Delaware State journal and statesman., 1866-06-05

| YORK Herpld Of Friday, the 18th ulitmo
headed ''Nr. Spiruer's Luminous Views OF
the National Bank Currency, being II crit
cism on my letter of the 10th inst. to tho
cashier of the Merchants National Bank o
Memphis, Tennessee, wl''ch article, by its
numerous direct questions to me, seems tC
invi.e al answer. That it would have been
more just to me to have printed, in connec
ton with your comments, the whole of my
letter, and at | have reason for complaint
that this was not done, tt'nk you will ad.
init upon reperusal of the letter and article
in question. But, waiving all matters of q
personal character, my main object in an
swering objections that may be urged by the
press, from whatsoever motives, to the ma
tional banking SYSTEM is to advertise to the
people this fact, \ q: that in national bank
notes we have the best secured bank paper
circulating medium that has ever been de-
vised.
The Herald makes an issue with the re-
mark that the notes of Il national bank that
has failed are "rather better than those of u
bank in good standing;1 but my explanation
as TO why they are better was not given, to
wit; ''If away from the business marts or
commercial centres of the country, for the
reason Tat the Treasurer of the United
States becomes the cashier of such delaulting
bank, and will, through lis assistants and all
other Government officers, redeem such cir
culation." II the circulating notes of a
bank in good standing must be sent to some
distant place for redemption, the notes of u
delaulting bank, being redeemable at over
four hundred different Offices scattered
throughout the country, at their face value,
are obviously ''rather better than those of q
bank in good standing" Your article irr.
ther says:
"Mr. Spinner's correspondent asks n very
pertinent question upon which the Treasurer
does not throw much light. lie inquiries
what security the II, holGers would have in
the event of the banks failing and the bonds
deposited shOuldnot realize enoughto redeem
the circulation in consequence Of the decline
in securities. Is the Government bound TO
redeem the notes at par. notN outstanding
the bonds deposited SHOULD not realize a sul-
iicient sum with which to redeem the.?
That is the question. Mr.. Spinner does not
answer it directly. He says the Govern. ..ent
has first and permanent 10y Ihc written
paramount lien upon all the assets of a
detaulting bank, to supply the deficiency.
But, Mr. Spinner, suppose there were no as
sets-and it is not likely there would be in a
general panic or smash-up-wouldth the United
States be bound to make up the deficiency
out of the Treasury That is the question
the correspondent put, and the question
WHICH HIS uOl Dtcu uHSWGleu.
You subsequently remark:
''lf we rightly rene. e..ber the act creating
these banks, the Government is not bound
to the noteholders beyond what il can real.
ize out of the banks. No Congress could be
stupid enough, surely, TO pass law ha..ing
it responsible beyond that. With
all respect to Mr.. Treasurer Spinner, we
think the legal tender is better and more Sc
cure than the national bank note; for the
Government is bound for that to its full
value, whatever crisis may come.
Now did answer the qu, TO-. of my cor
respont en-, which you state in the above
quotation that failed to answer, and the
reply was in these words: 81 therefore an
swer this question aifir..lativcly."
AS to the law creating this system and
providing for the redemption of nahona
bank notes, it does a ,,ear "'om your state
ment of it that ''more lrminousn expOsi
ton than has been given by either of US
might be acceptable to note-holders. In the
forty-seventh section OF the national cur.
relcy act it is 20 -ded that i'm case of the
failure of natioral bank "the Co lptrollei
shall declare the United States bonds and
securities PLEDGED by such association for.
feited to the United States, and tAe sam(
shall therefore be forfeited accordingly; and
thereupon the comptroller shall Immediately
| of the Treasury shall, by general rules OF
otherwise, direct, 10 the holders of the
circulating notes of such association TO pre-
sent them for payment at fhe Treasury o.
the United States, AID the Sale sail be paiC
as presented in the lawful money of the
| United States. y And for any de
ficiency in the proceeds of the bonds pledget
by such association the United States shal
have first and paramount lien upon all as
4 sets of such associatio-. !"
It seems clear enough that the notes OF {
national bank in liquidation are liabilities o
the Government and are redeemable at sigh
| by each and all of the hundreds Of designa
ted depositaries of the United States; ant
most people in commercial circles understand
this liability of ahd certainty of Redemption
| by the Government. The United States i
therefore clearly legally bound to redeem
every dollar of the circulation of de''ult
ing national bank. Tie Government 'rtu
ally undertakes that its six per cent. aold
interest bearing bonds-and any other Of it
bonds made of equivalent value-depositol
by national banks to secrre the redemption
of their circulating notes shall not depreciat
more than the diiie. ence between such pa
value of the bonds at which they are receive,
and the lesser amount of circulating note
issued to the bank thereon, and that if tile.
do, the Government guarantees to make GOO
the deficiency to the noteholder 1t agree
to redeem all such notes iro.-l its own fund
in the Treasury at par, and this, too, whethe
the securities deposited for that purpose
with the sums that may be aiterward realize
from the assets of such deiaulting banks
shall be sufficient or not. In other words
the Government does not act in the capacit
of Joint trustee of the national banks an
the holders of their notes to pay the latte
| u 1
of the securities of the former; but it stan;
as the perfectly secured endorser of ever
circulating note issued by national banl
The fact that all national bank notes a.e
legal tender TO the Governme 1t for all due
except customs would be sufficient to estal
, lsh this liability, even if there had been n
positive enactment of n mandatory charut
ter, such rs is contained in section forty.seye
, of the law above quoted. Such is the opinio
; of the honoroble Secretary of the Treasury
the honorable Comptroller Of the Currency
and of every other person with whom
have conversed who has given the matte
attention.
In this connection desire 10 state anothC
fact not generally understood; that is, thu
on account OF the personal liability clause
the act, on. the failure OF n national ban
the whole "capital stockn of the bank, froi
n "liabilityh of the bank to its stockholder
Immediately becomes an "asset" to its cred
tors,
As an example, showing public faith
commercial circles and among all classes
= the security Of the system, and how this ma
ter is understood and how it works, Iinstant
! the case of the First National Bank of Attic
o New York, which failed more than fourtee
months since, Notice was immodiatel
= given, in every possible way, that the circl
lating notes of that institution would be r
deemed by all Government depositaries c