The gold leaf. [volume] (Henderson, N.C.) 1881-1911, 1893-09-14
STATE BANK NOTES.

given to the system of State banks
proposed in the national Democratic
platform, it is of interest to consider
the advantages expected by the advo-
Gates of the repeal of the tax on State
bank notes from an extension of bank
ing facilities, under proper safeguards
OF federal inspection, in the several
States. Many parts of the South and
West are without banks. Persons
having money for which they have no
present use have no safe place in which
to deposit it. Much of the capital of
such communities lies idle, hid away
in stockings. The sums are small,
taken singly, but gathered together
they would form considerable amounts,
and in the form of loans by banks on
good security to enterprising persons
would vitalize local industry. The
South and West complain of lack of
money, not because money is wanting,
nor because they lack collateral, but
largely because local banks are want
ing to gather deposits, make loans
and issue well-secured notes varying
in volume with local needs. For
national" purposes-for payments
to be made at distant places, in other
States-gold coin, greenbacks and
national bank notes can, it has been
suggested, be had when wanted, but
there are local needs that can be
served adequately by local currency
Just as a well-known citizens checks
pass through several persons hands
before they reach the bank on which
they are drawn and thus serve some
what as sort of local currency, so. in
this view, the notes of local bank
may constitute currency of a some
what wider use, without pretending te
the character of a national currency
Some IS per cent. of ordinary bushes:
transactions in our cities are effected
by means of checks. 1t is not {
legitimate argument against the us<
of checks for local purposes to say tina
checks good in Philadelphia are no
good in San Francisco or New
Orleans. 1t is enough that they ART
good within the limited area within
which they are designed to be used
In like manner it has been said o
State bank notes that their existence
is justified if they serve usefu
purpose within the State. 1t is no
necessary that they should compet'
with the national currency, tina
circulates everywhere. They can b
printed on kind of paper and il
such colors that the most ignoran
person at glance would distinguish
State from national currency.
Would the note issues of State bank
be we'll secured7 This resolves its
into the question whether State banl
notes can be made safe-whethe
American experience shows the thing
to be practicable. The answer
found in the record of the State bank
OF Louisiana, Indiana and Massa
chusetts before the civil war. Thes
States had banking laws which secured
absolutely the safety of note issues
All authorities agree upon this. TIL
Louisiana law is pronounced by ex
perts eminently scientific" and tn
model for other States and countries.
None of the Louisiana banks sus
pended in the panic of 1857, although
most of the banks of the country wer
temporarily closed by that catastrophe
The notes of the Louisiana banks wer
not secured by bonds, State o
national. Their principal security wa
requirement that each bank shoul'
have specie reserve equal to one
third of all its liabilities to the public
There were other wise regulation shall
contribute to the unquestionable sue
cess of the Louisiana system, but tn
requirement that the specie reserv
should be equal to one-third of tn
liabilities, whether deposits or notes
was found to be ample. Bonds, a
security for notes, were shown not t.
be necessary. The Indiana ant
Massachusetts, laws were similarly sue
cessful, and their success may be pitte'
against the argument drawn from tn
failure of the banking laws and note
of other States. Our forty-four State
have only to copy the Louisiana law
say the friends of State banks, to max
their State bank note issues as cool a
gold.
But granting that the adoption b
all the States of good banking la,
would make State bank notes safe, j
may be asked how the forty -four State
can be induced to enact such law
The answer, it has been asserted, lie
in the present ten per cent. tax Of
State bank notes. A law to the effec
that a tax of ten per cent. shall b
collected on notes not issued unde
State laws framed on a certain mode
(the Louisiana law would; it has bee
suggested, cause all the States tina
desire State bank notes to legislate tn
same way. Submission to federal, a
we'll as State, inspection at frequen
intervals could be made anothe
condition, it is said, of the removal @
the ten per cent. tax. Educationa
funds are now given to State institu
tions on condition that State educa
tional laws conform. to certain condi
tons. 1t is an interesting question
whether State action in regard t
banking can be similarly controlled
Baltimore Sun.
| Letter from Kittrell.