66 The Ohio bank law of 1845 authorizes 75 banks, of which nine were old banks, including the bank of Wooster, recently exploded. It therefore authorized 63 new banks with aggregate capitals of $6,150,000, and circulation, $12,291,000. The 75 banks authorized, have two modes of organization laid before them; viz., as branches of a State Bank of Ohio," or as "Independent banking companies," on a plan something similar to that of the free law of New-York; a common provision which applies to both plans is, that before commencing business, 30 per cent. of the capital shall be paid in, in specie or specie funds; one-half, or 15 per cent. in "gold and silver coin ;" and moreover, it is provided that this 15 per cent. of gold and silver coin "shall at all times be on hand." If the ratio of 15 per cent. shall be diminished, the bank to cease doing business, except to purchase sight bills of exchange until it is made good. This keeping of 15 per cent. of specie on hand has been tried in New-York, in Alabama, and elsewhere, and its gross absurdity always made manifest. Of what use is it that a bank has the gold and silver, if the law forbids it to part with it? To comply with the terms of the law, the bank must have at least 30 per cent. in specie, 15 per cent. for use, and 15 per cent, to keep according to law. The 56th section, however, removes the difficulty entirely, as follows: "Sec. 56. Actual deposits with any solvent bank or banker, of established credit in the cities of New-York, Boston, Philadelphia or Baltimore, subject to be drawn against at sight, in gold and silver coin, shall be deemed equivalent to gold and silver coin whenever used in this act." Hence, if a bank pays out its notes for a draft on either of these cities, that draft is gold and silver coin. Thus, if the circulation is $90,000, and the specie reserved is reduced to $10,800, the bank has only to pay out its notes for a New-York draft of $5,000, that draft being gold and silver coin within the meaning of the act, it will have $15,800, or 16 per cent. on hand, and its quota more than restored. On this basis, when seven banks were formed, intending to do business as branches of the "State Bank of Ohio," they were to organize, and each to appoint one person to be a member of a "board of control." This "board of control" locates itself at Columbus, elects a President, and becomes incorporated as the State Bank of Ohio. The members fix their own salaries, each representing one branch, and having a vote for every $50,000 his branch has in circulation. The basis of representation are, therefore, the promises of his constituents; the more they promise the more power has he. This board is empowered to investigate and examine all the branches, reduce the circulation, if necessary, &c. Now the place of each member is dependent upon the bank that appoints and pays him. Yet this appointed and paid servant is constituted a supervisor over his employer who pays him. It may well be supposed what kind of a board of control that is which is dependent for its existence upon those whom they are to control. It must resolve itself, as was probably intended, into a mere whitewashing committee, to cheat the public by standing between it and those banks which employ the "board of control." This "board' of control" is to furnish the circulation when 10 per cent. of the required amount shall be deposited in money or stocks. Here again money means "Eastern kites." If a bank wants $10,000 circulation, it sends the requisition to its agent, accompanied by a draft on New-York for $1,000. This by the law is "gold and silver coin on hand." If the board of control have not sense to see it in that light, the banks will appoint those that have in their places. The stockholders of these banks are not to borrow more than onethird of the capital directly, and one-sixth as endorsers, making one-half. That is, two stockholders owning $3,000 each, may have a discount of $1,000 as makers each, and $1,000 more between them as mutual endorsers. This is indeed an improvement, because some directors have been known to borrow more than the whole. The affairs of the Bank of Wooster, recently failed, afford a good illustration of the manner of organizing these concerns. Mr. J. S. Lake was formerly canal commissioner, and became the largest stockholder in the Bank of Wooster, an institution never in good repute, and which was on the point of failing three years ago, together with the Norwalk and Sandusky banks, in connection with the exploded bubble, called the Bank of St. Clair, Michigan. The capital of the Wooster Bank was $249,450; of that there stood in Mr. Lake's name $171,900. Mr. Lake then moved to New-York, and commenced business as a broker, under the firm of J. S. Lake & Co., in Wall-street. The Co. was his son-in-law, O. Klemm, who was doing business in Cleveland, under the firm of O. Klemm & Co., the Co. being J. S. Lake, in New-York. Klemm was also cashier of the bank. These gentlemen performed all the business of the bank, that is to say, Mr. Klemm purchased with its means eastern drafts, and sent them to Lake for collection. Lake making his returns occasionally, the other directors knowing but little of the transactions. The amount of funds in the hands of these gentlemen were as follows: With this large amount of the means derived from the Wooster Bank, Lake & Co. speculated in produce, on which they acknowledge a loss of $150,000, and they started three other Ohio banks, besides buying the Mineral Bank of Maryland and a bank in Texas. The last returns of the three Ohio banks, were as follows: The Canal Bank is an independent bank, and the other two are branches of the State Bank. The law of Ohio requiring the independent banks to deposit with the state treasurer stocks to cover the circulation, and the law calling eastern paper gold and silver, the specie in these returns probably means Lake's paper; we now observe that the foundation of the whole is $171,900 of stock owned by Lake in the Wooster Bank. It is possible that not a cent of money was ever paid at all, but stock notes given. The Bank of Wooster borrowed, it appears, of the public, mostly of poor people, on small bills, $492,403, and Lake & Co. held $540,000 of this money, borrowed of the farmers, through the agency of a bank, or they had $369,000 out of the bank more than they professed to have put into it. Included in this $540,000 was $57,665 Ohio state stock. This was depo ited with the state treasurer, as a basis for the Canal Bank of Cleveland, and $51,678 more notes issued to the public for it. With the other funds the Akron branch and the Toledo branch were started, and $422,500 more notes issued to the public, besides the issues of the Texas and Mineral Bank. Here, then, Lake & Co. had borrowed of the public on small notes through four banking machines, one laying the foundation of the other, $936,398. For these issues they obtained large quantities of produce of the farmers, on which they met with disastrous losses, and the notes cannot now be redeemed. We have thus entered into details in order to illustrate the whole operation of this bubble banking. Now, there is nothing whatever in this Ohio State Bank system to prevent the enactment of the same scenes which in 1838-'39 were presented under the wild-cat system of Michigan. It is the most absurd piece of charlatanry with which a community were ever insulted. A bank may go into operation on $30,000 of “ kites,” with a nominal capital not less than $100,000, and when 60 per cent. is paid in the "board of control," its own paid agent may release it from paying in the remainder. It may then proceed to push out its promises to any extent, and in active competition with other issues. There are now five of these banks owned by one money broker in Wall-street, New-York. This State Bank is composed of branches, the progress of which has been as follows: Aug. 1848 ...... 37.... ..3,302.090......5.633,322.....1,994,937......7,021,933 The board of control" or "State Bank," it appears, is now composed of 37 delegates sitting at Columbus, each appointed and paid by the bank he " controls;" and the less he "controls" them the greater number of votes he has. For instance, the Akron bank, in Feb., 1846, circulated $22,306 notes, and its delegate had one vote. Under the operations of Lake & Co. the bank raised its issues to $200,000, Feb., 1848, and the same delegate had, in consequence, four votes. This increase of his influence at the board did not induce him to "control" the source whence it issued. Such is the bubble which has been supposed a check upon banking abuse in Ohio. All these operations are called "furnishing a currency," and in some quarters the practice is defended on the ground that it is "free trade in banking," and that legislative interference will not remedy the matter. Now, the general principle so advanced is a correct one, viz. that these things should be left to regulate themselves. But the application of the principle in relation to these banks is unsound, inasmuch as that they have their origin in "regulation." The state undertakes to endorse, as circulating money, the promises of an individual who will deposit stock with the comptroller. This elevates the character of, and gives currency to, the promises of an individual who, left entirely to himself to be " regulated" by the "laws of trade," could obtain no general circulation for his promises any more than the possessor of any other property. These promises are then used solely and simply for the use and behoof of the individual at the expense of the public. This is not free trade in banking; it is simply giving an annuity to an individual. The laws of nature and of trade are those only which should be trusted with the "furnishing of a currency." Mankind, by a common consent, have adopted gold and silver as currency. By a singularly wise provision of Providence, the quantity of these metals furnished from the mine, being governed by the value of labor, keeps pace precisely with the wants of the world. Each nation obtains its share according to the enterprise and industry of its citizens. The quantity brought into a nation by its industry and commerce, always suffices for its wants, and its government affixes simply a stamp upon it to designate the uniform quantity of the metals in each piece. Having done this, "the currency is furnished." The wants of commerce are then supplied by the notes and bills of individuals in good credit, based on actual transactions, circulating within the immediate sphere of the transactions on which they are based, and within which the makers of the notes and bills are generally personally known to those who are called upon to take them. These bills and notes constitute the real currency of commerce, and should be left entirely free. The state legislature then, in their wisdom, undertake to create another species of currency, having no relation to trade, not being the result of industry, and in no way forwarding the general welfare. This they do, by authorizing an individual to buy stock for his own emolument and enjoyment, on the credit of false moneys issued by him, and to which the state fixes the stamp of legality, in order to give them a currency they would otherwise no possess. FLUID CONTENTS OF THE CANE. Art. II. SUGAR MANUFACTURE. MEANS RESORTED TO TO EXTRACT THE JUICE FROM THE CANE.-SUGAR- * THE period of the year has arrived when the canes are to be cut, and their saccharine fluid expressed, that it may be converted into sugar. The preceding efforts of the planter are now to be tested; they are about to assume that form by which their value is to be estimated, and on the quantity and quality of which his profit or loss for the year will depend. That it is the interest of the planter to obtain the largest possible amount of sugar from the canes appears to be so obvious, that we can scarcely suppose that a doubt could be expressed respecting it. But does the planter of the present day so consider it? Does he believe that the object for which the canes have been cultivated at so enormous an expense, is that of obtaining sugar from them exclusively?—or has he overcome so many difficulties in bringing them to maturity, that he may employ them for some other and ulterior purpose? These questions will be answered presently. I must, however, at once declare that his sole consideration, after having obtained the canes in the most perfect condition that circumstances have permitted, ought to be the means to which he should resort for extracting their saccharine constituents in the greatest abundance, and in the greatest purity. The fluid contents of a cane form 90 per cent. in weight of the entire structure of the stem; they consist of water, holding in solution a large quantity of crystallizable sugar, and a small amount of other substances, the presence of which would prove highly injurious if not removed shortly after the vitality of the plant has ceased. The remaining ten parts constitute the woody tissues of this portion of the plant. It has likewise been shown, that it is highly probable, if not certain, that during the life of the cane the various substances which enter into the composition of its juice are never found mingled together, but that sugar and water alone form the contents of the cells, whilst the others are found in solution in the sap vessels exclusively. The anatomy of the sugar-cane teaches us, that to obtain these two fluids separately, is altogether impracticable; nevertheless, we * Continued from August and September Nos. |