The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-06-28

no control. The State banks issued
argely and in addition the country was
| flooded with unchartered currency OF all
denominations from six cents upward
Bank failures and great distress through
out the country followed
| Mr.. Dallas, Secretary of the Treasury
/ At Washington IN 1914, says in his report
70 the Committee on Ways and Means.
The multiplication OF State banks in the
several States has SO increased the GUAM
| tity of paper currency that ii would be
/ difficult to calculate its amount. and still
more difficult to ascertain It's value
There exists at this time no adequate cir.
culating medium TO the citizens Of the
United States. The moneyed transac.
ions Of private life are at a standstill
and the fiscal operations of the govern
nent labor with extreme inconvenience. 9
Through this crisis the North Carolina
banks were sorely pressed Various meth
IDS were tried to remedy the evil. The
/ state allowed the State Bank to retain
| 1 per cent of the dividend on the stock Of
! he State as a reserve. Later the Bank
| # Cape Fear and Bank of New Bern
| were allowed to increase their capital
| .tcck by $525, 900. with the provision that
they could be required on three months
notice, to loan one-tenth OF their capital
stock to the State and should also present
to the State $4,000 stock in each bank
without conversation other than TIE
granting of the amended charters. The
State seemed DESTROYS of aiding the bank
4 by aiding itself Yet no methods seemed
to lave any effect in preventing the enor-
nous volume of paper currency from grow
! ing larger The banks continued to issue
BY November. 1873. the proportion be-
tween the notes in circulation and the
fspccie in the State Bank of North Caro-
ina was over eleven and half to ono
For every dollar in the vaults of he
bank. there was in circulation between
S1f.50 and $12 of paper For the purpose
of stemmng the tide which was about
to overwhelm the institution, the directors
ordered the books to be onened for sub
scriDtions to the amount of s42400D. which
stock remained unsubscribed. In order to
decrease their circulating debt the direr
tors allowed these subscriptions 20 be
paid in the notes of the bank thereby
calling in $424 900 of their outstanding
paper currency. Before all the install
ments had beer paid in, however. it was
evident that the scheme would not be
means of saving the bank that it was
impossible to keep sufficient specie to
meet the constant demand for redemption
and in June, 1919. delegates from all three
of the banks the Cape Fear. New Bern
and State Bank. met at Fayetteville and
entered into a formal resolution to sus-
pend specie payment. Their notes imme-
diately fell to Is per cent below par.
The sentiment Of the people and the
effect in business circles occasioned by
this action of the banks are evidenced by
the following report OF a legislative COM
mittee. "The depreciation of the notes OF
all the banks caused by the refusal Of he
bank to make good their notes with
specie, has been productive Of incalcula-
bic mischief to the community; and it IS
considerable azeravation of the mischief
to know that in the case of the State
banks large quantities of their notes have
occasionally beer thrown into circulation
by themselves IN the purchase of cotton.
Another remarkable fact is that to pro-
tect themselves from demands for specie.
| they at one time administered an oath
to each individual presenting their notes
for specie compelling him to state that he
was not a broker =
The general condition of the finances
Of the country. the lack of confidence Of
the people and the scarcity of gold and
silver, made the existence of the banks a
constant struggle. In 1920 the charter OF
! the Bank of New Bern expired and was re-
/ chartered. as was that of the Bank oil
Cape Fear in 1922. These two banks. to-
gether with the State Bank Of North Car
olna and their separate branches continued
as the only financial institutions in the
State until 1886.
Specie payment was resumed in 1920.
and until 1923 the banks did their best
TO meet the demands placed upon them.
That they succeeded only fairly well can
&c readily imagined from the system en-
ployed. Private individuals were allowed
/ to become heavily indebted to them, wefe
siaw IN payment, or did not pay al all.
IN 1929 the financial system seemed to be
approaching crisis. The affairs Of the
banks were in deplorable condition, and
| the remedy was wanting An attempt on
their part to force collection Of their loans
added the general distress, and in 1923
/ the General Assembly appointed three
commissioners the Governor, Comptroller
and Secretary of State, to attend The
meetings of the bank and prevent, if POS
sible, too rapid reduction of the debt.
or any movement to wind up the affairs
of the bank too suddenly. These three
| commissioners were also authorized to at
tempt a consolidation OF the three banks.
which was unsuccessful The commission
| ers succeeded in making matters easier by
/ promising to recommend to the General
! assembly the continuation Of the charter
| of the banks for three years after the
expiration in 1885. This the General As
sembly agreed to do, provided the follow
,ng resolutions were observed: First that
he bank should make no loans after Dc
cember ST. 1894; second, that after Sep
| tcmber 30. 1890. no loans should be made
on paper payable in longer periods than
three equal installments of ninety days
each third, that after 1882 no note for
Gums under five dollars should be issued
and fourth that no notes should be emit
ted after December l. 1884 The banks
were to be allowed to discontinue any or
all OF their branches The directors ac
eepted these conditions. and the work Of
gradually reducing its loans and winding
rp the business was begun.
4 statement Of the State Bank of North
Carolina. Mey 10, 1929, shows that with
CAPITAL stock Of 100000 # had deposits
If only $3.50 .515.55 specie in its vaults Of
only $40, 7c2 64 while its notes in crcula-
fiol were $910.55425 For every dollar Of