Allen C. Fuller to Richard Yates

                                              Belvidere Dec 30 1864

Governor Yates

             My Dear Sir:

                In my last I believe I wrote you that I would be in Chicago last week and would write you from there and make such suggestions as occurred to me on the subject of our present defective banking laws?  I have just returned from there but had no time while there to write you and I do so now with a full appreciation of the difficulties which surround the subject.  That our present banking laws are radically defective does not admit of doubt.  Any law which permits, much less encourages, a set of irresponsible adventurers to put afloat as money millions of these "circulation" at remote and unknown parts of the state and which practically requires the bill holder to see to its redemption instead of the parties who issue it must of course be politically dangerous to the commercial and agricultural interest of the state.  There can be no real prosperity where such

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a law exists because no man who holds a hundred dollars of this "circulation" knows whether it is worth sixty dollars or eighty dollars, but all do know it is not worth what it pretends to be. While in Chicago I spent quietly two days in endeavoring to ascertain the wishes and (illegible) of the masses who are not interested in profit. Noting this state of things and I find there is great unanimity upon the following propositions; 1. That U.S. & Illinois stocks should only be hereafter secured as security and that the present ten per cent margin should be adhered to. 2. That none but bona fide owners of these stocks and who own them over and above all debts & incumbrances should be allowed to deposit them and receive circulatory notes. 3. That some increased facilities should be provided for protesting delinquent banks and to that end severe punishment should be provided for obstructing persons in making demand & protesting: and banks having 4 no place of business liable to protest any where. The protest to specify facts and the Auditor

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to be at liberty to enquire into the sufficiency of the facts set forth as ground of protest. 5. In addition to redemption at home, banks to be at liberty to establish agencies of redemption at Chicago, Springfield or Alton and on redemption made at either of these points to be allowed from one half to one per cent. Banks establishing such agencies liable to demand these, and protest these & immediate liquidation if protested there. Such banks known to have thirty days after protest at their Counties and all others ten days as now provided on paying twelve per cent int. 6. Quarterly examination to be made by the officers of the Banks if their stocks deposited with Auditor and some promises to be made against their negociability in case they are abstracted.

  These propositions cover the principal points which they desire incorporated in amendments to our present laws & include some suggestions which I made to them.  A great many other schemes are on foot which I do not remember.  The main

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features of these proposed amendments I think correct. The 2nd, 4th & 5th I have not sufficiently considered to feel confident about but the principle involved in them I think sound. I do not claim to be a practical banker in the fashionable acceptation of that term and therefore do not pretend to have that profound insight into the workings of any system that some have. I never was directly or indirectly interested in any bank note except as holder nor ever shall be no matter what our laws may be. I am only interested therefore in the banks redeeming their issue at par and without any unnecessary delay. This the people demand shall be done & they will crush out any system, banks or party who stand in the way of this thing.

  I am vain enough to believe that I could prepare a reasonably good banking law for our state if we had no banks now in existence but the great difficulty in now inaugurating a new system growing out of the fact that we have word afloat about twelve millions of currency issued under the present defective laws.  The fact is undeniable that our circulation

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now is actually more than we require to transact our business. "It is as it is" & the loss of driving our present banks to the wall would face not upon the banks of issue, as ought to be the case, but upon the bill holders - the farmer - merchants & business men of the state. Here is the net. Now what shall be done? After considerable anxious reflection and examination, if I was Governor I would recommend to the Legislature. 1st That a law should be immediately proposed preventing the issuing of any more bank notes under the present laws. This would stop the evil and give time for the Legislature to produce some laws to meet the exigency of the times. 2nd That none but U S. & Illinois stocks should be received as security and that the ten per cent margin should be preserved. 3 That effect should be given to the 4th sec. of Article 10 of the Constitution respecting the individual liability of stockholders by providing in what manner that liabil-

                                    6                         (Dec. 30, 1860)

ity shall be as contained and at what time it shall be deemed to exist and during what time it shall continue. The 38th section of the act of 1857 is inadequate and cumbersome & expensive to enforce. All transfers of stock done amid this liability should be declared void and all possibility of irresponsible and nominal holders of stock guarded against: and stock holders should be made liable for the interest drop created during the time they hold the stock. And I am inclined to think that the bill holder should have a right of action against the stockholder before all the assetts of the bank are exhausted with the privilege of having powers, the judgement or decree against him discharged by turning out to the office majority of the Corporation. 3 That banks hereafter and those now in existence who come into the "new arrangement" or conform to the principles of the new law shall have the right to take the same interest as is or may be hereafter allowed to be taken by other persons and no more 4th The banks should be made to redeem at some accessible points in the State

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at some reasonable discount say 3/4 of one per cent which would make exchange one per cent on New York and this rate for some years to come would I think be realistically to the Commercial interest of the State. And they should be allowed if they desired to remove their nominal place of business to such points and these redeem at par. Many of them now have no place of business and they are not required by law to keep open doors during any particular hours of the day.This is wrong & should be remedied. This plan of a central redemption I should insist on unless they can be compelled always to redeem at their Counties & I think it is fair of the banks providing they are paid for it, in a reasonable discount. 5th Frequent examination of the securities should be required to be made by the offices of the Banks to see that their Bonds & Stocks are actually on hand. This to protect themselves as well as bill holders. If we knew we should always have as honest and capable Treasurer & Auditor as we now have this would not be necessary, but

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legislature should all look to possible contingencies. 6th Some businesses should be made to guard against "abstractions" I think they call it. I call it 'stealings' The recent robbery of the Indian Hand at Washington has again impressed me with the necessity of having some stamp affixed to these securities to prevent there being negociated unless they are lawfully and honestly withdrawn, which lawful withdrawal may be indicated also by a proper stamp or seal.

   These suggestions are thrown out for what they may be worth.  They do not of course go into details because details are matters for the Legislature.  I should be glad to have you recommend them or such parts of them as are thought proper, to the Legislature, for these reasons.  First because I think them just and expedient and secondly because I think the people would  sustain you in doing so.  If I Know my own thoughts I desire to see your administration made honorable and profitable to the state

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of which we are so jointly proud. We have labored long and hard to have an opportunity of inaugurating a Republican state policy here. To do this the error and corruption of the part should be corrected and explored and a repetition most vigilantly guarded against. In these perilous times on which we have fallen on coming into power, we should make our main interest - state prosperity - the subject of our most anxious thoughts and watchful care. In the recent brilliant success you have made of the state you have justified the expectations of your most devoted and admiring personal friends. By directing the energies and power of your administration to restore public confidence in our state finances: in averting the further growth of an evil resulting from unguarded banking laws - an evil now felt by every citizen of the state -: and in being true to the sacred cause of liberty and humanity with which your name for the last six years has been specially identified, you will add strength and honor to the party which has placed you in power and be a blessing to the commercial and industrial interest of our people.

                            (10)                   (Dec. 30, 1860)
   In addition to National politics you have already my poor opinion that usually the less said about them in Governors messages the better.  Recent developments known have convinced me that the Country will justly expect something from you on this subject.  Your position known on this point is one of great delicacy as a matter of policy and should not I think be taken without careful consultation with Mr Lincoln.  Whatever you say as to our federal relations will be understood by the Country as reflecting Mr Lincolns views and policy  In view of the unparalleled embarrassments which surround him the less he is committed until he is actually in power the better: and then I say let him hourly remember his official oath and trust in God and the patriotism of the American people.  Until (illegible) a few days I had hoped that the madness which rules the house would soon give way and reason would control the conduct of our southern bretheren.  Hence I appeared more of a Conservative while at Springfield than I

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really felt. But present appearances too plainly indicate that the die is cast and that blood must flow before this treason of the south comes to an end. They must retrace their steps or conquer us or we must conquer them! There seems to be now no alternative left. The high and holy mission of our party now seems to be to protect the Constitution and maintain the integrity of our government. What high and holy patriotism should this thought inspire! The nation is now called upon to dedicate itself and to determine whether we have a government strong enough to maintain its friends against its internal enemies.

  Our position as a State will be most critical.  Wedged in between two slave states we shall have a double frontier to protect: and, in case of War, or civil insurrection, our whole state will soon be involved in the struggle.  The South I think will be in sixty days united against us.  Much as the southern slave states desire to avoid alliances with the Cotton States I do not think they can long avoid it.  The force of circumstances will 

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soon dragg them in and we must prepare ourselves when this does.

   Without therefore saying any thing to exasperate I would recommend an immediate enrollment of the militia of the state.  Let it be done thoroughly and without delay.  There is no time to be lost for raw recruits cannot be drilled for service short of two or three months.  But I cannot dwell.  My letter is already too long and my soul is filled with more grief than anger.  May God preserve You Richard Yates and the cause you represent!

                                Truly Your Friend
                                 Allen C. Fuller

P.S. I will write you to-morrow on the other subject mentioned in your last letter -- Please remember me to Mr. Lincoln, not because I am or expect to be an office seeker at his party nor because he knows any thing about me, but because I am a man & his friend --

A.C. Fuller