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COMMERCE OF CHICAGO. Tabular statement of receipt of pro
duce and merchandize for the year 1853 ........
Tabular statement of shipments of produce and merchandize
Shipments of Flour from 1844 to 1853 inclusive...... ........
Wool statistics from 1842 to 1853 inclusive...........
GERMAN PHILOSOPHY. From the French of Madame De Stael,
Translated by the Junior EDITOR. Continued from page 69....
The period for which the Bank of the State of Missouri was chartered having nearly expired, the time has arrived when the people of this State must determine whether they will eschew banks altogether, continue the present system, or adopt one more democratic in principle and more useful in its operations. Notwithstanding the objections entertained by many to banks of issue, we are persuaded that a majority of our citizens will so far yield to the spirit of the times and to the peculiar state of things now, existing as to continue, and, perhaps greatly extend, in some form or other, their Banking institutions. Regarding this result as certain, we deem it to be our duty as journalists to investigate the subject, and submit our views to the consideration of the public.
The first inquiry presented is, whether we shall continue our present system, and, if so, shall it be extended to the limit fixed by the constitution? Were it not for the inconvenience and probable derangement of business, which would be occasioned by closing the present bank and its branches, before another system could be put in full operation, we should say, without hesitation, let the system and charter expire together.
But, upon grounds of expediency, we conclude that it will be the better policy to extend the present charter to a period that will
fford time to establish another and a better system. The obserytion and experience of many years have confirmed us in the opinon that, though banking corporations are capable of affording imortant facilities to certain branches of industry as well as to comperce, yet, it is better for States which have no banks to remain I that condition, and use the paper money of other communities,
than to adopt the system of banking which has hitherto prevailed in this country.
We know that many intelligent individuals regard the existence of banks of issue in other States as a strong argument in favor of establishing similar institutions in Missouri. These affirm that by allowing the bank notes of other States to circulate here, we become subject to the evils of a paper currency without the benefits derivable from bank accommodations. This is a plausable, but a superficial view of the subject. For it must be borne in mind that banks of issue being institutions of credit, a state of indebtedness is an inevitable consequence of their operations. Indeed their operations are marked by a peculiarity which distinguish them from all other business transactions, for a debt is created by both parties to every negotiation for a loan. And for every dollar of paper money issued by a bank, debts to the amount of two dollars are created; the borrower becoming indebted to the bank, and the bank to the bill-holder. Besides this, the business of the banking States is burthened with interest on all the bills put in circulation, except such as may have been loaned by the banks to non-residents. If business in the non-banking States be conducted on sound principle, the people acquire a paper currency by a legitimate exchange of commodities, and no indebtedness need be created in obtaining it. And, moreover, they enjoy the benefits of a circulating medium without paying interest upon the amount issued. These facts, with exemption from many other evils of banking which might be mentioned, are strong arguments against the establishment of banks in States where none exist.
It is an inherent quality of banks of issue that the establishment of one creates a demand for another, and the intensity of the demand always increasing in proportion to the degree of expansion, the system cxplodes in time as a necessary consequence.
Though we admit that banking corporations have been powerful agents in establishing manufactures and constructing public works in the older States of the Union, yet, holding, as we do, that their chartered privileges and practical operations infringe the sound principles of public economy, we cannot consent to the establishment and indefinite continuance of that system of banking in Missouri; and hence, should the time limiting the charter of the present Bank be extended, we should object to an enlargement of its capital.
Looking forward to the present state of things, we called the attention of the people of Missouri to the subject of free banking about four years ago ;* but unfortunately, as we think, for the State, it received little favor in the General Assembly. Had the measure been adopted by that body, at its session of 1850–1851, we are persuaded that little difficulty would have been experienced in prosecuting our works of public improvement; and, that now they would have been at least two years in advance of their pres. ent condition. Besides, it was a more favorable time then than nov to introduce the system. There was then less demand for money; the system would have went into operation without delay; and absorbing our State and corporation securities as fast as they were issued, the interest accruing upon them would have been paid at home, and have constituted a basis for the issue of a home currency.
Though still the advocate of free banking, we confess that we do not feel the same degree of ardor in behalf of its introduction, that we did four years ago. We have long deprecated the policy of creating banks to relieve communities from pecuniary embarrassments ; and though the people of Missouri are comparatively free from embarrassment, there is a deeided pressure in the money market giving rise to a desire for banks : a state of things which should always induce the legislator to act with great caution.
But doubts have been raised in respect to the power of the leg. islature to authorize individuals or associations to issue notes or bills for circulation. This is an important point; and one which should be carefully investigated. For were the legislature to adopt a system of banking, and serious doubts should exist in respect to the constitutionality of the act, such doubts would prevent capitala ists from entering into business under the law until the point should be settled by judicial action. We understand that the opinions of legal gentlemen have been given upon this question, but have not seen or heard the reasons stated for their conclusions. To our view the subject is entirely free from doubt. The eigthth article of the constitution of Missouri provides that “the General Assembly may incorporate one banking company, and no more to be in operation at the same time.
The Bank to be incorporated may have any number of branches, not exceeding five, to be established by law; and not more than
• Vide Western Journal, Vol. IV, p. 211
one branch shall be established at any one session of the General Assembly. The capital stock of the bank to be incorparated shall never exceed five millions of dollars, at least one half of which shall be reserved for the use of the State.”
It is clear that in adopting this article, the main and only ob. ject designed by the convention was to limit the power of the legislature in respect to banking corporations. The constitution contains no prohibition against private or individual banking; leaving that pursuit like all other useful employments free for all who might choose to embark in it.
The laws of other States regulating free banks, so far as we have observed them, are not of the nature of charters. They grant no franchise or privilege not enjoyed by every citizen of Missouri under the constitution before restrictions were imposed on private or individual banking by the legislature. Indeed, so far from possessing the qualities of a corporation, a system of free banking, such as has been adopted in other States, contains important restraints upon the rights reserved to individuals by the constitution of Missouri. Before individuals are allowed to issue and circulate bills as money, under the laws referred to, they are required to deposit with the Auditor or other officer of the State certain securities sufficient to redeem all the bills to be issued. But were the legislative restraints on individual banking removed, any citizen of Missouri would possess the right to make and put in circulation any amount of bills or notes that he could find a market for without making a specific appropriation for their redemption.
Hence we conclude that no alteration of the constitution is necessary to authorize the adoption of this modern system of finance. The whole subject has, in our opinion, been left to the control of the legislature to be regulated with a view to the best interests of the community.
Should the people of Missouri incline to adopt a system of free benking, many details affecting the success and usefulness of the measure must necessarily claim the attention of the legislature. The most important of these will be the nature and amount of the Becurities required to be pledged for the redemption of the bills to be issued.
Public confidence is a vital element in all banks of deposit and issue; and, besides, justice to the bill-holders as well as sound principles of public economy require that the security should be