Daily national Republican. [volume] (Washington, D.C.) 1862-1866, 1863-02-06
The Plan OF Secretary Chase and ans
Country hanks. ..

This opposition does not surprise me. In the
first instance, regarded the change proposed
with anything but favor. An examination
since, In view Of facts, some Of which shall
refer TO, has produced the firm conviction in
my own mind, that the adoption Of Secretary |
Chass's plan will not only prove beneficial TO
the country, but will offer to country banks es-
Ssntisi advantages, instead Of affecting them
injuriously.
The "sufolk system" under which the re-
demption OF their bills by country banks, In
stead Of being made In coin, at their own coun-
tiers, lie effected througha general exchange In
Boston, ives sdopted for the purpose Of avoid.
ing the labor, expense, and Inconvenience Incl
dent to the old system of home redemption.
True, It had other purposes; but its efficacy In
this respect Is universally admitted. Upon Its
adoption, redemption In specie practically
ceased. Country banks In good standing were
no longer forced to keep In their vaults forty or
nfty per cent. Of the amount Of their circula.
ton in gold, losing interest upon il, for ten,
and often Eve per cent. were found sufficient to
meet all calls upon the specie fund. The re-
demptions were made with increased facility,
and at an almost nominal expense.
Additional securities were furnished by 1t to
the bill-holdsrs. Every bank was obliged to
make Its circulating notes equal TO par in
Boston, and TINS gave uniformity to their value
in the country. II also afforded a ready and
sure means of detecting any improper imitation
by a bank Of its own circulation. This was re-
deemed daily at one place In Boston-the suf.
folk Bank. Any failure to provide means for
this redemption caused the bills of the default
ing bank to be "thrown ont, - as it was termed,
Of which all the associated banks were at once
advised. Bills thus dlshonored could no longer
circulate. The fraudulent attempts which were
several times made by banks In falling circum-
stances to initiate their issues, were detected in
time to prevent much mischief, and the aggre-
gate loss to the bill-holders Of New England
has probably been as small rs In any section Of
the country.
Previous TO the adoption Of this system, the
only security which the public had for the re-
demptlon Of country bank circulation was
found in the integrity Of the officers and man
ayers Of the banks themselves. Painful illus
trations Of the insufiiciency of this security
were frequent. When a bank failure occurred.
II was almost uniformly preceded by an extra
ordinary imitation Of Its circulation In antlcipa.
ton Of bankruptcy, and the blll-holders were
heavy losers. Had not the Suffolk system been
put in operation, 1t cannot be doubted that the
New England States would long ago have been
compelled to adopt some system of protecting
the bill holders, better than that Of committing
the whole assets OF bank TO the unrestricted
control OF its officers.
Il 10 TO be remembered that this system was
adopted when the country banks depended for
their profits almost exclusively upon their cir
c'adtioH. Twenty years ago bank of good
reputation, in ordinary times, could carry a
circulation, with little difficulty, Of double the
amount Of Its capital. The profits upon this
were large. Country bank stocks became a
fAvorte Investment, and new charters Of great
value. This led TO great increase In the mum.
Der of banks and to much competition in the
matter Of circulation.
change then commenced which has been
going on ever since. New avenues of comm.
niCation, railroads, telegraph lines, and express
companies brought the remote country town
INTO daily communication with the great bust
ness GENRES fronts upon circulation were
rapidly reduceu' Bank notes Issued In New
England LOT circulation In the West, which
formerly remained out a long time, were re-
turned aS quickly a. tue express could take
'heil' lor inc purpose oil creating Eastern ex'
'hahge' wh'ch was generally at high pre-
mum In the western States Local circulation
was oil Out iittie account Each Bank had iti
corps OF 'riendS ana agents. to gather up and
senu III lot redemptlon every note OF another
Oahk when Tell IN their way The result was
th"t IN the year 1901 a bank which once found
no dimculty In keeping out circulation equal
10 "ire tue amount OF us capital, was iortu
49,, y, WIN 'u' 'eS. Judgment ana greatest
~s,. ',',o'I 49, '"'ui"'''" Vi MY
y - ."''1' ''OH' was my pehei
"PO" a'' 'he 'S'S couiu
o,ssnI1,'nS ~ ~ ,"N VI country pAnk
49,. ~. =. ..,.-su i" u'u not sAceeu
"V'u'' ','S' one- n'teeh'N
80 "" '"'1''"n ""' ''u''ii'u ua''y'
-. Toe, 49,, 49, a.. o,-I'',N.' " 1a"',s "a
,,.,,,, ,..,.'.,.- 49,, "'1V" VI "i' "u'
uo'u uO' S'oP 10