The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1867-11-21

Banks. This would convert the Treasury De.
partment at Washington into United States
Bank, without other capital than the general
resources OF the country, but commissioned to
furnish the country with all it's paper money.
Now, we maintain that there are practical rea-
sons, growing out of the nature of banking
and paper-money system, why the Treasury
Department cannot thus supply the currency
of the country. The ordinary mode in which
a paper currency is kept ahoat is that the
notes and drafts arising in course of trade and
business, and having from thirty days to four
months to rum are received by the banks, and
held till they mature, the banks giving in
exchange therefor their own notes, payable on
demand, and the latter pass into circulation
as currency. Apart from this system
OF discounting private paper, a currency
cannot be kept in circulation. This business
the Treasury Department could not transact,
either directly or indirectly. The attempt to
do 80 through the old United States Bank
broke down the party that committed
the error. Banking, though necessary to our
public and business life, must be kept distinct
from the Treasury Department and all Gov
ernment influences. Let us suppose Mr..
Pendleton's plan carried out-the present ma
tional banks recall their currency, and sell the
bonds now deposited with the Government for
about $500, 900, 600 in greenbacks. This
transaction has swept the national banks out
of existence. There is the same amount of
currency held by the people, but there are no
banks, no places of redemption, no agencies
for keeping it in circulation, no security has
been given for it by anybody, and nobody
knows how much of it there is in circulation
except at hearsay. The profit on circulation,
which is the only consideration which can
induce bank to give its circulating notes.
payable on demand, in exchange for notes Of
private parties, at four months, is gone and
hence the banking business is stopped. All
this would involve an immediate depreciation
in the value of the greenbacks themselves.
Either the Government must employ the banks
as agents to resume their discounting, using
its greenbacks instead of their own notes. or
else the system of State banks must be revived.
Assuming that the revival of the State banks
is not what Mr.. Pendleton is driving at, we are
brought to the question, On what terms would
the banks resume discounting and circulate
greenbacks instead Of their own notes 1t is
essential to the safety of the banks that the
discounting shall be done at the risk of the
banker. This cannot be, unless the banker is
responsible for the redemption of the notes.
1t is essential to the safety Of the banker that
when he gives demand notes for notes payable
at future time, he shall have the full interest
on the currency. This he cannot do if the
Government charges him anything for the use
of the currency. 1t is essential to the safety
of the community that if the banker furnishes
| the currency at his own risk, and has the in
terest on it while it is outstanding, he shall
give security for its redemption; and no Sc
curity could be so good as that of Government
bonds. Thus, unless we reestablish State
banks, which nobody desires, or abolish bank
| ing altogether, which is impossible, or convert
the United States Treasury into a gigantic
bank of issue and of discount, with agencies in
every city, like the Bank of England, which
we don't like, the very necessities incident to
| the maintenance OF paper currency drive us
| right back to the three fundamental features
| of the national banking system, viz. that the
currency shall be furnished without interest by
| the Government; that it shall be issued at the
risk of the banker; and that it shall be secured
| by Government bonds. Our objection to Mr..
| Pendleton's crude theory is thatit is utterly
absurd, unsophisticated, and impracticable;
that it ignores the fact that paper money can
| only be maintained at par by making it re-
| deemable; that it can only be kept in circula-
| ton and made redeemable through some
| banking system; that Mr.. Pendleton proposes
| to destroy our present national banking sys-
| tenn, and to substitute nothing in its place;
that his policy would depreciate the green
backs to a third of their present value, and
| would Immediately precipitate disastrous
| collapse in our financial and business inter
| ests, without accomplishing single benef-
| cial result. We must have banking system
| of some kind. We could do better without
railroads than without banks. The only
question IS whether the Gov
| ernment has driven good bargain
with the bankers under the present system.
| If they have not, they have the power to
amend the bargain at any time. They can
drive it closer and closer, until they drive the
banks out of the business. II has been shown
| that the banks now pay in taxes about all the
interest the Government pays them on their
bonds. The profits Of the banks have been
| about proportionate to those in other kinds OF
business. But we do not object to any amend
ments to the National Banking law, whereby
the Government will drive a closer bargain,
| give less and get more; but Mr.. Pendleton's So
called plan simply destroys the banking sys.
tenn and substitutes nothing for it. The theory
that the Government can save any sum what
ever by destroying all the banks is prepos-
| ferrous. 1t is one of those crude destructive
vagaries which men out of power, and Invested
| of all responsibility, may advocate, but which,
if they were themselves in power, they would
have too much sense to carry out.