The Hancock Jeffersonian. [volume] (Findlay, Ohio) 1857-1870, 1867-11-01


: This fact, which I shall soon sub
\ stantiate, indicates how little this
E suject is understood by those who are
most persistent in their attacks upon
; the present system of banking.
1t is not question whether the
Government ought, or ought not, to
tpay to the banks the interest on the
United States bonds, owned by them
and deposited at Washington to Sc
cure their circulating notes. These
bonds are the private property of the
banks-the agglomerated capital of
individuals who have thus united
their means in legitimate business
;, and no matter who held these Gov
ernment securities, the interest would
have to be paid all the same. The
National Banks are just as much en-
titled to the interest on the United
States bonds they have bought and
paid for, as are the farmer, the me-
chanic, and the merchant, to the in
|terest on the bonds held by them.
1t being plain, then,that the Gov
lernment coufers no special privilege
upon the banks by simply paying
them interest on tho United States
bonds they hold, it becomes necesss-
Try TO look further for the "favoritism"
and loss to Government, Of which we
hear complaint. My statement made
above being necessarily admitted, it
will he claimed that the National
Banks are permitted to issue three
hundred millions Of circulating notes,
which amount they loan to their GUS
toners at an average interest OF six
per cent.-thus, in reality, receiving
"a double interest on a single invest
ment of three hundred millions of
dollars. Then follows the additional
claim that The Government may just
as we'll supply this three hundred
millions of circulation, and with it
buy up and cancel an equal amount
lof United States bonds, thus saving
to the people the eighteen millions Of
annual interest.
This has plausible look and mis-
leads many. By this showing the
banks stand charged with eighteen
millions of annual interest derived
from their circulating notes, which
amount, if it really be received, and
no equivalent be rendered by the
banks, is virtually gratuity or spe-
cial privilege enjoyed by the Nation
al Banks. The interest on govern
ment bonds has nothing to do with
the subject--the ''favoritism," III
such there be, is connected exclusive
ly with the circulation Of the banks.
But, / reply, the National Banks
do not receive anything like eighteen
millions of interest on their three
hundred millions Of circulation
What they do receive, the following
acts, which are accessible to all, will
show:
The very law which authorizes the
National Banks to issue circulating
notes at all, also requires and COM
pels them to keep constantly in their
vaults an average of twenty per
cent, twenty-five per cent. in cities
and fifteen Per in the country
| of the amount of that circulation, as
reserve. Here are sixty, OF the
three hundred millions OF circulation,
living idle in the bank the year round,
anu Sne amount on wnicn the banks
can receive interest is thus reduced
to two hundred and forty millions.
Again, the same law requires and
compels the banks to keep a reserve
equal to twenty per cent, (twenty-
five per cent in cities and fifteen in
the country Of the average amount
oftheir deposits both public and pri-
vate; and this reserve must be in
lawful money. The average total of
deposits during the last year was
S571 900, 900; thus S114, 100000 Of
non interest bearing legal tender
notes were carried by the banks du-
ring the past year, which sum is a
Just offset to that amount of circula-
ting notes received from the Govern
ment by the banks. This deducted |
from the $24O, 100000 leaves only
sl26, 100000 of the S300,000.000 of
circulation available to the banks, as
the result OF a balance sheet bctwcont
themselves and the Government on
this question of circulation. Six per
cent. interest on S126. .000, 900 is S7,-
$50, 900. This latter amount, then,
is the sum total of the profit which
the banks can derive from their cir
culation so long as the Government
has legal tenders which it wishes to
have carried vithontyinterest. al
Some may object to my thus coup
ling the reserve required to be held
for deposits. with the reserve for cir
culation. This objection might have
some weight If the Government were
not itself profting by the issue of
non interest bearing notes, a large
proportion of which are carried by
the National Banks with the very
means supplied 10 them by the gra-
tuitous issue of their own notes.
Thus this amour. of STA 900, 900,
is q fair deduction from the circula-
ton which the banks are allowed to
issue.
But there still remains an appar-
ent profit of S7,560,c00 derived by
the banks from their circulation
What have the banks to Offset to this
seeming subsidy
l. They pay the National Treasury
one per cent per annum, (One-half
OF one per cent. semi-annually) on
1 the whole amount of their circulation
SAY $4,000. -.r
2. They pay to the National Treas
ury one half OF one per cent. per an
nnm on the average amount of their
deposits, which, as their deposits
last year averaged s571 900, 900,
amounts to sass, 900. OIL
8. They pay national tax on their
capital stock, over and above that in
vested in Government bonds, which
tax last year amounted to S4O0,0O0.
(The above three items are re-
quired by section Al of the amended
National Currency Act.
1. They, pay a tax of one-half OF
one per cent. per annum on the net
amount OF. dividends and amount car
ried to surplus fund, which tax for
the past year amounted to $780,
900.
5. They pay license tax OF two
dollars on every one thousand dol
lars of capital. The aggregate Of
National Bank capital, as last re
ported, is 24,000,000, and the