Dayton daily empire. [volume] (Dayton [Ohio]) 1850-1865, 1860-01-23
$500
t2,5OO

Leaving nett pFofts Der annum 81 $500
II you lose nothing by loans to insolvent men
This is ali you receive on a capital Of $50 =
600, which. in any other business, would yield
At least $4,000.
Were the figures Of the gentleman correct,
were IL true Of what he complains, that at
present there 10 no inducement Of even reason
able profits held out to fusneiers TO engage in
the manufacturing Of currency" | for one
would consider II AZ the best argument in favor
Of continuing the law Of 1851, for It would
then seem TO have the effect Of lettering "cap.
i~talists" from establishing banks Of issue But
this Is not the case. We have in our State 4
goodly plumber Of banks organized and operating
under that very law Of 1851. The Canal Bank
Of Cleveland the Seneca County Bank, at TIT
fin, institutions that have become memorable
10 the 6nsncial history Of the State, have been
organized under it. and have attempted to "ben.
eft the community" by the issue Of their "eir-
culation." II would seem, therefore, that there
are still some means left by which stockholders
in banks can realize larger profits than 10 any
other business, for it is reasonable to suppose
that they engage in banking for a more solid
Nhah ~ hNA ihNo W bNhNhAhAhH
the community" would yield. And these
means. by overlooking the gen,leman's figures,
will be found to have been entirely forgotten.
Ho mentions but three sources Of profit, viz:
6 per ct. lot. on the bond, 6 per CT. int. on the
working capital, aud 81 200 as premium on
exchange sold; to this item is added an ct
cetera, meaning to include in the 81 900 all the
other items from which a bank generally draws
tvs profits. l will take the trouble to open this
Pandora box Of "et c%etera. q" and to look what
is concealed within it.
admit. right here, that il a bank would do
buaineas only with the money which the law
allows them to borrow from the people upon
their notes, the expenses Of the costly machine
would certainly eat up not quite one-hslf Of
the legitimate profits. But upon the strength Of
its being a bank they re; Give deposits, and
sometimes 10 Il very large amount, from mer-
chants and others. These deposits are also
used by the banks as its funds to operate with,
and they make n fair interest on them, though
II would be unkind in me to say that II rates
higher than the law has stipulated. Now, il
may we'll be taken for granted that a bank hav.
ing $50, 600 stocks in the hands Of the State
authorities. will. in the course Of a year, re-
ceive at least 800 600 in the shape Of deposits.
on which its profits cannot be less than 1000
dollars, Every one will acknowledge that this
estimate might be largely increased without
overlapping the truth. Thus we have one
item Of 1000, hid by the ct cetera, to be added
to the profits.
Buying notes Of other banks is mother Of
.hsss iterns. Nobody will deny that the bills
II scarcely any bank out Of this State, though
;urrsnt for the full amount Of its face for retail
transactions, is taken at par at a bank. There
iss discount on it to be lost by the holder,
ust as there is a discount to be lost by an in
iividual note Of hand desiring TO cash t.
This item is generally included in bank
ltAtements on the asset side, under the head OF
Debts due from other banks" (which head,
however, comprises also the heads Of drafts
paid for, and collections mnde by, or deposits
had in, other bAnks.) l may safely assume,
without the least fear Of e1aggeratiou, that the
profits from this source, with an original chpi>
tai Of $4,000, will amount, during the year, to
At least ! 900 dollars-a sum also to be added
to the profits covered by the ct cetera.
will mention still another of these items
and IL is one which, ia making up public esA
Inmates OF bank profits, is generally omitted
and for a reason too obvious TO be stated. Pa
per is not imperishable, it can be destroyed
not only by fire or other accidents. but also by
wear. It is worn aud tornt 10 pieces very often
thus being lost, and making a clear gain for the
bank. 1t has been estimated, that in the
cOurse Of fifty years the paper issues Of a bank
remaining in circulation the entire time, woulG
be very near wholly destroyed by mere wear
OF the paper. This calculation would make a
gain for the bank Of two per cent. nett. Bot
will assume, aud l believe | can Justly do so,
a gain Of one per cent only. and this upon a
capital Of $50 900 would increase the profit ac-
count another $500.
will not mention any other items Of profits,
Rccruing to banks from different other trans,
actions which many Of them indulge 10, but
which do not properly belong to the Legitimate
fruits Of banking, But l will say. that the
statement Of the writer in the Journal, that
G pr. ct. interest are only made upon S35 ,0OO
from = circulation Of S5O.0OO, il in my opinion
entirely erroneous. 10 the first place the inter.
est ranges higher than G pr. Ct For this rea,
son banks,are allowed, by the law Of 1885,, to
take . pr. ct. interest. but they are also allowed
TO deduct the amount Of the interest at the tim,
= loan is made. This fact alone brings us Il
ahigher rate Of interest. A man who has biz
note for 500 payable in thrsS months dlscoun
ted by bank, receives but $3.50 and hal
$3.50 or at the rate Of 6 pr. ct, per annum To-
500 10 pay for the uss Of only sos 90 which
i, instead Of 6 pr. ct. At The rate Of clio pr
q. per annum. The several amounts thus de-
dpetsd are loaned out again at the same rate 0
interest, that is l-I0 pr. ct. and hence thei
epPi.ai bears accommodating interest. which vii
giTs them, from the use Of $50, 900 circulation
a least $4,000 or.s pr. 81. per annum. AM
they kass ne use 81 ths whole Of the $50. OOl
fofxbe 80 pr. Ct % which IL" speaks il tb,
JourLe, a. being rsquired 70 be kept on hand
q 70 Be - gold and silver 70 redeem their cir
e%gielipg aess and noi 10 their nossa.
vi have lhei1iore. a pfqlts of bank wiu
q eir4A iaEpn b go. Oeo tAe sum Of eis,5OO
not e~osnliag De profits upon h9 amSaat Of q
~ q, u lhei capital stock paid 10, because
PIesvms . PeitIen Of q vgi W awsiewsd u