New-York tribune., 1868-09-22
TIE NATIONAL BANKS
TO me Editor OF rhs y,,bnn,

To' the Edftor OF The Tribnp,
SIR fear your Mystiied Republican, vim
appreciate your elucidation in FRIDAY ,o... NV
TRIBUNE Please allow me 10 suOoest a..
trouble lies IN the unsoundness of his premise.
Government does not return 10 them fine ka., i"'
nearly all their purchase money! nor any nortio-
1t. The Government does not "lend money - -,
banks, and pay interest upon it, nor does 4, ,,,
any money TO them. The nearest approach 70 anu a..
so ID that 1t intrusts some of its funds in denos;,
some of the banks that give ample security for q,
return Of the money, and hold themselves readx
pay it on demand. The banks were comnel.S \
the National Government to abandon their
chses under the laws of the several States ana :
vest their cash in Government bonds For a.
forced loan to the Government they paid the fn ,.'
value Of the bonds. and in majority of cases n,-
paid also the current premium above par Morao,.s'
a large portion of these bonds Ten-fortes viii.
pay only five per cent interest. The only man,
paid by the Government to the banks IL the nan,
interest that it pays to every other holder of ia oh
cations.
On the other hand. as YOU inform your my.tis.a
friend, the banks pay back to the Government ;,..,
nearly $i1 900 in taxes, and to the local autbo
ties nearly $s,O000O0 more, making about Il 5O0ns
more than they receive for interest on their bond.
When the banks deposit with the Government a.
collateral security for the payment of the Circulating
notes they propose to ssue the United States bond.
which they had previously bought and paid for. ths
Government furnishes them, not with money, bu,
with forms of promssory notes prepared for the re-
spective banks to perfect. These are worth opl,
the value OF tse paper and printing they are mais
of until signed by the officers Of the banks Wheu
so signed they become promisesof the banks to pay
lawful money on demand, and are received and
used by the people as money. The relation in which
the Government stands in the transaction is that Of
trustee holding the securities lodged with il BY ths
banks TO indemnify the public against loss, in ths
event of the failure of the banks. The notes thu.
secured form the best circulation we have ever had
But it Is an error to suppose that the National Bank
system is valuable one for the banks or is one OF
their procuring; and those who are not otherwise
! interested in banks than to have them useful
| and safe, make q mistake in aiding to break il
up by adding to the almost ruinous taxa
ton with which it is already burdened.
The franchise under the National Currency act is NOT
worth half as much to the bank as was that under
the State charter in most of the States In the latter
tho bank was privileged to issue circulation to the
amonnt of doube that of its capital and was not re-
quired to provide any special collateral security.
Thus a country State bank with capital Of sloaeD
was allowed y circulation of..."...-.... 9oGs
All available to accommodate the people S00.a
A Nationsl bank OF oapital........--.x 100000
is allowed only a circulation off,. 5000
roro1 $4,000
And Is compelled 70 loan Goy't..... 10000
Leaving available to the people only...... ~es
Deacit An ability tn serve the people t2oGW
Thus it Is plain that the same amount OF capital
under the sd system afforded the banker three times
the available ability TO do business with the public
that il does under the National act. and therefore
the sclf-interest Of the banks would make them
rejoice over a return TO the State Bank system.
L