Year: 1862

bankers are all rascsls,, or that the individ


ais who may have control of the stocks Al


scoundrels am examining the State ban!


ing system, and when / show that this sy


tenn is liable to such great abuse, sho


that the security for the notes is not at a


reliable


But gentlemen claim that there is othe


security under this system for the redem4


ton of these, notes. What Is itas The az


Of incorporation, it'll true, provides that


any branch fails to redeem its notes in spe
Gle, then the State Bank of iowa shall i'm
mediateiy. provide money, and placs it Il
such solvent branch or branches as may b


most convenient for the purpose Of redeem


ing the notes of such failing branch. Blu


suppose the Bank refuses or fails to provid


the money to redeem the notes Of the failin,


branch, or suppose the branches fail or re
fuse to contribute each their proportion, s,
"a to enable the Bank to provi le the mean


of redemption. What then!


Should this calculation show thatit woulS
not pay, or that some other branch woult
be weakened, so that it would probably sinh
in the. effort to shoulder the liabilities, ant
that others could not shoulder lie. kAbilitie;
VI t0C tWV W th1S latiitlH OI0tICtICS--ttbCI
stand from unde7i The Clubhouse fixinr
must roll down, unless the honor and hon
'esty of the banks should be able from inher
'ent strength and pccuniary ability to with
stand the seductive influence ofmoney. Bu,
if honor and integrity be the sum and sub
stance Of this security, it would be better te
depend upon it without the mockery of .
law which promises more but furnishes this
alone. This security is an element Of weak
ness, instead Of strength. While the wealth.
er is pleasant and the road smooth, these
branches hitched together as team may
draw their load very beautifully, but when
they attempt to ascend that slippery hill
called crisis, and every muscle is strained
to the utmost, one OF the team may fall from
exhaustion, and throw its share Of the load
on the others, this increased load may bring
another to the ground, and this another un.
til the whole team slips backwa,d ds over an
embankment and goes into eternal smash.


. But there is another security for this paper
money. Each stockholder is made liable to
an amount equal to the amount Of the stock
he may own. Now what does this amount
top Stockholders are not required to have
any property, oyer and above their stock
and should they have any there is no lien on
it by this provision. A few unsuspectine
small stockholders, might be caught with
property that could be made available should
the bank break but am inclined to think
the larger stockholders-the men who really
own and control the branches would no,
fancy being caught in such trap, and as
they could have plenty Of time to escape it.
they would not run their heads into it. The
most that can be said for this kind Of securi.
ty is. that in case Of failure, something by
possibility might be obtained from some ol
the stockholders, but it is really no security
whatever. - x ft


We are now at the end Of the securities,
provided to insure the redemption Of the
paper of the State Bank Of iowa. think
that / have shown that no one of the three
kinds Of security is reliable or sufficient /;
and il they are insufficient singly, they must
be collectively. This banking system is so
imperfect that II is open to almost innumer-
able abuses. The bank furnishes its own
notes, appoi is its own committees to exam
ipe the branches, the president and all off,
GERS and agents Of the Bank give bond in
suchsum and with such security as the bank
shall prescribe; numbers and countersigns
its own notes. and appoints the receivers to
wind up failing branch. One person can
have the control of branch, because he can
own substantially all the stock. Besides its
circulation and Indebtedness to depositors,
each brance may 60 in debt to the extent oil
two thirds of the amount OF its cash capital
may loan its own stockholders on their own
personal security, to the extent Of three -fifths
the amount of their paid in capital ; and the
branches can loan on their personal security,
each others stockholders without restriction.
But Senators may say that they believe our
bankers are honest and these abuses are moi
likely to occur. Ny reply is that when there
are such good opportunities for abuses there
is great danger. Having shown that this
banking system is not perfectly safe, now
come to the second inquiry, '.Is this State
Bank now sound ~ LIDO not say that il Is
not, but hold that We should have evidence
to convince US that u certainly is sound be.
fore we vote to receive its paper for State
dues. Where is the evidence 1t has oc
CURED to me that it ia little singular thai
no Senator has attempted to produce any
evidence whatever on this point. The Stats
they tell US, elects and pays three directors
to watch this bank and see that everything
is managed rightly. Why haye the support
ers Of this measure failed to present ds with
a report from these directors, showing ths
good condition and proper management O
the Bank Such report might quiet ou'
fears and 60 far to convince us that w
should consent to take this currency. / vii
answer the question. 1t is because th'
banking system is so loose, that although
it provides for the appointment and paymen


Of these directors by the State, yet it does
not require them to make any report. Be


sides, these State Directors are considerable
of humbug They can neither do or know
ANYTHING that will be ofsubstantial value +
the State or the note holder unless the banl
chooses to let them, except to enjoy the hon
ors of this Office, and draw their pay.


There are fourteen Directors, l believe
appointed by the Branches, and three by tn
State, and State Director has no more, G


as much. power than one Of the Others


Hence the fourteen can always control tn
three, in oil the management Of the Bank


they see proper to do so, and If snythin


should get wrong, what security have "


that the Bank Directors will see proper


manage both the Bank and the State Direc


ors to suit themselves. But the friends ,


this measure show us the last statement I


the bank as evidence of ,ts soundness. Tn
| is very unfortunate for them, since this stat


meut does not fill the provisions Of the a
Of Incorporation, in showing the condition
of the bank It shows that the bank h:
1 over $3.50. 900 more circulation than it h,
specie for It's redemption, and that is abo,
/ the sum total of the information that can
j gathered from it. Tis true II shows US TIL
the bank has over $500, 900 due it fro


Banks and Bankers, but it does not tell ,


whether these funds are good or not /; tn
lit has over 400. 900 in loans and discount