The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1868-03-05

'ey retunted in taxes, I6,O0O, 90
Leaving, UaH sfIT3oo "a
to the about i3 per cent on the loan ofthe bank
put 'ophins more closely into this caleula
tion, Is u probably that the per,nanept re
serve of U. S. demand notes hold h., a.,
banks is so large as $150,OOOOoOp Tha ~,
amount OF these notes outstanding is onI,
about S370,000,000, OF which the treasu.
holds about $30,OOO,000, leaving S34OyOOO.Oo0
II the banks hold $l50,O0O,00O there remain
| but Sl00,000,000 in circulation. The curren
| cy reserve, like the specie reserve under tn
otate laws, Is theoretical rather than actua
Inc immense volume of DEPOSITS, bi lon
ana quarter dollars acc ,rding to the amour
reoulsed Tor taxes and the loans so largely il
excess OF capital, show that the banks ar,
utilizing and earning interest upon ever,
t1lns they can prudently avail themselves ola
money. With virtually no liability to redeem
their circulation with supervision ior NOR,
lax than under State laws, with an obligation
to make returns only quarterly, it is to b,
supposed that the reserve of legal tender
notes are kept as low as is consistent with
prudent regard to self interest.
But is the reserve, whe ther S150,0OO,OOO OF
more, Or less, any part of the loan of the
banks to the government, for which they arc
equitably entitled to interest? The only ad.
vantage which the government can be suppos.
ed to derive from the reserves in the banks
is, that so much Of It's debt drawing no inter.
est is kept out without presentment Tor paw.
ment. We must consider how the govern.
ment is affected by this, first, in a time Of
suspended specie payment, second, in time
OF specie payment. 1t is evide Mt that in a
time of suspended specie payment, that is
tor the last six years, and probably for year
OF two to come, the government is not affect
ed one way or the other by the retention Of
this reserve. Safe in its own avowed iasol.
veney, it is matter of perfect indifference
to the government, whether its dishonored
notes are in the vaults of the banks, in the
pockets of the people, or presented at the treas
nry for payment. 1t closed its doors and put
out the sign of No Funds years ago, and since
that time it has not been annoyed by suits
costs, damages extra interest, or very importu
nate duns. So that up to the present time, it i.
most preposterous for the banks to claim that
they have kept hundred and fifty million OF
the United States demand not es from being
presented .ior payment, whe reby the treas
ury would have lost so much gold, or been
mulcted in the payment of so much interest on
bonds. The United States took efIectual care
of itself by stopping payment, and refusing
bonds, and does not owe the banks as Mr.
Hulburd makes out, 100000 a year fol
keeping up its credit.
1t remains to consider what beneficial in
terest the government has in the bank re-
serves in state OF specie payments. Let
it be understood that every demand note OF
the government might be presented at the
treasury and converted into coin or interest
bearing bonds, and it is evident that the
larger the volume of these notes that could be
kept in use as currency, the less interest the
treasury would be liable to pay. Now do the
banks by their agency increase or lessen this
volume of unpresented currency? Clearly
they lessen it. For il there were no banks
every merchant, tradesman, business man and
householder who now keeps say S25 in his
pocket and balance of say $500 deposited
in bank, would be obliged to keep 1925 in
his pocket to meet his daily expenses and IL
abilities. This S225 he could not invest OF
use; it would be reSeroe that could never
embarrass the treasury. But by putting $500
OF his $225 in bank, the bank, safe in its
incoming deposits and accrUing loans, can
prudently loan and carr interest on $3.50 o
. it and have reserve of $50 besides. This
reserve they would be very likely TO present
at the treasury for specie, and they might
find too no more profitable investment for the
$50 than to purchase a government bond,
to be converted again to currency when its
amount could be loaned at better rate. So
that the intervention of banks has the effect
OF reducing the reserve currency to a mini
mum, and as soon as its amount becomes
certain to make it available by exchanging il
for specie or interest-bearing bonds.
There is still another reason why the re-
serves of greenbacks are not chargeable to the
United States as loan from the banks.
Though the law requires the banks to keer
on hand 25 per cent. of their circulation and
25 per cent. of their deposits in United
States demand notes, it is a requirement, not
for the advantage OF the government, hut
for the advantage and safety OF the banks
Every business man finds it necessary to keeJ
considerable percentage OF his capital with
in reach as cash. He foregoes the interes
on this amount, on account of the ease ant
credit which it gives him in doing business
Just as prudent and successful banking re-
quires certain reserve of available cash tC
use in emergencies, when public distrust
might in a few hours amount to ruinou!
panic compelling failure. What this amour
should be the prudent banker learns by ex
perience. If there were no law ON the sub
ject wise self-interest would not be likely
to put itmuch less than the requirement o
the government. If then banking is of it
self contrivance whereby capitalists il
Nitlng deposits by their own integrity and wise
management can loan their paid-in funds
| once and their deposits twice over and thu
get three fold interest on their capital, ought
they to complain because they cannot get
| fourth interest on such cash as they reserv
| for contingencies, OF charge that interest t
the government?
Ofthe S16O00,000 paid annually by the bank
in taxes, IS, ,000 600 are for State and $S,OOOOOt
for national taxes. Have $S,0O0,00O been
contributed by the national banks in taxes {,
the States? The only mode the State has Q
levying taxes upon The national banks is b
taxing the shares of the stockholders. 1t
so much actual capital which was taxable a
money before it was paid in as bank stocl
and would be taxable as money if the bank
should go into liquidation, OF would be tax
| able as stock if it had been or should be in
vested in railroads, manufacturing o
insurance. No new source of revenue 70
the State has been created by the institu
tion of national banks, and to the State il
matter of indifference whether so muc1
| OF its accumulated capital is beld as money @
invested in banks, or invested in other stock
| or in ships, or lands. 1t cannot escape Stat
taxation whatever form it takes. For thes
reasons probably, Senator Morrill, of Vernon
conceded, in adopting Mr.. Hulburd's calcul;
ton generally, that the credit of SS,OOO,0C
for taxes to the State, was not to be allowe
But more than this, the States have actua
ly been a source of revenue in the establish
ment of national banks. In Maine the Stat