The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1866-05-30
Mr.. Spinner on the National Bank Cur
rency.

Mr.. Spinner on the National Bank Cur
rency.
The New York Herald recently criticised, rather
sharply, MIR. splNNERs letter on the National Cur
rency, The Treasurer thus replies in very n
teresting letter:
To the Editor Of the Herald:
Mvoattention has been called to an editorial
article which appeared in the New York Herald OF
Friday, the 18th inst headed ''Mr Splnners Lu, !,
minous. Views of the National Bank currency,
being criticism on my letter OF the 1otn 1nsT. ~ ~
Memphis, Tennessee, which article, by its nunle-
rous direct questions to ME, seems TO in!lte on
answer That it would have been more just 70
me to have printed, in connection with your COM
ments. the whole of my letter, and that nave
reason for complaint chat this was not. done, L
think Won will admit upon reperusal or the letter
and article in question. But, walvlng all matters
of o personal character, my main OBJECT In
answering objections that may be urged by the
prees; from whatever motives, to the national
banking SYSTEM is tn advertise to the people this
fscEyyiz: that in national bank notes we have the
best secured bank paper circulating medium that
has ever been devised.
The Herald makes an issue with the remark
that the notes OF national bank that has failed
are,y'rather better than those OF q bank In good
standing" but my explanation as to why they are
better was not given, to wit: III away from the
business marts or commercial centres OF the
country, for the reason that the Treasurer OF the
United States becomes the cashier OF such de-
faulting bank, and will, through his assistants
and all other Government officers, redeem such
circulation If the circulating notes of a bank
in good standing must be sent to some distant
place for redemption, the notes OF defaulting
bank, being redeemable at over four hundred
different Government Offices scattered throughout
the country, at their face value, are obviously
srather better than those ofa bank IN good stand
ing Your aFticle further says: -
aMr Spinner's correspondent asks q very peril
nent question, upon which the Treasurer does not
throw much light: BE inquiries what security the
noteholders would have in the event of the banks
falling, and the bonds deposited should not realize
enough to redeem the .irculation in consequence
OF the decline in the securities Is the govern
ment bound to redeem the notes at par, no with
standing the bonds deposited should not realize
sufficient sum with which to redeem them? That
is the question. Mr.. Spinner does not answer 1t
directly He simply says the government as a
first and permanent [by me written m ~
supply the deficiency But, MIR. Spinner, suppose
there were, no assets-and it is not likely there
would be, in O general panic or smash up-would
the United States be bound to make up the dehcl-
ency out OF the Treasuryp This is the question
the correspondent put, and the question which
has not been answered" - = r-.'f-{-
You subsequently remark:
sIf we rightly remember the aot creating these
banks, the Government is not bound to the note
holders beyond what it can realize out of the
banks. No Congress could be stupid enough,
surely, to pass law making it responsible beyond
that. = l*i* With all respect to Mr.. Treasurer
Spinner, we think the legal tender is better and
more secure than the national bank note; for the
Government is bound for that to its full value,
whatever CRISIS. may come" it.% "a
Now, / did answer the question OF my corres-
pondont, which you state in the above quotation
that failed to answer, and the reply was in these
words :"I, therefore, answer this question affir-
matively."
As to the law creating this system and provid.-
ing for the redemption Of national bank notes, 1t
does appear from your statement OF 1t that q
s'lnore luminous" exposition than has been given
by either Of us might be acceptable to notehold.
ers. In the forty-seventh section OF the National
Currency act it is provided that in case OF the
failure Of u national bank "the Comptroller shall
pledged by such association forfeited to the
United States, and the same shall thereupon be
forfeited accordingly; and thereupon the Comp
troller shall Immediately give notice, 10 such man
general RUE. or otherwise, direct, to the holders
OF the circulating notes Of such association, to
present them for payment at the Treasury OF the
United States, and the same shall De paid as pre-
scented in the lawful money OF the United states;
X 8 = And for any deficiency in the proceeds OF
the bonds pledged by such association the United
States shall have u first and paramount lien upon
all assets or such association"
1t seems clear enough tuat the notes OF ma
tonal bank in liquidation are liabilities OF the
Government and are redeemable at sight by each
and all of the hundreds of desgnated depositaries
OF the United States; and most people IN CONNER
cial circles understand this liability OF and Ger.
tainty Of redemption by the Government. me
United States is therefore clearly legally bound to
redeem every dollar Of the circulation OF de-
faulting national bauk. The Government virtu-
ally undertakes that it's six per cent. gold interest
bearing bonds and any other OF its bonds made
of equivalent value-deposited Wby national
banks to secure the redemption OF their circulat-
ing notes-shall not depreciate more than the
difference between such par value OF the oonds at
which they are received and the lesser amount
OF circulating notes Issued 70 the oank thereon'
and that il they do the Government guarau-
tees to make good the deficiency to the note
holder. 1t agrees to redeem all such notes from
its own funds in the Treasury at par, and this,
too, whether the securities deposited for that pur-
pose, with the sums that may be afterwards re-
allied from the assets Of such defaulting banks,
shall be sufficient or not. In other words, the
Government does not act In the capacity OF joint
trustee Of the national banks and the holders OF
their notes to pay the latter snch sums as it may
realize from the sales Of the securities OF the for
Iner but it stands 20 the perfectly secured endor-
ser of every circulating note issued by national
bank. The fact thatal national bank notes are .
legal tender. to- the Government for all dues AK
ceptcustoms, would be sufficient to establish this
liability, even IT, there had been no positive enact
nent OF q mandatory character, such as is con-
tained in. section furty-seyen OF the law above
quoted. Such is the opinion of the honorable
secretary Oh tne treasury, tne n0nOraole Comp-
troller OF the Currency and Of every other person
With whom Thave converssd who has given the
matter attention. -'rGp' ~ 81 a-asrrr
In this connection desire to state another fact
not generally updersty cd; that is, that account
of the personal liability clause in the act on the
failure of national bank the whole ''cspital
stock" or the bank. fr m the liability" Of the
bank to it's stockholders, Immediately becomes an
"asset" to its creditors.
As an example, showing public faith in CONNER
cia circles and among all classes in the security
Of the system, and how this matter is understood
and how it works, instance the case Of the First
National Bank OF Attica, New York, which failed
more than fourteen months since. Notice was
immediately given, in every possible way that the
circulating notes OF that institution would be re-