, 1864-07-19
Mhicago Grlb1lne.
TUESDAY, JULY 10, 1854.


UO0, all told, III New York. The banks seem
TO have proposed to lend tho Government
rhcIr crda, in this way; il the Government
would hand over to them its legal tender
bends, either or 1910 per cents, By tnsfah-
mcnts, they would furnish the Goyrrnment
with their own bills by installments' ana as
fast as they could ret them with greeooacks.
This was like agreeing to give their notes II
The Government would deposit with them an
tnna1 amount Of gold as collateral. The
New York banks had sent ali their grcenbacks
West to ,,uv produce because the West would
not 1nke their own bills, and baring done 60
they wanted 6ccr4tary Fcssendeu to become
lie agent for the distribution Of their paper
and totscposit legal tender bonds with them
as collateral This, for banks who. have
nothing to lcnd, Is refreshlngly cool!
It is time that the true nature and causes
OF tue conflict between tue Government and
1hc State banks and Wall street capitalists
we're more Thoroughly ventilated at.d under.
stood.
At the commencement Of the war tho GoY-
crnmcDt had substantially neither gold, d
paper currency, bank, treasury, nor
revenue. Tie finances OF the county were
controlled by the local banks formed under
State laws. In these were invested, to form
their capit.l stock, In some States, as New
York and Illinois, the State stocks or debt,
United States stocks-and, In Others, indi-
riduM bonds aud mortgages, aud other eyi
deuces Of debt Upon these as basis, with
Il small margin Of specie, never sufficient
during panic for the redemption Of their
bills, these local banks OF the Northern
States had issued paper currency amount
ipg to s1.s OK, 600. This sum they were
never called Oh 10 redeem, except during q
I,anic, in which casc they suspended redemp-
tion, 70 that the, enjoyed practically ire
dccmable losn from the people Of $50 per
head in their circulation alone THIS was,
pr1lars, doubled By their deposits, which,
as received, went out again in the form OF
loans and discounts, As zach of these eour-
cee tended to initiate the other every ten
years, us in 1917, ~, 81, 80 and 81,
brought around general Reputation
Of payment by the banks and
crash an'cns tlle people. Still the business
cunluunit, needed banke, the United States
bad tlieu no dctt Of importance, the onl5
basis Oh which bsnktpg could be done seem.
cd to be the individual and State debts which
AOAACA AAN NAF1@a4 ekINA vi lAtEC uauAh, uuu
TIT 6. stem Of local banking monopolized the
tinnncial interests Of the North aluost a.
did slavery those Of the South. To these
hunks in New York Secretary Chase tlree
years ago applied for loan. TIE banks
have but one ra1e Of action, viz: to enter
into 10 transaction in which they are n ot
suic to MAKE money. TheJ would take the
frtt instalment Of loan at S.. As these
]osns were tuccessively put on the market,
each would decline, to the injury Of former
lenders and Of the Government, until further
lohns Wuuld become Impossible.
Chase 6aw clearly that either the war must
he abandceen, or that national debt would
be incurred to the people, which would be
so much more important than the individual
and State debts which formed the basis Of
the local banks, that like Moses' rod 1t
should swallow up the others This is real.
lied. The people have in loans aud in cur
rcucy invested 81 ,so0, ,000, 900 In the goyesn-
ment Of the United States, TINT being the
amount Of the national debt. This Is at the
least SIX times the amount they have invested
in the local banks. In any conflict ofinterest
therefore, between the two, If eucl there
were, 1t is evident that the former must pre-
ponderate. Banking consists in using debts
rs security for trusts and deposits, and as a
busis Of discounts and loans. When State
and individual debts were all we had, 1t was
natural to use them as the basis Of banking.
But when these amount to but 250, 900 900,
while the national debt expands to 81, sou,
100000, 1t Is 1ol1y to suppose the country
will continue to bank on the lesser capital,
while i've times it's amount falls vllueless
for waut Of any use to which to l'ut it.
Mr.. Chase proposed
1st. To issue legal lenders.
Cd. To tax to onehalf our expenditures.
Sd. To make provision for using the na-
tional debt as the basis Of banking.
4th. To tax the local bank paper two or
three per cent, which would cause its with
drawaI from circulation and the substitution
In it's stead ut first Of legal tender, and ulti-
nlately Of national bank currency, in the
circulation Of which all the local banks
might engage hy substituting United States
stocks for their 1ormer capital stock, con-
sisting Of State debt or individual notes.
bonds, and luortgages.
TIC first measure was passed. The second
aid third were garbled and inperfectly adopt
I'd. The fourth, Congress utterly refused to
adopt, because its members were more inter-
ceted In the local banks than In the national
debt The Suite banks opposed Mr. Chase's
system as inituical to their profits. Haye
they gained or lost BY their opposition
Had they consented to Mr.. Chase's plan, a
tax Of say two per cent on their circulation
of STE, ,00o. 900 would have caused the with
drnwal Of their paper at total cost to them,
and revenue u the Government, Of S, ,560, 900.
A few Of them whose circulation even then
exceeded their capital would have ex xoloded,
by which both they and the county would
have made profit compared with their pres
cit etatus. But their original capital would
then have been available tor other purposes
without det recitation.
Instead of this. however, they have availed
themselves Of the legal tcuder act to expand
thciz circulation. The expansion in the bills
of the smaller banks has caused like ex-
pansion in the deposits of the larger, which
Il iurn expanded their own discounts, each
mode of imitation adding to the other: The
country, or wild cat banks. would issue their
bills go long as they could work them of for
:.rccnbacks. These oyer-issues increased the
deposits Of city banks, which could on1Y get
lid Of them by expanding their discounts.
We have frequently given the figures rela-
1iye to the expansion in the wild cat banks
through their bills. The following shows
The expansion in the sounder New York
banks through their deposits, with which
their discounts bare kept equal pace:
In June, 1851, the depoaits Of the New York
t,anks throughout The state were $106, ,315l 49,.
u June, H. they we're ...-..,-...... .S15t ass =
And In March, 1861, THE last retuins.3 ~
shoxns o. iac4aase Of sissi;.6si N tSs Isl Il
Certainly on such figures the expan-
sion Ii both discounts and bills OF
The local banks throughout the coun-
may safely be set down at seven or eight
Aundred millions, an amount far exceed
ing all the legal tender issued by Secretary
Cblse. Here, then, We have the source OF
The financial imitation, and of the rise in gold.
For the Issue OF legal tender By the Govern
mcnt Was unavoidable and a1one would not
have produced tho imitation. But these over
issues md expansions by the State banks
were entirely ayoidable, and are therefore
the responsible cauees OF this imitation. As
the effect Of this imitation has been to depre-
ciate not only their own bills, but the Gov
crnmcut legal tcn0er In which those debts
Which form their capital stock are payable,
it follows that In raising gold to 800 they
have reduced The value OF each dollar OF
thelr capital to thirty-three cents, md have
thus eunk tno-tblrds Of their orig
inal capital stock by the depreciation
which they have caused. Again We ask
49,. 41,nv ,ro3o nv Ynst 41,ru Fsr hv rert 4.