Western Reserve chronicle. [volume] (Warren, Ohio) 1855-1921, 1867-10-30
The NatIonaI Bank system

NA9SofSA0Os tuo WuOte dUalr Is Stll en-
shrouded in mystery.
The National Bank System.
From the Ohio State Journal
The important exposition by jay
Cooke, given in yesterdays issue, of
the principles and practical workings
, OF our National Bank System, merits
the most thoughtful consideration.
: We shall endeavor to condense with
in the space of one column, the sub
stance of what occupies six, although
that will be impossible, for each SEN
tence contains point ami every nara
graph proposition. The SIX questions
asked are substantially answered in
the first four terse and condensed re-
plies given by Mr. Cooke, and we shall
contne our attention to these only.
: I. ORIGIN OF THE NATIONAL BANKING
SYSTEM.
) This distinguished bakner in sub
stance says: That until 1863, our pa
per currency consisted of notes on
banks chartered by the several States.
under the laws peculiar to each State,
with no approach to uniformity in ba-
zis or in bank legislation that in most
cases the currency was left to take
care of itself, and the bilLholders to
take care of themselves; that few
State bank notes passed at par in all
parts OF the country, but had various
rates Of discount and different values
IN different parts Of the country at the
same time, and that exchange between
different sections was made expensive
I and Vexauous, that the notes of no
two banks being alike in appearance,
the country was flooded with counter
teits, rendering 1t unsafe for people to
accept paper money, without consult
ing an expert; that failures under this
! system were frequent and disastrous
the losses usually falling upon the bill
holders, and the public mind concern
ing the solvency OF banks, was con
stantiy filled with apprehension that
more chaotic ana unsatisfactory f.
nanclal condition of the country could
not well be imagined
That at such time the nation. be-
ing engaged in supPressing a great re-
oeIllon, was forced to meet expenses
utterly unparalleled that the only
manner IN which the system could be
made even temporarily available, was
TO grant the State banks the widest IL
cense ofissue, thus flooding the country
with an irredeemable, and to a great
extent, unsecured paper currency (;
that as the only means of bringing g.
nahelal order out OF chaos, of giving
the country safe and uniform curren-
cy, and above all, of furnishing the
slnews OF war, our GoFernment orig
mated and put IN successful operation
our splendid National Banking insti-
tutions, which enabled the nation 20
meet Its enormous expenditures, and
hight the war to a victorious issue that
the plan thus devised was not design
ed as a temporary expedient, but was
meant 10 be permanent financial sys-
tenn: that one of the terms or
conditions upon which State banks
surrendered their charters and con-
formed themselves to the National
plan, 101s The pledge from tie Gocerlsalcat
made necessary 10 induce them 20 le1vs
the fsld-thGt they should Be permitted toi
sue eertaiH amount Of circuL1t0ry notes
that the change from the old plan to
the new, swept from existence a cur
rency mongrel IN appearance, unstable
IN value, and insecure in character,
and substituted currency unifOcm in
feature, and safe as the Republic itself:
that the system secured for the Gov.
ernment an immediate loan of three
hundred millions of bank capital, es-
tabllshed sixteen hundred efficient and
responsible agents for the negotiation
OF other and greater loans; and that
the soldiers of the Union, when pay
for wages and subsistence was in ar
rears, with the much needed means
through the active and earnest COOP
Grafton OF these National Banks.
Ii. CHARACTER OF NATIONAL BANK CUR
RENCY.
That from its uniformity in appear.
auce, it can be recognized wherever
met, without the aid of brokers' clerks
or bank note reporters; that owing 10
.he different plates and designs, II is
impossible to alter these notes from a
over denomination to higher: or to
them.
That the uniform value Of this cur
'ency in every State and territory saves
Millions of dollars in exchange, dis
counts, &c; that in one sense they are
aier than greenbacks, both public and
private credit being pledged for the
payment Of these notes; that they are
Wholly unaffected by the suspension OF
destruction of the particular baak
Vnose name they bear, and that no
oss can fall on the note-holder in any
went.
IL. SUBSTITUTION OF GREENB4CEs FOR
NATIONAL NOTES.
Mr.. Cooke says that the issue by the
Government of legal tender notes is an
nomaly in finance; that it was purely
war measure, justiha6le because nee
ssary to the life of the nation. and
Mould end with the return of prosper
Us peace; they should be gradually
eplaced by currency which is legiti-
nate and permanent; that without
his pledge 70 the old banks of circst1a-
on, they would not have surrendered
lelr charters, and it would have been
npossible to establish the national
ystem at all that circulation eaaaot noe
taken array 'githOH a paLDz5Lc breach Of
nth to17ard the c0Hb1lst eaDitaL of The Aa-
on, such breach of faith as would
yer after render capital timid, eau
ous and backward in its dealings with
ne Government. That instead of the
government paying the National Banks
ighteen millions of dollars annually,
ne Banks pay the Government TEN
ILLIoNs, EIGHT HUNDRED AND FORTY.
aREE THOUSAND DOLLARS f5r the priyi-
'ge of existingl
V. PRESENT POSITION OF THE NATIONAL
BANKS.
That. having lost their profits az
oyernment agencies, they cannot now
eclare dividend of more than seven
er cent. by reason OF heavy State AMI
stional taxation, and the system isia
condition least favorable to the bank
5 and most favorable to the people
ne bill holders are completely and al
ays secured against every possible
'cident. We have the best system in
rHuH