Year: 1859

| Mr.. Dudlgy-Mr. speaker: l propose a leW re-
marks on the practical working of the counter note
system.


Nearly every member in this House will tell you
that he is in favor of the counter note system; but
when they further interrogated we find the fol-
lowing variety Of views prevailing on that subj ject ::


lst. There are some who stick TO the bank bill of
last session, which means that no bank shall pay
out any note not payable on Its face at the cOnter
where paid out.


| I'd. That no bank shall issue note not payable
at the counter where issued that is the emittance
or first issuance of a new bill shall be paid at the
counter where issued but the bill being once in
sirculation and coming in due course of trade into
the vaults of other banks, it may there be paid
out.


Sd. No bank shall pay out any note not payable
on its face where paid out; provided, any principal
bank may pay out the notes payable at its branches
but the principal bank shall be liable to redeem
such branch notes.


4th. The issuance of all bank notes shall be at
counters where payable, but any principal bank
may pay out the notes Of its branches, provided
always, that the principal bank shall be liable TO
redeem all the notes Of its branches; provided fur
ther that the branches may pay out in addition 10
its counter notes such notes as are payable at
its parent bank, which it may have received in due
course of trade.


A 9th view entertained is, that each banking in
stitution shall make all its notes payable at some
central point and that all branches may receive and
pay out these notes payable at the parent bank.
9th. Any bank may pay out the notes Of all spe-
Gle paying banks of this State


7th. Some think that the banks should be per-
mitted to pay out the notes of all banks, whether
chartered by this or any other State.


1t is necessary to proper understanding of any
subject that we should attach the same meaning
to the terms used. Now, by the word issued, we
mean to emit the new or fresh impression of bank
note or BILL or in other words, the first time bank
pays out bill Just printed and signed After this
bill has once come into circulation and returns in
the course of trade to the bank and is again handed
to customer, this is called paying out. The words
"pay out include the word issue" but issue does
not include the words "pay out" Both terms are
used in section 1914 of the Code, and in various
bills before upon banking.


Ny amendment would not repeal the act Of last
session in anything except allowing branches TO pay
out parent bank notes. which it may have received
in due course of trade nor shall it conflict in the
least with the platforms the two political parties
erected and stood upon In the last canvass don't
consider these platforms very high authority but
then it is smoother sailing to go with them than
against them. The Opposition platform used the
word lssuance-whiCh means the first emittance of
bill. To this part propose TO adhere. The DEM
ocratic platform said, "to enforce invariable re-
demption at their counters of their circulation
Now, this sentence does not prohibit one counter
from paying out notes payable at other counters.
But il simply says and means that the law shall en-
force or compel the branch to redeem the circua-
ton at whatever counter it may he payable or be-
| long. The platform says nothing about paying out
| notes. 1t aludes merely to their redemption after
they paid out


| The mode propose would be acceptable. so far
as can learn, to all the banks. And think it
very desirable to have all the banks working under
the same rules and regulations.


The first class of opinion advocated is the counter
note system passed at the last Legislature, and
now enforced upon the Bank of Tennessee. For
this system fear there is majority of the House
Let us look for moment to the practical working
of this system. 1t says that bank shall pay out
any note not payable at the counter where paid out
This dcprivPs the bank of the use of all notes of all
other banks well as of all notes of the same in
stution that are payable ut cher Offices 1t likens
the bank to fsh-trap: it may receive, but not pay
out. The best way to understand the subject is to
look at the actual working of the system. | un-
dersand from the officers of of the branch banks
that on the lst of September they received about
10000 counter notes, signed and sent them by the
parent bank for circulation. The bank commenced
business on them. 1t discounted notes and bills of
exchange, and paid out counter notes for them II
paid deposters checks in these counter notes aud in


few days business all its counter notes were paid
out and they became scattered all over the country
and the office had nothing with which to discount
note or bill, pay deposters check. 1t is true,
some few of these counter notes would find their
way back. but so few rs to allow the bank to do
little or no business. Suppose customer goes to
bank to make a deposit, there being about
$4,000 900 of paper in circulation in the State and
only few thousand of this are the counter notes
of this branch the chances that all nearly all
of the money sought TO be deposited will be pay
able elsewhere. Tomorrow the depostor checks for
his money. and the bank must pay the check in
counter notes and so the bank is continually swap
ping its counter notes for other notes. understand
the branches of the Bank of Tennessee have not
only been compelled to almost stop discountinp
notes and bills, but have refused to receive de-
posits.


will instance case that actually occurred. A
man in Clarksville had 81 900 Of notes on various
banks which he deposited in the Clarksville branch


A few days afterwards he wanted the gold in Nash,
vile; he drew his money out Of the Clarksvill'
branch in counter notes brought them to Nashville
and deposited them in the parent bank and checked
for the gold. The bank at Clarksve could not


use the first notes deposited, the Nashville banl


the Clarksville notes. This makes the banks thu
public carriers, and that without reward. This op
Grafton will keep majority of the circulation con
stany in transitu, and prevent the hanks from he
7 ing able to grant the usual accommodations to tn,
, citizens. 1t will take double the circulation TO dc
the same business.


II may be answered that to permit the bank Il
I have more notes signed would obviate this diff
Guilty, and allow Of the hanks doing its usual busi
, ness This would certainly be unsafe both to tn


bank and community For possibility more than


Legitimate quantity might get into circulation Il


one time and the bank itself would always he Il
= more danger from theft and robbery. Mr. CAN'T
c bill for a bank code forbids any bank to permit il


issues to exceed ~ Of paper TO 81 of specie an
specie funds on hand. Now, if this hard none


counter note system operates tc sp one-haf Of tn
circulation in the vaults ans tsitu, where


the chance for profit TO the bAs' If il keeps


silver dollar in the bank for IN its outside crcu
4 lation, what chance is there Of making more none


than win pay expenses and bad debts?


Mr. Trimbles bill for the re-chNrter Of Planter
and Union Banks forbids the banks to issue hav


prepared for issuance more than and one-half O


paper currency TO one of capital stock paid. Thi


restriction, combined with the present counter not


system, virtually confines them To seventy-fye cent
e of circulation 20 one dollar Of capital