426 



FARMERS' REGISTER. 



[No. 7 



ofbanks has diverted capital from its most produc- 

 tive pursuit, and wasted or sunk it in such a way 

 us that it is deprived of the power of reproduction, 

 then we saj', the system has been most pernicious. 

 Every house that has been buih, which was not 

 called for by the increcise of population — every 

 barn which has been raised, wifiiout beinn^ requir- 

 ed by the accumulating crops ot iheliu-mer — every 

 turnpike road and bridge which has been prema- 

 turely constructed, and which does not save to the 

 community, in the reduction ol the expenses of 

 transportation, a sum equal to the re\eime that 

 could have been derived from the employment of 

 liie same funds in other pursuits — are visible monu- 

 ments of the annihilation of capital. As far as ihe 

 banking system has been instrumental in these 

 results, and your committee are constrained to say, 

 that in their opinion it is deeply implicated, so far 

 has its tendency been adverse to the public pros- 

 perity ; and as banks have not the power of pro- 

 ducing the necessaries of life, the real capital which 

 makes turnpike roads, it would appear that the 

 most they have accoiTiplished, has been, to induce, 

 by false allurements, some unwary people to em- 

 barrass themselves by subscribing their capital and 

 credit to unproductive turnpike roads and bridges, 

 and others to lend their money and labor to cor- 

 porations which can never repay them. Improve- 

 ments thus forced and extorted, and by no means 

 resulting from the ordmary course of the employ- 

 ment of capital, are not at all to be desired; and when 

 we reflect upon the power of money to accumulate 

 at compound interest, and estimate the difference 

 between a sinking of capital and its profitable em- 

 ployment in some productive industry, we cannot 

 but regret the cause which has been instrumental 

 in producing such a wanton destruction of pro- 

 perty. If any confirmation were wanting of the 

 truth of our assertions, it might be found in the 

 fact, that most of our turnpike companies are 

 deeply involved in debt. Much of the amount is 

 due to contractors and laborers, and no small sum 

 to the banks ; and it thus appears that they have 

 been in a great degree constructed witii the capital 

 of those, who never voluntarily consented to such 

 a permanent iiivestment. 



Having thus shown, as your committee con- 

 ceive, that all the benefits which the community 

 can experience from the existence of bunks, are 

 derived from them in their capacity of banks 

 of deposite and discount, and not in tfieir charac- 

 ter of banks of circulation, it remains to be 

 shown in what further particulars they are objec- 

 tionable. 



The very nature and essential character of 

 monied institutions are hostile to the spirit of free 

 government. The power and influence which a 

 combination of wealth is capable of begetting, are 

 of so commanding a nature, as scarcely to admit 

 of being controlled. Tlie want of an indi\idual 

 moral resj)onsibility on the part of the persons as- 

 sociated, often destroys all the protection which 

 the public can possibly possess against abuses and 

 oppression. Men have been known, as component 

 members of a corporate body, to acquiesce in mea- 

 Bures which would have wholly destroyed their 

 reputation in society, had they given them coun- 

 tenance in private life. Public o|)inion is the most 

 powerful shield of the citizen against the encroach- 

 ments of injustice, and whenever individuals are 

 invested with immunities which screen them from 



the public view, there is danger to be apprehended? 

 as the certain consequence of a divided responsi- 

 bility. 



Your committee are fully of opinion, for the rea- 

 sons here laid down, that banks of circulation oc- 

 casion much more injury to the community, than 

 they produce of good. Still, however, they are 

 compelled to admit, that, considering the vast 

 amount of debts now due by the public to the 

 banks, it would be highly injudicious in the legis- 

 lature, to refuse to allow to any of the banks such 

 a number of years after the expiration of their 

 charters, to collect their debts, (strictly prohibiting 

 all new loans and issues of notes,) as would render 

 the operation as little oppressive as possible to tlie 

 great mass of debtors. Three or five years would 

 aflisrd ample time to mn' solvent individual to meet 

 a debt which he had contracted to pay in sixty days; 

 and when it is recollected that the capitals of the 

 banks might be directed by law to be divided 

 amongst the stockholders, after the payment of all 

 their debts, in instalments of five or ten per cent, as 

 liist as collected, it will be perceived, that the 

 money thus paid to the banks, would be immediate- 

 ly in the hands of the individual stockholders, seek- 

 ing employment as before. 'J'he winding up of a 

 l)ank is, in itself, a simple jjrocess, and by no meaps 

 accompanied by those awful consequences which 

 interested persons are so apt to depict. If banks 

 have been unfortunate in their operations, let their 

 losses fall upon those Avho have reaped the profits 

 of their prosperity. Let no artificial rise in the 

 price of their stock, usually resulting fi'om the re- 

 newal of a charter, be sufliered to deceive the 

 ignorant and unwary into ill-advised speculations, 

 under the delusive hope, that a simple extension of 

 a charter can restore lost capital, or in other words, 

 make bad debts good. 



Your committee are clearly agreed, that in no 

 event should a great jiroportion ol the bank char- 

 ters which will expire in the year 1825, be renew- 

 ed. What particular institutions should be select- 

 ed from the mass, must depend u[)on the wisdom 

 of future lesrislatures, who will have a proper re- 

 gard to locality, stability, public convenience, and 

 the calls of trade. But your committee conceive 

 that it is a duty incumbent upon all such legisla- 

 tures, to protect the community as far as lies in 

 their power, against the pernicious operations of 

 the banking system, by introducing into all new 

 charters, such provisions as will be efficient in re- 

 straining them fi'oni excessive issues, and from 

 those destructive acts which have hitherto proved 

 so ruinous in their tendency, ji future suspension 

 of specie payments, either through design or miscon- 

 duct, must be rendered impossible, and with such a 

 principle wisely and resolutely adhered to by the 

 legislature, the evils resulting from the system will 

 be greatly diminished. Your committee would 

 recommend as absolutely essential to the public 

 welfare, that no charter be granted or renewed 

 without embracing the following provisions, some 

 of which already exist in some of the acts of in- 

 corporation : 



Pirst. That a penalty of twelve per cent, per 

 annum be imposed upon the amount of all notes 

 and deposites not redeemed or paid on demand, in 

 gold or silver coin ; that the charter be forfeited, 

 except for the mere purposes of winding up, and 

 that during any suspension of payment, no divi- 

 dends shall be made. 



