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COMMUNICATED.
# THE BANK OF TENNESSEE AND ITS MANAGEMENT.
As there has been much said against the Bank of Tennessee and its present able and distinguished head, and little or nothing in favor of them, something on that subject, it is hoped, may not be considered improper.
The suspension of specie payments by that bank has been condemned by some. To this it may be replied, that most of the best managed and soundest banks int he United States have suspended-banks over which men of the highest grade of mercantile integrity, honor, and punctuality, preside; men whose whole lives, public and private, like that of the head of the State Bank, are examples of justice and good faith to all men. Every well-informed man in the community knows that the suspension of cash payments by the State Bank was a matter of indispensable necessity, resulting from surrounding circumstances, and not a matter of choice, with a view to make a profit thereby to the State, by the injury to the holders of its million and a half of notes. A suspension by the State Bank, singly and alone, would, in most conceivable cases, have brought disgrace on its managers; but the State Bank is only one of 400 in the United States, the largest portion of which, and all at the great commercial centres, New York, Philadelphia, New Orleans, &c., have suspended.
It is not necessary here to attempt an elucidation of the causes which have led to this result. A succession ef good crops and the high prices of our staples, Australian and California gold, and a general spirit of speculation and extravagance, engendered by a variety of causes, and aggravated by multiplication of banks, and by injudicious and indiscriminate loans, and the arbitrary displacement of masses of specie by the Eastern wars, must be regarded as amongst the most prominent causes which have produced the present difficulties throughout the whole commercial world. Under the operation of the general spirit of the times, the Legislature of Tennessee (an interior agricultural State, the trade of which consists almost entirely of the purchase of dry goods, groceries, &c., and the sale of raw produce) has put in operation upwards of forty banks, competing with each other for business, and pushing their notes into circulation-the pittance of specie required by the statutes not being sufficient, even if on hand, to meet an unfavorable state of exchanges, much less a panic. The banks at the great commercial centres, New York, Charleston, Savannah, New Orleans, and Philadelphia, in this state of things, had suspended. What was the State Bank to do under such circumstances? It was bound to pay near $100,000 in gold in the city of New York, on the first day of January last, either directly or contingently. A previous legislature had authorised a sale of the State stock in the Union and Planters' Bank, withs a view to increase the capital of the State Bank and to pay a debt of $125,000, due on matured bonds. That stock was not sold and the bank had to meet the debt out of its profits. It was paid. It had to pay interest on State bonds ($150,000.) It did pay it. It was responsible on endorsed bonds of railroad companies. It had to be in readiness to meet that interest to save the State from dishonor in the contingency of a failure of any railroad to meet the demand. One company did fail and the bank paid $12,000, and did save that road and the State from dishonor. The bank furnished gold in the city of New York for the whole of the railroad payments in lieu of State paper.
All these liabilities, direct or contingent, it was bound to be prepared to meet in discharge of duties imposed on it by previous legislatures. To meet these and other liabilities, the bank had $2,000,000 in bills falling due at the commercial centres in suspended banks. The door by which it was expected to obtain gold was closed, and the only resource left was to collect in gold a portion of the notes discounted for the citizens of Tennessee, to wit: $1,600,000, to meet the metallic demand in New York and elsewhere. Just so certain as the bank had continued to pay specie in the midst of the circumstances by which it was surrounded, just so certain would every dollar of its cash have been drawn from it by brokers, as an article of traffic, shipped and sold where banks had suspended, and where it would have commanded a sufficient premium to make its shipment a profitable speculation; and just so certain would the bank have been left without the means of doing business, the people in some measure without a circulating medium, the State dishonored, and the president of the bank declared unfit for the position he occupies. Although suspended, it has paid out in gold $200,000 to those who needed it, yet did not obtain it as an article of traffic. It has furnished a large amount of exchange at one per cent, when it could at the market rates have exacted larger amounts. It has discharged all the obligations imposed on it by the State. It has been enabled to sustain its circulation, so as (like the Bank of England) to lighten the blow on the debtor interest to some extent, inflicted by a sudden reduction of the currency from, say $3,000,000 to $4,000,000; and its notes will now pay all domestic debts at par, and purchase all property, real or personal, at cash prices.
It may be asked, did not the Bank of Tennessee contribute, by its management, to the suspension which now exists? To this, it is replied, that there is nothing to be found in the conduct of the bank to sustain in the slightest degree such a charge. It is evident from the past history of the bank for the four years under which it has been under the direction of its present vigilant directory, and its present condition, that there has been a consistent effort to avoid such an increase of its circulation and such injudicious loans, not based on the produce of the country, as would lead to imprudent and heedless speculation and indebtedness. It is well known to the author of this communication, as well as to many other persons, that the sagacious President of this bank has been predicting the present state of things, and that he has held the bank in a condition to meet the crisis which has come, as well as it could readily be done consistently with the duty imposed on it of supplying the community with circulation and answering in other respects the purposes of its creation. The amount of its circulation for the last four years, since Colonel Johnson has been at its head, is as follows:
irculation 1st July. 1854 $2.471.830
