
| rim for twenty years from their GATE
| The note would thus have a certain date
| IN run and would be redeemable In specie
| or its equivalent The benefit or such
system would be great and immediate.
First mortgage bonds OF trunk line
railroads at their market value, with tne
same restrictions, might also properly
| be made the basis OF such a system why
! should the notes OF such banks as these
| no NJ n discount in New York or any
| whore else? They would be practically
| Gold notes because the bonds upon whicn
| they would be based could at any ume
! he turned into gold. The system would
| he elastic because the notes could be IN
| creased as the wants OF business required.
| The banks would make the legitimate SIX
| per cent. profit on their notes ana ara"
| the interest on the bonds in addition.
The greatest prosperity ever enjoyed oy
| Virginia was between 1850 and 1880 under
| the existence of the much derided State
| banks Ii was the golden age OF our
| prosperity It Is also true that only
| small minority Of these banks ever failed.
In Massachusetts, there was only one
| suspension in seventy years. and the notes
| Of South Carolina and Louisiana were
always good. Under the system propose
| the per capita circulation in Virginia
would be increased at least fifteen dol
| lars, making 1t forty dollars In the place
| OF twenty-five. And as national bank
| mites are bound 70 remain In circulation
| at least twenty years longer, they would
| suffice for all purposes OF travelling II
there should be any discount on State
| bank issues. which is very doubtful. Ma
| tional banks, while they have done a great
| amount of good. have also been pro-
| ductive OF harm. From their very nature
| they cannot be used by the plain people
| Of the country, not being allowed TO lend
| money on real estate. They have thus
| made the rich richer and the poor poorer.
| The want of banking facilities Is the chief
| cause OF the present great dissatisfaction
| of the country people. That dissatisfac-
ton Is based upon principles OF right and
justice, and the Democratic party ought
| TO heed the demands Of this half-blird
giant. who Is now striking aimessly but
forcibly at everything before him. he
needs sustenance and means to have II,
and what is more. he is entitled to II
The free coinage of silver. and the resto-
ration of State banks are the true and
proper remedies. Wise indeed was the
statesman who engrafted upon the Demo
cratic platform that plank which demands
the abolition OF the prohibitory tax OF
10 per cent. on State bank issues. The
more II is reflected on. the more II Will
command the favorable consideration OF
prudent and thoughtful men.
CAMM PATERSON.
The promptness and certainty Of its
cures have made Chamberlain's Cough