Seventeen Talks on the Banking Question / Between Uncle Sam and Mr. Farmer, Mr. Banker, Mr. Lawyer, Mr. Laboringman, Mr. Merchant, Mr. Manufacturer

by Charles N. Fowler

In confirmation of what I have said in praise of the Suffolk System let the bank commissioners of Connecticut, Vermont, Maine, Massachusetts and the New York Courier and Enquirer testify.

"The currency of this state is of the first order and can not be improved, being equal to gold and silver. This is strong language, we admit, yet perfectly true, for every bill holder can on demand convert his bills into coin." (Connecticut Bank Commissioners' Report, 1841.)

"The bills of any country bank, redeemed at par in any commercial city, will always be current throughout the extent of region whose business channels flow to that city. Hence, New England money is worth more in the cities of New York and Philadelphia than the bills of their own country banks. Vermont bills have uniformly borne a premium in the eastern cities without loss, while bills of their own states are at a heavy discount." (Vermont Bank Commission's Report, 1852.)

"The 'Suffolk System,' though not recognized in our banking law, has proved to be the great safeguard to the public. Whatever objections may exist to this 'system' in theory, its practical operation is to keep the circulation of our banks within the bounds of safety. No sound bank can have any well-founded reason for refusing to redeem its bills in Boston, and a bank that is not sound can not long do business under that system and ceases to be in good credit when it is 'thrown out at the Suffolk.'" (Maine Commissioners' Report, Dec. 31, 1857.)

"If there was no check upon circulation there might be some danger, but the frequent redemptions at the Suffolk Bank and the rapid communications between different parts of the country will prevent any greater circulation than the natural business wants of the country will sustain.... Indeed, this system of par redemption seems to be a most perfect regulator upon all the New England banks. It would seem somewhat surprising that something has not been adopted in other parts of the country that should produce the same beneficial results." (Connecticut Bank Commissioners' Report, 1848.)

"The charters of the banks have been renewed. If the laws by which they are constituted the agents of the people to provide a currency, and by which their faithfulness in the discharge of such agency is secured, remain unchanged, there is every reason to believe that the currency of Massachusetts will be for the next twenty years what it has been for the twenty years past—as perfect as any in existence, as perfect as in the nature of things it can be. No reasonable man, no practical man, no man who is not bound hand and foot in the fetters of mere theory, can desire for the people a currency better adapted to meet all the circumstances of a business community than that which has been furnished by the banks of Massachusetts for the last quarter of a century." (James B. Congdon, cashier Merchants' Bank, New Bedford, in memorial to Governor of Massachusetts, 1851.)

"We said that the Massachusetts currency was apparently unsecured. In reality their bank paper is well secured. The experience of the last fifteen years has demonstrated that the losses from bank issues in the State of New York are four or five times greater than in Massachusetts. The system of the latter is better than our own." (New York Courier and Enquirer, 1854.)

"It is by no means wonderful that a system which has stood the test of time and struck its roots so deep as to have become incorporated with and formed a part of our banking system should be abandoned with hesitation for one which is new and untried." (Maine Bank Commissioners' Report, 1865.)

"The State parts with these objects of her care and solicitude with many regrets, but with a just pride in their career, inspired by the belief that their capital has been highly instrumental in promoting the prosperity of the state, and that they have furnished as good a paper currency, based on individual credit, as any part of the country has ever enjoyed." (Massachusetts Banking Report, 1865.)

Mr. Lawyer: If, as we have gradually come to understand and firmly believe, the true service of a bank is to furnish credit to its customers, as they want it, and in such form as they need it, then these institutions which you have been describing were certainly far better suited to the purposes of their day than any banks we now have in existence.