The gold leaf. [volume] (Henderson, N.C.) 1881-1911, 1893-04-06
THE STATE BANKING LAW.
TCorrespondence News and Observer.

HENDERSON, y. C., March %, '93.
Several dRys since, in an editorial on
State Banks, You referred to the fact
that the Richmond Dispatch condemned
the State Banking Law recently enacted
by the Legislature.
| This statement occasions no surprise
to one who is familiar with the position
which the Richmond Dispatch has taken
State banking system, and approval OF
the continuance of the National Banking
Act.
InasInuch as the National Democratic
party has declared in favor OF State
| Banks of issue, and our own State Is
pledged to do all she can to obtain re-
peal BY congress Of the tax on State
bank notes, we win not debate the qucs-
ton.
II seems that Mr. Carlisle has decided,
a. one OF his measures OF financial re-
form, to recommend to congress the re-
peal OF this tax and we may assume 1t
will come sooner or later. The object of
this communication Is to call attention
to remarkable endorsement OF the
North Carolina banking Law that has
lust come to my notice. An endorsement
especially noticeable in the fact that it
comes from the New York Journal Of COM
H,erce; than which, as YOU know, no
weightier authority i'll such matters can
be had in this country and the endorse
ment OF the journal is particularly EN-
phatlc upon those points which the Rich
Inond Dispatch finds most to condemn. In
its issue of the 18th instant, the Journal
Of Commerce Under the heading New Bank
ing Schemes" discusses a scheme brought
forward by prominent member OF con-
gress Just before its adjournment. This
scheme proposed to let the National
Banks receive their circulation from the
general government without a pledge OF
bonds; the government to guarantee the
notes of the bank, and to have first lien
on all assets of the bank with the addi-
tiOnal security OF IL safety fund to be
raised by an annual tax on the banks
circulation, &c. After discussing and de-
Tending the provision that the govern
ment should have first lien on the
bank S assets, as is now the case IN the
national banking act, the editor goes on
to argue for the repeal OF the tax, and
uses this language: "The tax ought to
b" repealed, and that without any con-
ditions. But some people are so appre-
hensivc that wildcat banking would
follow the renewed liberty, that they hes
itate to endorse the demand for this re-
peal We noticed in our former article
tn" project to do away with the tax on
condition that the notes shall be issued
under statute precisely similar to the
Federal banking Act.
The new proposition is to remove the
prohibition of all State bank issues, the
par redemption of which shall be guar
i IL, H.
located. When this was sent us last
week by member of congress for our
opinion, We replied that we knew of no
State likely to afford such a guaranty.
At the very moment, but without our
knowledge, an act had been passed by
the State OF North Carolina embodying
this peculiar feature. We have q copy
on our desk covering forty printed pages
and too long for description here. But
it proposes a banking system which fur
nishes the most ample security for the
note holder. The State is to have the
right to subscribe one-third of the cap
ital stock of each institution, and to
name one-third of the directors. The four
per cent. bonds of the State to pay the
subscription are to be held as security
The State is to guarantee every note,
and to see to its redemption. This act
has been passed by the General Assembly
and is now the law of the State. 1t makes
provision for a vote of the people to
change the Constitution, by which the
statute shall become legally effective
The system, if thus approved, is to be
inaugurated within ninety days after the
repeal by congress of the tax on State
bank issues 1t is sufficient to say that
no loss could come to a note holder thus
protected.
9 1t is an illustration ola statement we
made some years ago, that if the State
banks were permitted to issue the flexible
currency so much needed in this country,
the States would see to it by appropriate
legislation that no loss fell upon the
holders of the desired circulatiOn.'
We i'll North Carolina may content
ourselves with approval from such a
source; and it may be that North Caro-
lima will have the credit of inaugurating
Il State banking system that will be fol-
lowed by other of her sister States in the
South, and let us hope that those resO-
lutte and patriotic men of the recent legis-
lature will not lose their reward; who
against much opposition and some rid
iculc, vet hesitated not to enact aradical
measure of financial reform when once
convinced that it was to the interest of
their people that relief along that line
should be given
W. II. $. BURGwYN.