The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1869-03-13
TIE NATIONAL BANKS.

We have asserted 1t 10 DO one OF tue oeiecl'
of tho system of national banks that 1t dis
eliminates between the depositor and the note
holder, in case Of insolvency and division O.
assets. Reason and justice alike condemn the
discrimination. In England. from which coun
try;ye have borrowed our monetary lnstltu
.tions, such discrimination is not known. Ii
1856 the solicitor Of the Bank OF England, Mr.
Freshfeld, for the information of the Chan
cellor of the Exthequer, furnished an opinion
in which he affirmed that the holder Of note:
could clam no preference over the depositor
in case Of the Insolvency Of that institution
minutes OF Evidence taken before the Selec
Committee Of the House of Commons, 1859
This opinion was given subsequent to tie pass
ing Of the act of 1874, and although it applied
to the bullion in the Bank OF England, it was
applicable to any other portion of it's assets;
for the question had never been made before
tllesadopt1on Of that act. Tie considerations
that address themselves to our sense Of jus
.tice' do not, however, require 10 be fortified by
authority. Policy equally forbids any distinc-
ton OF the kind.
There. are two classes Of depositors. 1.
Those who apply for discounts. 2. Those who
lodge their money in banks for safekeeping
:The4discounts granted to the first class Of de-
positors are placed 10 their credit and become
deposits. The secoud class owe no other favor
to the banks with which they deposit their
money but that Of safekeepiDg, for which
banks have right to what is called ware
house rent. The first class take money out OF
banks. The second class put money into
them. The second class furnish the very
funds that the first class borrows. Whence
tho derivn6 that fr1ctifv fialIS
that set 80 many sluttles in motion that stim-
Mite commercial enterprise? From what
source but the deposits Of banks, which
are first accumula ed into large ag2re-
gates and then distributed to those who en-
ploy them productivity. The Report of the
Secret Committee of the House OF Commons
in 1853, stated, among the evidences Of mate
rial improvement in the British Empire, were
the deposits Of the joint stock banks Of Lon
don, which had been augmented from f8, $780,
TIA in i847, to f43 SCOTIA in 1S57-that such
was the magnitude OF these deposits that one
broker had five milllons; another had between
eight and ten Millions, Now allowing for the
circumstance that London is the great centre
OF receipts and payments. every city and town
in the United Kingdom that possesses bark
can bear tes,in,o.:; TO the value and import
ance of tho deposit system, au~ .n. 4n. n9~
constitute the great fund Which supplies the
streams Cf capital that hourish industry and
a-s.end the limits OF enterprise.
The Comptroller OF the Currency, in his last
report recommeuds'that Congress should pro
hibit the receipt Of interest on deposits By the
national banks. This ls another exemplhca-
ZION of that spirit of interference with the ln-
ternal economy OF banks which would impede
their freedom by artificial restrictions Ii the
suggestion had confined itself to those banks
that give undue facilities OF credit to specula-
tors. there would. at leust, have been abstract
;pt h cnnnal,ion. h11t there
sibility of distinguishing the deposltor who
makes discount the basis Of his deposit and
the depositor who lodges his money IN bank
merely for safekceplng and convenience.
The superintendent: states he wishes to
restrain speculation by his suggestion. NOW,
which of the bahks, those OF Cheat srltaln,
where allowing interest on deposits is almost
universal, or those OF the United States, where
theIp practice is 80 rare, are more characterized
lby specula;iouP .s,.4s -
-Deposlt banLs, constitute q species Of saw
incs banks. They are SO considered IN Sco.,
land, where the deposits have often amounted
to EOS. 600 600 or ESQ, 900, 900. The Scotch are
remarkable for thrift and enterprise. Inelr
banking system, Of which deposits constitute
an essential part, have o large agency In these
moral results. And yet our financisrs would
,nlace them under disabilities. Incentives
ought. therefore, to |. > held out. and not dis
sussiyes. to the formation OF those large ag-
:pregates which are among the chiei dement's
Of Joint stock associations.
We would not essen. the security OF those
Glasses of society To whom circulating notes
ara OF vital importance. Their real security,
however, ragainst1.those who would abuse the
nriyiIepe Of issuing paper money, is IN con-
yertfbie currency aud the use OF ccin in retail
transactions and the payment Of labor.
While: one OF the defects in the banking law,
namely. the discrimination between the note
&h.d dann 10 yr1thOni, OraCSdelt
or example in the history Of banking IN any
mart of Europe, the other defect, the hmltac
lion Of the issues, appears to have oecn cODlea
from the exam Die of England, in the act OF l6i4,
commonly called Peers acs. 1t appears to us as
remarkable fact in the history OF these trans
actions, that the trainers of that act should have
,been 90 entirely unconscious OF the bearing
of a well known principle, that undue extension
of credit in the form OF bills OF exchange, de-
nosits. &c. has much more to do with mone-
tary disturbance than bank notes. Tho very
evidence that was taken before the committee
that affirmed the truth and proprietS OF Slr
Robert Peel's act-the commlttee OF IooS,es-
tablished thi. fact. Ample testimony had been
Afforded ten years before of the great differ
anne in amount between bills OF exchange and
hank notes. MIR. Lsatham, a high authority
on all such subjects, estimated the amount OF
bills Of exchange clrcu,atlng III the three king-
doms IN 1889, at f528 600 600. MIR. Bosanquet,
who published an able pamphlet in 1872, uuder
the title of "Metallic, Paper and Credit Curren-
nv &c. draws the conclusion from the state
ments and calculations of MIR. Leatham, that
property changed hands by means OF bills OF
exchange. by endorsement, to the value OF
twice f528. 600 600. or LOSS 700 QUO, being at
the rate Of more than 93 600 900 per day. Mr..
Bosanquet estimates the daaty amount OF ope-
Iations performed by deposits throughout the
United Kingdom ut not less than Flo, 5,CO0.0 .0O0,
while the daily amount Of operations perform
ed by bank noes could not be estimated, ne
thinks, above G20 100000. since that period,
there has beeu an enlargement OF the note
currency of the Bank OF England. We have
never seen any estimate since that places II
higher than SSO0C0 600. The difference will
show the limited agency of bank notes in the
expansion ofcredit, compared with other forms
of credit, proving the error of the theory that
assumes as its basis the oyer-lssue OF bank
notes. r.. -.
There are no means of ascertaining the
amount of bills of exchange in the United
States, unless through the stamp duties, as III
ENGLAND: but no one has taken the trouble, as
Mr. Leatham did in England, to estlm1to tho
amount of bills OF exchange IN tho United
States. A comparison o. q similar character
of the amount OF bills of exchange and dc.
posits, with the amount allow to bc lssueo
by the national banks, will show similar re-
sult-to wlt, tie very subordinate aeencs o.
hank notes in comparison with other torrls o.
credit in deranoing vClues.
Tho final CONCLUSION from these statements
ia that while the trainers OF the act OF 1871
Sir Robert Peels act-looked exclusively II
framing that act to the over-issue of the notes