The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1867-06-18
THO Rettesaess aud Danger Of tho National
Ranka.

Tso Nefsosness aud Danger Of tho National
Ba.ks.
Our special correspondence from the West,
published yesterday and in last Tuesdays
HERALD, on the condition of the national banks,
makes such revelations as should open the
eyes of the public to the rottenness and danger
OF these institutions To US the facts revealed
are not at all surprising; for we have long fore
seen and shown through the columns of the
HERALD what must result from such an i'm
mensely fraudulent and homogeneous system.
We felt it our duty to proclaim to the people
the danger that was inevitably coming. For
time we stood almost alone in our efforts. The
vast power of the national banks over poll
ticians and the newspapers generally made it
up hill work; but the people and many of our
public men are becoming enlightened at last
The Independent metropolitan press Is above
national bank influence, and can afford to tell
the truth. In spite of the power Of this gigantic
monopoly and Of the Chase radical faction,
which look to it as grand political machine,
we saw that large party in Congress last
winter and spring, as we'll as several leading
newspapers Of the West, dared to attack tho
monster evil. -7r~-'-
Our special correspondent referred to, who is
employed in the work ofprobing the rotten con-
diti62 Of the banks, and who has visited Buffalo,
Chicago, ST Louis and many Of the other princi-
pal towns of the West, gives us startling results
of his Investigations. Daniel O'Connell said
once that he could drive coach and six
through the acts Of Parliament, and he GER
tainly knew how to get through or around them.
Our national bank managers and directors find
it easier to evade the National Bank act, and
do so with the greatest facility. For example,
one of the banks spoken of by our correspond
ent has a capital Of two hundred thousand dol
lars, and it honors the drafts of specializing
stock dealer, who has no funds in the bank, to
the amount Of hundred thousand dollars
week, or fifty per cent of its entire capital, in
direct violation Of the forty-scventh section Of
the act. How much this bank accommodates
others we do not know, but the probability is
that it does SO to o large amount, thus carrying
on transactions vastly beyond its capital or
what the law allows. "Half the banks in the
Interior" we are informed, "ara guilty Of like
violations Of the law every day." In many
cases the spectators without means who obtain
such accommodation are bank directors or their
friends. In one case bank president, more
honest than the rest, withdrew from the institu
ton because the directors were specializing
largely with the funds and be could not control
them 81 resigned" he said, "sold out my
stock and abandoned the concern" He very
properly added, "Under the law, as you are
no doubt aware, the stockholders are only
liable for double the amount of their
stock TO creditors. board Of unscru-
pulous directors, If they were so dis
posed, at period when the deposits are large,
can speculate upon the funds, and, in the
event Of trouble threatening, transfer their
stock to men Of straw, retaining only sufficient
to give them control Of the institution. Take
for example, . bank with capital Of two hun
dred thousand dollars, o circulation of hum
dred and any ssousand, and individual and
government deposits Of million and half.
with the treasurer to secure government de-
posts and circulation; yet how easily II can
fail and the managers profit at the expense Of
the government and unsuspecting depositors
There Is much rottenness in the system, and
am glad am out of it" Such Is the testimony of
national bank president who knew all about
the system. Can we DO surprised, then, il the
government should lose the peoples money
and thousands Of unfortunate depositors be
Aeeced by these gambling and rotten institu-
tons! Have we not examples in the cases Of
the Merchants National Bank Of Washington,
of the First National Bank Of New Orleans, and
Of others that might be named! Is there not
the best reason to believe that the evil Is wide
spread and that general crash will be the
consequence
The people In New York, and all through
the populous part Of the country on the eastern
side Of the mountains, have been suffering from
the high price Of provisions. They have been
astonished to see -four over twenty dollars
barrel and provisions in proportion, when
it was known there was an abundance in
the country. We now learn that II was the
pet national banks Of Mr.. McCulloch and Mr.
-
too, by using the peoples money and through
the power which the peoples representatives
in Congress had given to them. But like all
greedy spectators, they have overreached
themselves, and have large stocks on hand
when prices are falling. This is one Of the
chief causes Of the shaky condition of the
Western banks at present, and one which
makes such prudent man as the bank prea-
dent referred to before stand from under the
"rotten system"
But what shall we say Of the government Of
those members of Congress, and particularly
Of Mr. Secretary McCulloch, who bolster up
this infamous systemf What shall we say Of
the Secretary Of the Treasury, who lets these
spectators and forestallers have the govern
ment deposits TO carry on their nehrious