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principle of wisely benign humanity, for examples of which it is not to despotic thrones that we must generally look. Monarchies, and all oppressive forms of government-in addition to their natural instinct of all conservatism-cling with a peculiar affection to the Death Punishment, for the obvious reason that they can never venture to make the use of it they always apprehend as possibly desirable for political offences, when it has been abolished for all others. The marvel is, not that it was restored by Bonaparte and the French Revolutionists, with all their habits of force and ideas of blood; nor that it is maintained by the present ruling authorities of the country; but that a prince was ever found on such a throne enlightened enough to venture on so noble an experiment-to carry it out for nearly a quarter of a century-and then, when it was no longer experiment, to embody it into law intended to be perpetual; though in such circumstances it must always be necessarily dependent on the individual character and opinions of the reigning sovereign.
We have given as much space as we could afford to the notice of these points in the volume before us, for the reason stated at the outset of this Arti cle, that not only was most unequal and unjust advantage taken of our very unsuspicious liberality on the occasion out of which it grew, but we were also refused the opportunity of appending to the volume itself any statement of the argument on the other side. Had this permission, first accorded and then recalled, been granted, though we might have discussed the general subject in these pages, the present vol ume would have been left to other criticism. We have been able to touch on but a few of the points on which it would be as agreeable as easy to refute its showy sophisms, its ingenious appeals to prejudice, and those sweeping assumptions which, when unanswered and unexposed, are so apt to carry away captive the concurrence of superficial or favorably biased hearers. If any future opportunity of discussion, involving fair chances of alternate reply should be afforded, in compliance with an invitation to that effect which, though declined, yet stands open, we shall be glad to complete orally what is here left undone.
Twice proscribed, and having first sought refuge in Switzerland, and afterwards in Italy, I spent in those unhappy days a period of considerable length at Florence, and I often there have heard the praises by its inhabitants of the mildness of their laws, and the efficacious influence it had in diminishing the number of crimes." Upon which M. de Sellon remarks: This statement of the noble Vice-President of the Chamber of Peers of France corresponds with those of all the travellers who go abroad for the purpose of acquiring knowledge; and is confirmed by Professor Pictet, in his letters from Florence, inserted in the Bibliothèque Universelle." And the following testimony is from the present or late Minister of Tuscany at Paris, M. Berlinghieri, a man of enlightened mind and elevated character: "There is no doubt that the humanity of the penal legislation of Leopold, and particularly the abolition of torture and capital punishment, was attended in Tuscany with the most satisfactory results. Crimes of all kinds were much more rare during that period than either before or after." And not further to multiply these evidences, the testimony of M. Carmignani, a distinguished professor of criminal law in the University of Pisa, demonstrates the happy effects of the great measure here in question; and that the re-establishment of the punishment, chiefly through the power of the absolute will of Bonaparte, in 1795, and its re-enactment by Napoleon's penal code for Italy in 1806, were the result of an intrigue of a bigoted and prejudiced clique, in opposition to the wishes of all the magistrates, to the views of all the enlightened jurists of the country, and to all the evidence which their recent experience had afforded.
Mr. Cheever's reply to the case of Tuscany is, that Capital Punishment is now restored and in vogue there, and that murders are frequent. While we may thank him for the confirmation of our own argument, which is contained in the latter fact, we must protest against the disingenuousness of assigning the former to a conviction of a failure in the great experiment, in the face of such evidence as the above. This reform is a measure only to be adopted by a philanthropic and philosophical prince, willing to sacrifice the great power of life and death, to a
BANKING AS IT OUGHT TO BE.
WE have had many expositions of banking as it is. Let us endeavor to exhibit banking as it ought to be. It is one of the great practical questions now before the country, which must be thoroughly discussed and thoroughly understood, and from which it is vain to shrink, either from repugnance to its dryness, or from apprehension of its possible political dangers.
1. Banking ought to be free. Every man who wishes, should be at liberty to engage in it. It is as absurd for the Legislature to fix the number of banks, and determine their location, as it would be for it to prescribe by act of assembly the number of baker's shops, or of butcher's stalls.
2. Bankers ought to be subject to the same responsibilities as individuals engaged in other pursuits. Why should they not? When their business is prosperous, they pocket all the gains. Why, when their business is unprofitable, should they be suffered to throw the loss on others?
This subject is placed in a very clear light, by the bank commissioners of Ohio, in their last annual report:
"The history of the past," they say, "has proved that frequent and heavy
losses have occurred from bank failures. This loss must fall upon one of two classes of men-the bankers, or the billholders; and it would appear to be the duty of the Legislature, to decide on which of these two classes it should rest. To determine this question, would lead to an examination of the relations which the stockholders and the community bear to each other. If these relations are reciprocal, then the losses should be borne equally by both; but if the management devolve exclusively on one party, and the profits also inure to the same, it is clearly right to fix the responsibility upon that party having both the control and the profits.
"In the organization and management of the banks, the control over their discounts, and the decision as to what persons or classes of persons shall be accommodated, the people have no more direction than in the affairs of private individuals. On the contrary, the transactions of banks are kept with greater secrecy than the ordinary business of
private persons. The names of individuals indebted to the banks are scrupulously concealed from the public, and the commissioners authorized to examine their condition, are prohibited by law, except in certain cases, from making a disclosure of the names of debtors.
"The principal objection urged against liable, in his individual capacity, for the the propriety of making the stockholder
debts contracted under his corporate name, rests upon the ground that the corporation is a distinct and separate body, acting under a charter granted for specific purposes; and, as such, the stockholder of a bank incurs sufficient risk from the danger of losing that part of his property invested as bank capital.
"Notwithstanding the bank may be regarded as having a distinct and separate legal existence, yet the charter was grant
ed for the benefit of the stockholders; consequently, the accruing profits, inthe debts of the corporation, or to meet stead of being kept as a fund to discharge its losses, are, semi-annually, divided among the stockholders, and thereafter become private property, beyond the reach of an execution against the bank. And here is the distinction between a natural person and a corporation. The natural person retains his accumulated profits, and they become a part of his property, and are liable, at all times, for the payment of his debts; but the corporate body, instead of retaining its profits to pay its divides them among the stockholders. Indebts, or meet any losses that may occur, dividual liability, instead of dividing the profits among the stockholders, and the losses among the people, proposes to divide the losses, as well as the profits, among the persons composing the body
"Our last report furnished one case, in particular, which will illustrate the views above expressed. The Lancaster Ohio Bank, now closed by mandamus, as an infrom 1817 to 1839, averaging thirteen per solvent institution, declared dividends cent. If the balance of these profits, after paying the stockholders six, or even ten per cent., had been retained by the bank as its corporate property, the necessity of suspension and failure would have been avoided, and the institution, at this time, would have been able to redeem its notes in gold or silver."
Perhaps it will be urged, that mak
ing the shareholders responsible in their private capacity, will prevent our having any banks. Not so. Banking is a very profitable business, and men enough will be found ready to engage in it, although compelled to bear the losses incurred in carrying it on. Made responsible in this way, they would conduct their business with so much caution, that losses from bad debts would be, comparatively speaking, of unfrequent occurrence. They would not then trust everything to Boards of Directors; and in the selection of cashiers and other officers, more regard would be had to integrity and business talents than is paid at present. The stockholders in all the banks in Rhode Island which have been incorporated since 1832, are, to a certain extent, responsible for the debts of these institutions; and so also are the stockholders in all the banks of Massachusetts subject to the provisions of the general banking act of 1836. Yet there is no want of banks in Massachusetts or Rhode Island. In these two States, every village has its bank. The shareholders in all the banks in England, Scotland, and Ireland, five excepted, are individually responsible, yet the number of banks in the three kingdoms is many hundreds, or, including branches, several thousands.
making the business of banking free, would have a tendency to throw it into the hands of sharpers, who, having nothing to lose, would care little for the personal liabilities they would incur. But this would be the case only, if the banking system of the country were, in other respects, wrong in prin ciple. Individual liability is one thing that is essential in a good banking system; but it is far from being all that is essential. As we proceed, we shall endeavor to show what more is wanting, to make banking what it ought to be.
3. Banks ought to allow interest on all such deposits as are left with them for a stipulated time. In this way, they would extend through the country the benefits of Savings Institutions, and increase their own means of utility in the making of loans and discounts. This is the practice of the Scotch banks, and the amount of money thus deposited with them is very large. The exact sum is not known; but none of the estimates make it less than fifty million dollars, and some swell it to one hundred and twenty-five millions. This, it should be recollected, is in a country which has a population not much exceeding that of one of our largest States.
4. Bankers should charge their customers a small fee for all business transacted on their account, whether in the collecting of bills, the receipt of deposits, or the payment of drafts. In this way, they who derive advantage from the banks would pay their necessary expenses. Now, these expenses are paid by a tax levied, in an indirect way, on the whole community. Under the system here proposed, each man would contribute in proportion to the amount of business done by him through the banks, and the sum paid by him who had the most business done, would not be large. There is nothing original in this suggestion. The practice here recommended has long been usage with the bankers of Lancashire and those of other parts of Great Britain.
Perhaps it will be urged, that making copartners in banking houses individually responsible will prevent associations being formed to carry on the business. It has not had this effect in Scotland. In only twelve of the unincorporated banking companies in that country, in the year 1825, was the number of partners less than ten. In four, the number was between ten and twenty; in six, between twenty and one hundred; in three others the numbers of partners exceeded one hundred; in one other company, they amounted to four hundred and fifty-six; in another, to five hundred and fiftyone; and in another, the number of partners was actually one thousand two hundred and thirty-eight. In the year above mentioned, there were, in Scotland, thirty-three unincorporated banks, or, including their branches, one hundred and sixty-six banks, for the debts of which the copartners therein were responsible in the whole extent of their private fortunes.
It has sometimes been alleged, that
5. Banks ought to grant what the Scotch call cash credits." Many persons who are engaged in trade, seldom get business notes in their possession. Such is the case, by way of example, with publishers of newspapers, and most retailers. Yet they are
forced to make large advances, in the aggregate, to their customers. The newspaper publisher thinks himself happy if he is paid at the end of six months, and the retailer is overjoyed if all is paid up at the end of the year. The business of banks, it has been justly observed, is not to furnish the trader with sufficient means to carry on his business, independently of other resources, but simply to enable him to anticipate the proceeds of his sales, by making advances to him to supply the place of such portion of his capital as he may have parted with by selling on credit. Now, persons of the class above described are, on true banking principles, as much entitled to such facilities as are the largest wholesale merchants. The only difference between them is, that the wholesale merchant brings forward his business paper as evidence of his having advanced his own capital to his customers, while the retail trader has nothing to show but his book entries. The Scotch bankers provide for cases of this kind, by granting what are called "cash credits." A store-keeper, for example, will give a bond with two or more approved securities, for five hundred pounds. A credit is then granted him on the books of the bank for this amount. If on the next day he draws out one hundred pounds, interest commences on this amount, and on this amount only. If he pays it in, in the next week, the interest ceases. Great care is taken that these "cash credits" do not degenerate into mere accommodation loans. Unless the amount lent is paid in and drawn out so frequently as to show that it is employed in active business, the borrower is required to discharge the debt in full, and the credit is withdrawn. The whole amount of such credits was said to have been, some years since, about thirty million dollars, and the amount drawn out at any one time, on the average, two thirds of this sum, or about twenty million dollars.
If our American banks would act on these principles, the facilities they afford would not, as now, be confined to a few, but be extended to many.
6. The rate of interest banks should charge on loans and discounts, and the rate of interest they should grant on deposits, ought not to be fixed by law, but left to be settled by agreement
between themselves and their customers. Loanable capital in the form of money varies in value as well as other commodities. It is as absurd to attempt to fix by law the rent or interest of money in free contracts, as it would be so to fix the rent of houses or lands that are bought with money. If banks were left free to raise the interest on loanable capital, as its value in the market increased, they would by the very act of so doing put the whole community on their guard, and many a fever of wild speculation would be checked in its very commencement. We know that there are strong objections to giving this power to the banks so long as they are close corporations, and so long as they make the money they lend. But we have obviated the first objection, by throwing the business open to all, and we hope to meet the second in the next section.
7. Banks should not be allowed to fabricate money out of gold and silver, much less out of paper. The fixing of weights and measures, and, among others, of measures of value, is one of the prerogatives of sovereign power. We know it is said by some, that, so long as the banks pay specie, the notes they issue merely take the place, dollar for dollar, of an equal amount of coin that would otherwise fill the channels of circulation. But facts disprove this assertion. In 1830, the issues of the banks amounted to sixty-one million dollars; in 1834 to ninety-four millions; in 1835 to one hundred and three millions; in 1836 to one hundred and forty millions; and in the beginning of 1837 to one hundred and forty-nine millions. In the short period of seven years, during which time the banks were all paying specie, their paper circulation was more than doubled. Again: since the banks of the State of New York have resumed specie payments, we have seen their circulation increase in one year at the rate of twenty-five per cent., and decrease in the next at the rate of forty per cent.
Now, can any one believe that under a sound money system we should have such fluctuations? According to Jacobs, the whole amount of gold and silver in the world is equal to ten thousand million dollars; and according to Gallatin, the mines when most productive yield about fifty millions a year. The annual supply is to the stock on
hand one-half per cent. It may be admitted that under very peculiar circumstances, an unusual amount of the precious metals might be thrown into a hard money country, and under other circumstances an unusual amount might be drawn from it. But as a general rule, the money of such a country would increase as its wealth increased, and decrease as its wealth declined. There would be no such fluctuation in its currency as would cause any appreciable alteration in its value.
Here, perhaps, we shall be met with the argument that the great uncertainty of our paper currency is caused by the banks not being conducted on what are called commercial principles. The value of these principles we properly appreciate. If our banks were all conducted on them, all the notes they have in circulation would be the representatives of bona fide bills in their portfolios; and all the bills in their port folios, or it may be their pigeon-holes, would be the representatives of commodities which could be sold in time to enable the merchants to take up their bills, and thus enable the banks to redeem the notes they have in circulation.
It seems to us impossible that banks conducted on such principles should ever be under the necessity of suspending specie payments. But would this mode of action give to their paper that uniformity and stability of value which the money of every country ought to possess? A little reflection will convince us that it could not possibly have this effect.
Our country is divided into a number of commercial circles and sub-circles, each having its distinct centre of trade, and the whole combined together into a kind of ellipsis, in one of the foci of which New York may be said to be placed, and New Orleans in the other. Philadelphia is the centre of trade of one of these cireles, Baltimore of another, Boston of another, Pittsburgh of another, Cincinnati of another, and so are all the other large towns. These circles are intertwined in a manner left undescribed by Euclid; but they all have a peculiar relation to New York and New Orleans, the one as the great city of imports, the other of exports.
monetary transactions, whether fiscal or commercial. Hence it is possible to have a paper currency there, the different parts of which will, throughout the three kingdoms, maintain a fixed relation to one another, though the whole mass may fluctuate greatly in amount and consequently in value.
But in the United States, where we have at least thirty fiscal, and perhaps double that number of commercial centres, it is impossible for us to have a paper currency the different portions of which shall have even the small excellence of fluctuating equally in value. A national bank will not give it to us, nor will any other contrivance. The banks in each circle and sub-circle are determined in the amount of their issues by the extent of sales the people in their region can make, added to the amount they can run in debt beyond the limits of the circle. As these amounts are always varying, the amount of bank issues varies accordingly, and the fluctuation of value thereby occasioned is to be measured, not by the rates of domestic exchanges, or the price of specie, but by variations in the prices of commodities generally.
So extensive is our country, and so distinct, some respects, are the various commercial circles and sub-circles into which it is divided, that at the very moment when the banks in some parts of the Union are beginning to contract, those in others may be just beginning to expand. The extent to which they can, in the aggregate, expand, and the degree in which they are obliged to contract in order to sustain specie payments, depend on our foreign trade and the state of our credit abroad.
In England the case is different. In that country there is one centre for all
Suppose, for example, the value of our exports to be suddenly doubled or trebled. Then, what ordinarily yields us but one hundred million dollars, would yield us two or three hundred millions. It is evident that in such a state of things exchanges would be greatly in our favor, and that the banks would increase their issues enormously and raise prices accordingly. It is equally evident that the same effect will be produced, if we can run in debt abroad to the amount of one or two hundred millions. Though prices may, under such circumstances, be very high, and imports enormous, there will be little or no demand for specie for