Delaware gazette. [volume] (Delaware, Ohio) 1855-1886, 1867-11-08

ready issued. hence new banks organ
izing under the National system, as
well as many old ones, are de-
prived of their share Of circulation
limif. When, therefore, 2 Natio88l
Bank having circulation. surrenders
its charter and goes out Of existence, or
is closed up by the Government for any
cause, any National Bank not having
its share Of circulation, by gesting
special permission from the Treasury
Department and by gathering uB the
scattered notes Of the deiuncJ institu-
ton, and presenting theLn at the Uui-
ted States Treasury for cancellation
can have the amount OF circulation thus
cancelled transferred to itself. In thus
gathering up the scattered notes OF 81
extinct bank, pa8ties sometimes offer
premium Of from two to FIVE per cent
for them, thus making them for the
time being worth more than The notes
OF an existing solvent bank.
III Tares paid Bsf tie National Bauks.
iSls5stitlstiOa Of GTee1lbael-s for National
Bank Notes.
Your third question touches q part
Of the su bfecf which most interests the
people Mt the present time, and which
is most discussed, and least undertook.
by certain class Of politicians. My
answer is this s;
/. Even if it were true that the Gov
ernment is paying eighteen millions
annually into the Golfers Of the Nation
al Banks, which could as well be saved
to the. people by a substitution Of green
back currency, yet it would be far bet
ter 70 pay this sum than to have the
greenback or Treasury note system
permanently fastened upon the countrys
/ regard the issue, by the Government,
Of legal tender notes to be used as q
cirulating EsedAum rs an anomaly in
finance. Il was purely war measure
Z life OF the \ atiOI8.- and, ike other war
| measures, should end with the return
of the prosperous peace. 1t Is not de-
sirabie tla6 the greeul backs be immsdi-
ately or suddenly Withdrawn, but they
should be gradually and surely replaced
with a currency which is Legitimate
and permanent.
2. It was an important par: of the
contract between the Government and
I the old State Banks. when the latter
/ surrendered their State charters, that If
they organized under the new National
system, they should be entitled to q
I certain portion of circulation. This
was also the principal inducsment offer
( ed for the formation Of new banking
institutions. Without this pledge of
l-circulatiOu few if any Of the old ban ks
i-WOuId have surrendered their State
. s.
pOssibl to- establish the National sys-
tenn at ALI That circulation cannot
now be taken away without a psalpabIe
breaeirof f1ftlr toward the combined
capital Of the Nation-such breach Df
faith as Would ever after render cRpi tai
timid, eautzOUs, ard backward in its
dealings with government which could
thus Disregard it's pledges- However
plausib bic the proposition Haay seerns the
people cannot possibly De benefited by
any financial measure " gl practically y
repudiates the contracts Of their gov
ernment.
8. This claim would be equally good
against any system of banking, for the
actual point of the argument is, that so
long as there shall be national debt.
the Government ought To supply all
the currency Of the country, IN order
to save interest. Suppose the old State
Bank system were now IN existence,
with three hundred millions of com
paratively unsecured ciTclation, there
would be still stronger reasons why the
Government should force the State
Banks to retire their circulating notes,
and itself supply the needed currency.
The people would, in this supposed
case, save just as much interest as they
would now save by retiring the Ma
tional Bank notes. Hence, the real
question is, Shall we have any banking
system at al ? for, if The present excel
tEllG stem DH Q6SAAON ptAs IL WOuAN 10
imp0ssibl to originate another which
would not be open to the same Obiec-
tions. II an exclusively greenback
currency be adopted, Of course we can
have no system of banks, either State
or National, having the privilege Of
rcirculatiOn.
|. A. But it is not true that the Govern
ment would annually save eighteen
millions Of dollars, or any part of that
sum, BY destroying the National Bank
ing system and issuing greenbacks in
place Of bh9 National Bank currency
now in eireuHAti0n-
This fact, which shall soon Substan-
tiate, Indicates how little this subject is
understood by those Who are most per-
sistent in their attacks T7poR the present
system of banking.
1t is not a question whether the Gov
ernment ought, or ought not, to pay to
the banks the interest on the United
States bonds, owned by them and de-
posted at Washington to secure their
circulating notes. These bonds are the
private property of the banks-the ag-
glomerated capital OF individuals who
have thus united their means in leg
innate business-and no matter who
held these Government securities, The
interest would have to be paid all the
same. The National Banks are Just as
much entitled to the interest on the
United STATES bonds they have bought
chanic, and the merchant to bhe inter-
est on the bonds held by them.
It being plain, then, that the Govern
ment eOnfers no special privilege upOn
the banks by paying them interest on
the United States bonds they hold, it
becomes necessary to. look further for
the ''faYoritism'' and loss to Govern
ment, of which we hear complaint.
NY statement made above being neces-
sarily admitted, it viii be claimed that
the National Banks are permitted to
issue three hundred millions of Circu-
lRting notes, which amount 5heY loan
to their customers at an average interest
of six per cent, thus in reality receiV-
ing a double interest on q single invest
ment of three hundred millions of dol
lars. Then follows the additional claim
that the Government may just as well
supply this three hundred millions Of
circul atiOn,a nd with it buy up and
cancel an equal amount of United
States bonds, thus saving to the people
the eighteen millions of annual inter
est.
This has plausible look and mis-
leads many. By this showing the
banks stand charged with eighteen mill
lions Of annual interest derived from
their circulating notes, which amount,
if it really be received, and no equiv
alenE be rendered by the banks, is vir-
tualIy a gratuftv or special privilege
I
interest on government bonds has moth
ing to do with the subiect-the flavor
itism, - if such there be, is connected
exclusively with the circulation of the
banks.
But, 1 re ply, the National Banks do
not receive anything like eighteen mill
lions of interest on their three hundred
millions of circulation. What they do
receive, the following facts, which are
accessible to all, viii show
The very law which authorizes the
National Banks to issue circulating
notes as all, also requires and cOmpels
them 20 keep constantly in their vaults
an average Oftwenty per cent.,-(twen-
ty-five per cent. in cities and fifteen per
cent. in the country of the amount of
that circulation, as a reserve, Here are
sixty, of the three hundred millions OF
circulation, lying idle in bank the year
round, and the amount on which the
banks can receive interest is thus re-
dueed TO two hundred and forty mill
lions.
Again, the same law requires and
compeis the banks to keep a reserve
equal to twenty per cent. twenty-five
per cent. in cities aud fifteen in the