Bank Charters. Are they necessary?

[AlanM]

From the Ohio Statesman.
OHIO LEGISLATURE




The house engrossed a bill yesterday, and passed it this morning, that does honor the spirit of the age in which we live.  It was, to repeal the absurd law, that requires two years study to be admitted to the practice of law, just as though time and not qualifications, should be the test.

The following is the petition of M.A. Goodfellow, presented to the House by Mr. Wolcatt.  It is a question of no little importance, in a government possessing equality of rights, why one person with a capital of a hundred thousand dollars, should receive chartered privileges converting it into three hundred thousand while the same privileges should be withheld from another because he had only one hundred dollars.  Mr. Wolcott, in his remarks on presenting the petition, correctly said, this would be granting favors to the rich, and withholding them from the poor.  Nothing shows more plainly than this, the injustice of the whole system of corporate grants :

To the Honorable General Assembly of the State of Ohio :  Your petitioner would respectfully represent, that it has been customary for former Legislatures of this State to grant acts of incorporation to companies authorizing them to issue notes or bills, to circulate as money, only bound in their corporate capacity for the redemption of such notes or bills:  hence so many bank failures.

Your petitioner would further represent, that he believes in the doctrine of equal rights and privileges, viz:  each and every individual ought to be bound by law, equally and alike for all his liabilities, no matter whether they accrue in private transactions, or under cover of a bank charter.

Your petitioner, therefore, respectfully asks your honorable body to grant him a charter to bank, as follows :  1st  To be called the Farmers? and Mechanics? Bank of Wooster.  2d  capital stock not to exceed six hundred dollars;  to commence operations as soon as three hundred dollars in specie are paid in.  3.  The stockholders to be individually liable for all paper issued.  4th.  Shall not issue more than three dollars in paper for two in specie on hand, under a penalty of forfeiture, &c.;  the charter repealable by any future legislature of this State;  to be located at Wooster, Wayne county, Ohio;  and your petitioner will ever, &c.

M.A. Goodfellow.
Wooster, February 12, 1842.


I ask, why the need for ANY charter from the state? If I loan ten dollars to you, at an agreed upon rate of interest, I am doing the same as a bank does. Why a charter?

[Ron Helwig]

If all you are doing is loaning money, then you aren't a "bank". Banks "create" money.

Shall not issue more than three dollars in paper for two in specie on hand

[Russell Kanning]

It really shows the game .... doesn't it?

[Pat McCotter]

If all you are doing is loaning money, then you aren't a "bank". Banks "create" money.

Shall not issue more than three dollars in paper for two in specie on hand

Sounds like they were talking a 66% reserve banking system. What do we have now?

[tracysaboe]

Around anywhere between .1% and .05% depending on what the federal reserve policy is at the time. PLUS the government can just print money too.

Tracy