The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1869-03-18
THE NATIONAL BANKS.


TOTHE EDITOR OF THE NEWS t
We hsve endeavored to exhibit two Of the
prominent defects of the national bank system.
There remains that more radical defect, which
is one of structural imperfecton. The basis
Of the system is credit. The issues are founded
on credit. for they constitute credit from the
people to the banks, whllc the issues them
selves arc based on bonds, which constitute
credit from the bondhol5srs to the govern
ment. We have frequently heard it affirmed
that the issues of the national banks 1epose on
the same basis as the Bank Of England, 10
wit-public securities to the amount Of f14-
600 600, besides sum m gold averaging
Ella 600 900. AS some writer has expressed it,
there is q pile of gold behind their notes.
there Is lntr!nslc value as one OF the principal
supports OF British bank credit. The national
banks repose on an unsubstantlal basis. which
breath may DESTROY. ,.E -.ytt I
Judge Chase is thought to have performed
great financial achievement when he found
purchasers for 300 900 600 bonds, less ten per
cent. ny lnc operating in his scheme of bank
ing that teatu.e OF the New York banking
law by Which the banks IN tha,,. State were
compelled to give security in public stocks for
their notes he created demand for United
Ststes bonds nd was enabled to sell them at
par, but his admirers forgot or omitted to
state taat they were sold in deprecated cur
rency. a'~ -t..
There are two sources Of apprehension with
lie fe}aIa '} Iatjfp44aa; ST tie bSSRhkss bSSBRhkas We ,,,
ated In Europe, amounting to $3.50 600 COO /,
Hom severe monetary pressure there a Ss1.
4 The too great extension Of mercantile
credit by tho national banks by means of their
1 The first Of these causes of apprehen sion
may not be developed for some time yet. 1a
~ IT, is most probable to ocour on the 2. ,Inro ~
the British harvest Tho repeal Of t3e Corn
Laws is no protection aeainat tins evil It haa
occurred on two or three occssions since the
repeal OF those laws. Il is peculiar cause OF
disturbance. IL timo were allowed tor the ex-
port OF an equivalent amount OF merchandise |
mere would pc no apprehension of dsrsnge- |
ment; but TODD mus be had. end bullion must |
other sources OF disturbance NAV allow Of time |
e counteryail the action on the foreign ex-
ceeange. On gold is wanted to pay, the expenses
Ci war OF to, to rec.Iy az unfayorable balance Of
found TO avoid the large efdux Of gold. The
payment in gold for imported corn ia |
what tho Bank Of England, in COM
Britain, dread. TT, WATCHED with great 81 ankle ankle
y. What takes place when 1t does occur is
iaHAll,ar to our xsAders who ore informed on |
this subject First, alarm takes place among
nose to whom is entrusted the administration
90 TO arrest the drsin. and it may reach and
has reached twelve per cent. Tho bankers and
blll-brokers then lend money With extreme
bare AND caution, and increass their
becomes pressure, and pressure often
leads to panic. Thoss who hold for
eigp uonus endeayor, Of cou1se, to realize
them. 1t is at such times we are to apprebend
The return of foreign bonds to the United
States to be converted at almost any sacrifice
into money. Any large number of American
bonds placed on our market, under such cir.
cumstances, is certain to be attended with o
surprised that on the occurrence OF such en-
if American bonds did not bring
more than fifty cents in the dollar. Ia what
position ssould our national ba Ks be placed if
tary OF the Treasury should fall to. one half
their valued
On the second head, excessive c-c., ,, .r;,,, .,,
cvertradlng If such an event should take
place simultaneously with the return of our
bonds from Europe the pecuniary difficulties
and monied emDarrassfnents would be most
aggravated and intensified by the undue ex-
tension of credit The loans OF the national
banks are said, at present. 70 exceed slx hun
The hrst OF these causes OF apprehension
may not be developed for some time yet.
There would be Attic alleviation Of the pres
sure from those injudlciouA arrangeM ents |
which limit the issues OF the national banks to |
three hundred millions OF dollars.
Deposits are the source Of greatest anxiety |
to banks on 81 SUCH sas oeeasons. Ihey are ieut out
usual for these institutions to 81 pend pay
ment from demands Of this character ;han |
from their notes issued IN excess. Besides |
the limitation OF these lssues, the national
banks bong required to keepa reserve amount
ing to twenty-five pr cent. Of thei, Issues,
looks up their fluids at times when they are
most needed. It is well known that there are
periods IN the year when currency is required
In q larger amount than usual, both North and
South, to brlng the drops to MARKET and when
some degree OF expa esion .s needed. In the
nature OF these restrictions that valuable pro-
perty OF bank elasticity IF not lost, 10
for o time at least rendered unavarng.
The conclusions from these VIZ are that our
national banks should desire the removal Of
those restrictions by which they are hampered.
l. BY the limitation Of their issues 10 an ar
bitrary anount. e@
3. BY that portion OF the banking laws re-
quiring them TO keep r4rerve of legal tender
notes .IaA: 10 tWenty-fve per cent. OF their
Issues. }sat s tsa@
In these remarks we have freely discussed
the faults Of fs0rgdnaxGt,on. We have nothing
to do with the iaults of administration, ifthere
are any such. xe3y J.N.O.
II .iF