The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1866-05-30
The Daily IN ews.
WEDNESDAY MORNING, MAY 80, 1866.
Mr. Spinner on tho National Bank Cur
rency.

The Now York Herald recently criticised rather
sharply, Mr. SPlNNER's letter on the National Cur
rency. The Treasurer thus replies in very in
tercsting lettor:
To the Editor Of the Herald:
My attention has been called to an editorial
article which appeared in the New York Herald OF
Friday the 18th inst, headed "N1r. Spnner's Lu,
minous Views OF tho National Bank Currency,
being crltlclsm on my letter OF tho loth ,hsI. W
the Cashier or tho Merchants National BANK oi
Memphis, Tennessee which article by its nume-
rous direct questions to me, seems to invite @ III VI
answer. That it would have been moro just to
me to havo printed, in connection with your com
mcnts, tho whole of my letter, and that nave
reason for complaint that this was not done, l
think you will admit upon reporusai of tho lotter
and article Ill question. But, waivlng al matters W
OF personal character, my main ooJSce .,,n n
press, from whatever motives, to the natiQha 1,9
banking system, is t. advertise to tho people tnis
fact, viz: that in national bank notes we nave tle
best secured bank paper circulating medium tna'
has over been devised
The Herald makes issue with the remarh
that the notes OF n national bank that mas lhIo1
are Rather better than those OF bank IN gooo
standnR;" but my explanation as to why they are
better was not given, to wit IF away rom M inc
business marts or commercial centres OF tiio ilo
country, for the reason that the treasurer OF tno
United States becomes tho cashier or sucn ae-
faulting bank, and will, through his assistants
h th notes of bank
IN good standing must be sent to some dlstane
place for redemption, tho notes of defaultlnG
UAIk, DelnR reueemuDlC at over lOuT Huuot Ou
different Government Offices scattered throughout
the country, at their face value, arc obviously
rather better than those ofa bank i'll goou stand
ing" Your article further says: .
Mr. Splnners correspondent asks very peru
nent question, upon which the Treasurer does not
throw much light. He inquiries what security the
noteholders would have in the event OF the banks
failing, and the bonds deposited should not realize
enough to redeem tho circulation in consequence
OF the decline in tho securities Is the govern
ment bound to redeem the notes ut par, notwith-
standing the bonds dpDOsited should not roaffX0 IL
suihcient sum with which to redeem them Z Ihet
ls the question. Mr.. Spinner does not answer IT
first and permanent [by me written 'paramount']
Lien upon all the assets of dofaulting bank, to
supply the deficiency. But, Mr.. Spinner, suppose
there We're no assetsz-and it is not likely there
you'd be, in q general panic or smash up-yould l!
the United States be bound to mako up the'deficl-
ency out of the Treasury2 This is the question
the correspondent put, and the question which
has not been answered"
You subsequently remark: 80.
III we rightly remember the act creating these
banks, the Government is not bound to the note
holders beyond what it can realize out Of tho
banhs.P No Congress could be stupid enough,
surely to Pass sw making it responsible m beyond
Spinner, we think the legal tender is better and
moro secure than the national bank note; for the
Government is bound for that to its full value,
whatever crisis may come"
Now, did answer the question of my CORES
pondent, which you state in the above quotation
that failed to answer, and tho reply was in these
matively."
AS to the law creating this system and provid-
ing for the redemption of national bank notes. it
does appear from your statement of it that
''more luminous" exposition than has been given
by either Of us might be acceptable to noteholl-
ers. In the forty-seventh section of the National
Currency act it IL provided that in case OF the
failure of q national bank ''the Comptroller shall
declare The United States bonds and securities
pledged by such association forfeited to the
United states, and the same shall thereupon be
forfeited accordingly; and thereupon tho Comp
troller shall immediately give notice, iu such man
ner as the Secretary of tho Treasury shall, by
OF the circulating notes of such association, to
present them for payment at the Treasury of the
United States, and the same shall be paid as pre-
sented in the lawful money of the United States
And for any deficiency in the proceeds of
the bonds pledged by such association the United
states shall have first and paramount lien upon
all assets OF such association"
1t seems clear enough tuat the notes of q ma
tional bank in liquidation liabilities of the
government and arc redeemable at sight by each
and all Of the hundreds OF designated depostaries
of the United States and most people in CONNER
cal circles understand this liability of and GER
talpty OF redemption by tho Government. The
United States is thel efure clearly legally bound to
redeem every dollar of the circulation Of de-
faulting national bauk. The Government virtu-
ally undertakes that its six per cent. gold interest
Of any other Of its bonds made
banks to secure the redemption of their circulat
ing notes-shall not deprecate more than the
oiHoi onCe oet"eeh sucn par value OF the bonds at
which they are received and the lesser amount
OF circulating notes issued to the bank thereon.
and that il they do tho 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, pI,, with the sums that may be afterwards re-
allied from the assets of such defaultinp banks.
shaH be suf1c1ent or nut. In other words the
government does not net in the capacity of a io;nt
truetoe OF the national banks and the holders of
their notes to pay the latter such sums as IL NAV
realize from the sales OF the securities of the for
NOR; but it statida the perfectly seenred endor
ser of every circulating note issued bv a nat;oOal
6ank. The fact that all national bank notes are 4
legal tender to the Government for ali dnea ex
cept customs, would be sufficient to tabiish this
inability, even II there had been no positive enact.
ment OF mandatory character such as Ia con-.
talned IN sectlon tnrty-seyen OF the law above
quoted. Such is the opinion OF the honorable
Secretary OF the Treasury, tho honorable Conn
troer OF the Currency and Of every other persfr
with whom l have conversed who has given In,
matter attention. To-.
In this connection dosiro to state another fac
not generally pnder.t cd; that is, that ON accoun
failure OF a national bank the whole "caoita
stock" OF the bank, fr. m the ssliafilitv, ~ th,
bank to it's Stockholders immediateIv becomes a,
"asset" to its creditors. %
As an example, showing public faith in coronoer
cai CIRCLES and among NIL classes In the secnrit,
and how it works, instance tho caso OF the Firs
National Bank of Attica, New York, which faiie,
more than fourteen months since. Notice wa
immediately given, in every possible way. that In
circulating notes Of that institution would be rs
deemed by all Government depositaries on pro
terest alone On the Government aocuritisa nI.dan,
Tor the redemption oil tuese noteu ovoando a., % %