Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1867-08-16
THE MEMPHIS APPEAL
THE NATIONAL RANK SYSTEM.

THE NATIONAL RANK SYSTEM.
IL men ever reflected during periods o
great excitement, or IL they ever learnet
4 anything by experience or from history
all men who thought at all should hav,
: known that banks whose circulation
based, not on specie, but on deposit 0
Government bonds with the Govern
ment, while they can loan and speculat'
1d If6ftlfD1 on deposites made with them
/ must Of necessity blow up after while
as the wildcat banks of Michigan did
F, and those in Tennessee and elsewher,
whose circulation was secured by deposit
of State bonds. The State bonds were
better In the market, then, and worth
intrinsically more, than Q. s. bonds are
to-day. And yetsome men are so crack.
brained as actually to argue that such 8
currency is better than specie.
The following articles viii give our
readers some idea Of the opinions begin
ming to be entertained in the North
about the wretched system of National
Banks: .....
INCREASING ROTTENNEss OF THE ma
TIoNAL BANKS.
From the New York Herald.J HH
In looking over the columns of yes
terday's Herald the reader can get an
idea Of the uDsoUndness Of our infamous
national bank system. In one day there
is an announcement of the collapse OF
the Unadilla national bank, an account
Of the defUnet Newton national bank,
Massachusetts, disclosures Of the Weeds
port bank defalcatiOn, and a statement
concerning the defaloRtion in the Pc
quonnOck bank, Of Bridgeport. This is
pretty formidable amount of news for
one day OF national bank failures, swim
ding and corruption. IL is not necessary
10 60 back to the thirty or forty other
cases of failure and swindling among the
national banks during the short period Of
year or two that the system has been
in operation. With these the people,
unhappiIy, are too familiar: the batch Of
news now before us is quite enough to
arouse public attention TO the rottenness
and danger of these Institutions.
This bank of Unsdilla, in Otsego
county, of this state, which it is reported
! has made bad failure, with liabilities
/ Of two hundred thousand dollars and
with very small assets, was q safe, re-
I spectacle establishment, under its old
charter and before il became one OF the
! national banks Such was the case, too,
{ with several others that have failed. Ali
( this goes to show the corrupting influence
/ Of the system, the opportunities for frauds
| and reckless speculations, and how the
! people have been deceived by the appar-
/ ent national character and name Of these
I irresponsible institutions. The facilities
( for fraud and speculation with other
I peoples money are so great that honest
men are made dishonest. The whole
sysfem is loose, dangerous TO the public
and corrupting In its influence upon those
doing business under it.
There appear to be two causes chiefly
for the defalcatiOns and collapse of the
national banks. These are excessive
speculations, particularly in produce,
with a view Of forestalling and control
ing the markets, and the fast living Of
those connected with the institutions. In
some cases the failures and rohberies are
caused by the bank officers dabbling or
gambling il stocks. The Dasdilla bank
followed the career Of ifs defunet pFede-
csssors. It is the same old story over
again.
When we look at the opportunities for
swindiing we are not surprised at the
breaking down of these banks. We
shall be surprised If many more do
not 90 the same way. Our special cor
respondence, published short time ago
on the subject, showed the general un
soundness Of the banks in the west. As
ts the pretended Investigations into the
affairs of these institutions by govern
meat inspectors, as provided by law,
81. 1Hr.IN
ways OF deceiving these government |
agents, and not few Of the agents them |
selves are bought up to overlook irregu- !
larities. The banks can well afford to |
pay thousands OF dollars TO needy and |
corrupt officials for having their rotten |
ness covered up, and too many OF these |
officials are ready to pocket the bribe. !
Under the old system depOsitOrs and
others doing business with the banks
looked closely into their condition and
operation; now they cannot do that so
well, and they place confidence in them |
because the government has given them |
the name of national banks, and because |
it is enormously supposed they are
sOunder on account of having q quasi |
connection with the government, |
There was q direct and individual re- |
sponsibility in the old banks, though |
they had their defects. Under the |
present system the government saves |
itself and the note holders frst, Rs far as
it can, when banks fail, but the con- !
fidiDg individual depositors have poor
chance Of getting their funds. The gov
ernment, even, may lose its deposits, |
and in case OF q general smash-up, when |
in all probability the bonds held as |
security for the bank currency would |
become greatly deprecated, the treasury |
department would have to make up the |
deficiency out of the public money for
redeeming the circulation. Such is the /
bOasted safety Of these insecure and rot
ten institutions.
But this is not all we have against the /
national banks. They take directly from |
the public twenty millions year in /
profits on their circulation. They are, |
In fact, Invested with valuable privi~ /
lege-thAt OF having the benefit of ma
tional currency. which properly belongs
to the government for the benefit Of the
treasury and the people. Ii is a clear
gift Of twenty millions year OF public /
money 10 a mOnstrous monopoly; it is /
taking 8 large sum from a heavily bur
dened people and giving it TO few capt.
talists Then these banks use this very
money, in connection with the other
which the power congress has
given to them, to foTestall and monOpo /
lie the markets, and thus make the
suffering people pay twenty. five TO iifty !
per cent. more than they should |
pay for the necessaries Of life. /
Besides, they were instituted by |
Mr.. Chase, Mr.. McCullOeh and their
friends as powerful political machine,
and if they be perpetuated they will in
the end not only absorb all the profits of
Industry, but will control the destinies of
the republic. The financial power, mo-
nOpoly, danger and other evils Of the old
United States bank, were nothing com
pared with what we may apprehend from
the national banks. In every point of
view they are most dangerous and stu
pendsus fraud upon the country. The
creation of them was great blundeE on
the part of congress; their continued eX-
istence Is 3 disgrace to an enlightened
people and government; and unless they
be speedily swept away, 1t will be diff
cult to destroy them, and they Will be-
come the greatest evil that ever afflicted
a free country.
From the New York World
The source of this rottenness inheres
in the national bank system, which pre-
sents temptations too powerful for san
guine men 10 resist, and affords no
adequate safeguard to the stockholders
and creditors Of the banks. 1t is 8 sys-
tenn which stands on no solid or stable
standard OF value. All experience Rttests
that there can be no sound banking
system which does not rest on legal
obligation by the banks to meet their
liabilities by payment Of the precious
metals. Our national banks issue paper
which they are required to redeem only
in other paper; that other paper being
subject 20 daily fluctuations Of value.
Now 8 state Of things in which there
is no stability in values, in which the
currency and business of the country
Is constantly tossing like q raft upon
the waves, infeets all men who can
money o. credit with the
passion for speculation. When values
are settled, or pass only through grsdual
and easily predicted changes, men are
not tempted to toss property rapidly
from hand to hand in hope Of gain or
dread OF loss. OF this spirit Of specula-
ton which has seized the business men
Of the country, the national banks are
the focus as well as the origin. Heavy ,
spectators are in constant need OF bank
anoono rlnodafione and ehaFr-aVHd bank