The spirit of democracy. [volume] (Woodsfield, Ohio) 1844-1994, 1864-12-07
The National Banks.

TAe National Banks.
When Secretary Chase had promulga-
ted his National Bank schemes, and an
obedient Congress had it under censidera.
tiOn, we did net hesitate to call it a wild
cat system of banking, which could only
eventuate in final explosion, with serious
injury to both Government and people.
After the horse is stolen, the Cincinnati
Gazette is ready to lock the doer. The
following is cnly the beginning of glin-
mering light, which will soon increase to
MONDAY sun, upon the eyes of those
who have been led to extol Mr.. Chase s
follies in finance. Like John Law and
his South Sea bubbles, the hero of the
heur will see at an early day the bubbles
pricked and his financial skill held up in
dsrision by those who once landed it as
the embodiment of human wisdom. Says
the Gazette, of November Is:
The country has suffered but little thus
far from National Banks, but it is plain
enough to see that the foundations have
been laid for bubble of the most extra
ordinary dimensions, and the superstrue-
ture is going up rapidly. National Banks
are running into the widest kind of a
wildcat system. There is no doubt at
all about this. We need not say that we
do not refer here to the banks based upon
bona Jide capital, and organized for legit-
innate purpose; but it is known that she
ropes are being arranged for operations
that will, so far as regards the initiation
of the currency, throw the old, broken
down system of Indiana and Illinois into
the shades. What else can be expected?
Never was such an opportunity for max
ing money presented Let as look at it:
A bank is organized with nominal capi-
tai of $500, 600. The sum of 500, 900
is subscribed and paid in. This is invest
ed in United States bonds, which are de-
posted with the comptroller, and $780,
900 in currency issued. This is used
indirectly for purchasing other bonds.
and a further instalment of $S1, 200 is
Obtained in currency. This is again used,
and another 1nstalment ef s73, eco in cur
rency is received. Thus the bank has, on
bona tide capital of $1oO,Ooo secured
and deposited bonds to the amount of
$271 900, and has in circulation notes to
the amount of S244, 900. Put these to-
gether, and we have S515, Oe0 standing on
100000 This is almost equal to any
thing the Indiana and Illinois sharpers
ever got up in their palmiest days. Now
let us look at the profits:
Interest on bonds, equal in cur
rency................... S3T $40
Interest on circulation at per
cent. .......................,... I4;b4O
Total interest. ....... ............ $52, $50
We have deducted from the currency
26 per cent, which banks are required to
keep on hand. But the managers who
go into this kind of business will do bet
ter than that How this may be done,
we need not stop to explain. 1t is very
easy to make an average, by having large
amounts of currency two or three times
in a month, to swear by. 1t is thus seen
that on capital Of 100000 company
of gentlemen may realize a profit Of
$52, $50 per annum from the circulation
alene. If gold should go higher than
24O the profits would be still larger. 1t
would be in the direct liue Of interest
with those bankers to initiate the currency
and enhance the price of gold. But about
redem ptions. Isn't bank required to
redeem? Yes, in greenbaeks; but they
are not asked to redeem in anything
There would be no object in it. If We
had specie payments, there could be no
such banking as this to describe; but
there being no payments of any kind,
notes are set afeat and do not return to
annoy their makers 1t is fact, how
ever, that these notes are we'll secured
True. In addition to United States Sc
curities, there is ndiyidualliability. True
again. Then there are safeg yards to
prevent bogus stsek subscriptions, that
lis, to prevent banks from leaning t.
stockhelders to make new subscriptions
That's SO. But did you ever know Of a
sharp fnanoier being caught with such
chaff as that? National Banks are re
stricted to 6 or per cent. interest, bIr
somehow or other they manage to &c
more. In all these things it may be sale
that where there's viii there's way
And now let it be known that we ar,
not writing against National Banks as i
system, The system, Tor spocie slines, i,