Слике страница
PDF
ePub

of the country bankers, whose influence in electing Congressmen was a potential factor in the refusal of President Jackson to sanction a renewal of its charter. The withdrawal of the government deposits, coming at a time when the directors of the Bank of England, in 1836-37, becoming alarmed at the great diminution of precious metals, prescribed the paper of even the most eminent American bankers in London, with a view of contracting suddenly their business to force the exportation of gold and silver from the United States.

The inflation of note issues by the State banks soon precipitated the hoarding of specie and demonstrated the unsoundness of our financial system as soon as the restraining influence of the Central Bank was removed.

The message of his excellency, Governor E. D. White, of Louisiana, December 11, 1837, graphically describes the conditions which obtained in Louisiana, and in fact, throughout the United States. The message is particularly notable in that it places the responsibility for maintaining a stable currency upon the national government.

“The currency is a national issue under our federative system—the power to regulate the currency is one of the most essential attributes of the general government.”

The message of Governor White, the father of Chief Justice White of to-day, sounded the keynote for the systematic examination, regulation and control of the banks of Louisiana. The Louisiana banking law of 1838, which was drafted under his inspiration, provided a board of currency to carry out the provisions of the act, limited the note issue by requiring State banks should have at all times in their vaults specie equal to one-third of their note issue, and that the maximum note issue should not exceed one-fifth of the paid-in capital.

The Louisiana banking law became a classic and the pattern of all other State banking laws, as well as the foundation stone for our national banking system at the close of the Civil War. .

EXTRACTS FROM MESSAGE OF GOVERNOR WHITE. “An almost universal and simultaneous suspension of specie payments by the banks having taken place, their bills, no longer convertible into specie, and, in exemplification of the received axiom in political economy that a sound and a vitiated currency cannot exist together, the precious metals speedily disappeared from circulation to become a mere object of merchandise, while their place was usurped by paper of various kinds, having no fixed standard of value. In many places the notes of individuals or of corporations, issued without the sanction or authority of law, have become almost the only medium through which the smaller daily local exchanges are affected, forming, indeed, a very inconvenient and unsatisfactory kind of currency, but in which, from necessity of the case, men are compelled to acquiesce for the time.

“If it be in the power of the Legislature to redress the wrongs under which the body public is suffering, you are called upon by every motive which the sense of duty or the love of country can supply, to adopt such measures as may bring about the happy consummation. Your jurisdiction over the subject matter is generally supposed to reside in the control inherent in the supreme power of a State over institutions deriving their existence directly from the exercise of its creative will.

“In originating any plan to suit the exigency of the case, the great end to which all other steps should conduce, must be the resumption of specie payment. Nothing certainly could be more desirable to all, than to be able to look forward to some given time as the auspicious epoch when this was achieved. It cannot, however, be denied that speculation on this matter is involved in great complexity and doubt.”

Experience has shown that when the financial affairs of people become seriously deranged, it requires the utmost exertion of prudence and the best directed concert of action to bring them back to a state of soundness and stability. To expect such harmony of movement and correspondence of legislation among twenty-six independent State sovereignties, as may accomplish this most desirable end, would, it is feared, reasoning from the past, be utterly idle and Utopian. Nothing can effectually redeem the currency from its present derangement but the hearty co-operation of the individual monied capital of the people of the United States, and that of the national government operating through the medium of a national bank, and such is the extent and magnitude of the mischief that even the efficacy of co-operation has become a theme of conjecture and doubt. To compel our banks to resume, while the banks elsewhere pursued a different course, would have little other effect than to drive them promptly back, crushed and exhausted, with their vaults drained of every dollar, to a fresh suspension not voluntary, but compulsary, from which they could never reasonably hope to rise again. On the very same day, December 11, 1839, I find the following:

INTERESTING COMMENT BY THE SUPREME COURT OF LOUISIANA.

(Volume 3, Louisiana Reports, folio 585.) “Directors of a bank have important duties to perform towards creditors and customers, the public and stockholders.

Creditors and customers have a claim to the preservation of the capital in its original integrity, for it is the pledge on the faith of which they accept the notes of the institution, deposit their money and lodge paper for collection.

“Banks are not incorporated for the sole purpose of enabling capitalists to employ their money advantageously. * * * Most bank charters contain a stipulation that certain capital shall be

in the extension of commerce and the encouragement of agricul. ture, etc.

"As the claim of the public for these advantages is subordinate to that of the creditors and customers of the bank, so is that of the stockholder for profits subordinate to that of the public.”

The following comparative statement of deposits to credit of the Treasurer of the United States shows the heavy withdrawal of funds by the government:

Statement of the Commercial Bank (before) 1st October, 1836: Depcsit credit of Treasurer of the United States. . . $1,861,689.13

(After) 3rd December, 1837: *Deposit credit Treasurer of United States........ 90,374.75

*Shows the heavy withdrawal which helped the local panin.

We have before us a statement of the situation of the banks in New Orleans on the 23rd of December, 1837, as submitted by the joint committee by both houses of the Legislature, showing the resources of sixteen banks, with total assets of $72,712,463, and a liability of $27,864,742; however, the total movement of the banks is confined to the deposits, $7,096,465, and a circulation, $7,558,465. Deducting from the total the notes of the banks held by local banks, $3,160,505, we have the actual cash liabilities, $11,824,428, with a specie reserve of $2,729,983, equal to 23 per cent. of the cash liabilities.

Attention would naturally be directed to the loans on real estate and loans on bank stock as provided under the charter, which makes a very heavy dead weight, amounting to $43,341,904. Of the sixteen banks of 1837, we have with us to-day only two banks—the Canal and Banking Company, now the Canal Bank and Trust Company, and the Citizens' Bank of Louisiana, now operating as the Citizens' Bank and Trust Company. Neither of these banks availed themselves of the national banking act but the Union Bank of Louisiana after the Civil War became the Union National Bank, and the Louisiana State Bank became the State National Bank in 1870. The Union Bank of Louisiana went into Liquidation about 1896 and the State National Bank was liquidated in 1908, following the panic of 1907.

We have been unable to locate any data which would give us the more intimate history of these banking interests, but have noted on the bottom of the statement the different public improvements for which the City of New Orleans is indebted to the improvement banks of those days, and I submit the statement for your further information:

Following is a synopsis of the general principles contained in the bills reported to the Senate and House of Representatives relative to currency:

First-It creates a Board of Currency to be composed of competent persons appointed by the executive of the Senate, whose special duty it shall be to cause the provisions of the bill to be carried into execution.

Second-A condensed statement of the circulation and liabilities of the banks is to be published monthly by the Board of Currency.

Third—It is made the duty of the said board to transmit to the General Assembly, on the first Monday of January in each year, a statetment of the situation of the banks..

Fourth-All issues of banks are limited until the resumption of specie payment to one-fifth of their capital paid in, such issues to include notes of whatever kind emitted by the banks.

Fifth-The banks are authorized to increase the rate of discount to 8 per cent. on all loans over four months, to 9 per cent. on all loans over nine months.

Sixth-The banks are permitted to issue post notes payable on the first of March, or sooner, if in the opinion of the majority of the presidents of the banks, specie payments can be resumed before that time; said notes to be stamped by the Board of Cur

Seventh-The Board of Currency to ascertain the circulation of each bank.

Eighth-All banks having a larger circulation than that required, are compelled to curtail the same gradually, so that they may be within the amount by the first of March, 1839, unless the resumption of specie payment take place sooner, the banks having a less circulation to issue post notes as above.

Ninth—All post notes received at par by every bank in payment of debts.

Tenth-All banks are compelled, so far as practicable, to use their own notes for their daily payments.

Eleventh-The banks to have by the first of March, 1839, onetenth of their capital in specie.

Twelfth- The banks to have in their vaults by the first of March, 1840, and at all times thereafter, one-third of their liabilities in specie.

Thirteenth-Each bank, from and after the first of March, 1840, to settle all its balances weekly, and to pay or require the payment, as the case may be, in specie, said balances, and to reject the paper of any bank neglecting or refusing to effect such a settlement.

Fourteenth-The protest of a notary public from and after the first of March, 1840, of any bank or post note, to constitute a forfeiture of the charter of said bank.

Fifteenth-Any bank forfeiting its charter to be compelled under certain conditions to grant one, two and three years to its debtors.

Sixteenth-The limits to issues to be considered as repealed the moment the banks resume specie payments, and the penal clauses to become binding and in full force at the same time. Penal clauses are also contained in the bill to enforce a strict compliance with the provisions of the act. It is besides made the duty of the Attorney General to prosecute for forfeiture of their charters, such of the banks of this State as shall not have accepted, after a stated time, the above rules and regulations as part of said charters.

RESULTS, EFFECT IND WORKING OF THE ACT. 1. The Board of Currency afforded a complete check to overissues and restored public confidence.

2. Monthly statements published of circulation and liabilities enabled close scrutiny of bank movement.

3. Authorization to issue post notes payable the 1st of March, 1840, which notes were receivable at par by all banks for debt due them, insured circulation within the State and gave the banks two crop years to realize upon before they were required to resume specie payment after the 1st of March, 1840.

« ПретходнаНастави »