The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1869-12-10

made payable In coin.
2d That the boids known as the five-twenty
bonds shall be received in exchange for the new
bonds
3D. That the principal be payable in this coun;
try, and the interest payable either in the United
States in Europe, as the subscribers TO the loan
may desire.
4th. That the rate OF interest snall nOt eAceeu
~ per cent per annum.
5th. That the subscribers in Europe shall re-
ceve their interest at London, Paris, Berlin, or
Frankfort as they may elect.
9th. That the bonds, both principal and interest,
shall be free from all taxes, deductions, or abate-
ments OF any sort, unless IL shall be thought wise
to subject citizens of The United States 10 SUCH
tax upon income from the bonds as Is imposed by
the laws of the United States upon income de-
rived from other money investments.
There are TWO reasons, and each seems 70 me 10
be controlling reason, why the DondS Ol
the United States should be exempt from state
and local taxes. If not so exempt, the amount OF
the taxes imposed by the local authorities VIII be
added TO the interest the government Will be re-
quired to pay, and thus the national government
will be compelled TO provide Tor taxes imposed Dy
the local authorities.
Secondly, inasmuch az the ability to borrow
money may, under some circumstances, be es-
senlial to the preservation OF the government,
the power should not, even in times OF peace and
prosperity, be qualified by any concession to the
States OF the right to tax the means by which tae
national government is maintained. The right
ts use its lawful powers free OF any condition,
restriction or claim of another, Is an essenliai
condition OF sovereignty, and the national gov
ernment should never surrender or qualify it's
powers In this particular.
THE NEW LOAN.
In Offering the new loan, citizens and subjects
Of other governments should receive the strong
est assurance that the interest and principal are
to be paid in coin, according to the terms OF the
bonds issued, without any deduction or aoate-
ment whatsoever.
In order to avoid the necessity OF employing
agents for the negotiation OF the lean, respect
fully recommend that q liberal commission be al
lowed TO subscribers, and that those who first
subscribe be permitted TO select tile class Of
bonds in which their subscription respectively
shall be made. l further recommend, In c0nneo-
tion with the proposed loan, that the banks es-
tablIshed under "thc act to provide national
currency" be required to substitute the bonds that
may be issued under the proposed loan act Tor
those now deposited as security for the redemp-
ton OF their bills. Should any bank be unwilling
10 accept the new condition, provision Should be
made for the surrender OF It's charter, and au-
thority given for the organization OF new banks
to supply the deficiency thus created.
An essential condition to the success OF the pro-
posed new loan, Is the continuance OF the present
revenue system. chief means by which tue
preseHt holders OF the tive-twenty bonds can be
induced to surrender them, and receive bond
upon longer time aud at lower rate OF interest,
Is tile certainty furnished by the magnitude OF
the national revenue that these Dends are soon
to be redeemed. Ne must be prepared 70 oner
bond at lower rate OF interest. or payment of the
principal OF the existing bond. When the ive-twen-
ty bonds shall have been funded TO the amount
OF $1,000 OOO, 900 or Sl,200, 900, 900, the reven-
ues can be reduced materially, and yet suffcient
sums be raised to meet the ordinary expenses OF
the government to pay the interest ON the pubic
debt and also TO pay S25,0oo0o0 TO- $780, ooo,oOO OF
the principal annually.
be equal to my expectations, based upon the fact
that the ability and disposition OF the people OF
the United States TO pay the PUBLIC dept are suil
cient to justify us In assuming thas the bonds vi
the United States will command the highest rates
in the markets Of the world, we shall then be In
condition to enter upon the work OF reducing tax
alton at the commencement OF the next sc ssl0n
OF Congress.
REDEMPTION OF THREE PER CENT CERTIFICATES.
On the seth OF June, 1868, the amount Of out
standing three per cent. certlncates and COM
pound interest notes convertible into three per
cent certificates was S7l, ,604, $50. On the 30th OF
June, 1869, the amount outstanding was S54, 99l,
40, showing a reduction Of $l6,6l3,4So In that
form Of Indebtedness.
On the lst OF December, 1869, the amount out
standing was still further reduced TO $40, 7l6, $50,
showing total reduction, III seventeen months,
OF S2l, ,SSS, 140.
The three per cent. certificates are substitute,
to considerable extent, for United States notes,
being largely held by the banks AZ q portion OF
their reserve, and thus indirectly, though not to
their full nominal value, they swell tile volume OF
currency.
demptlon OF the three per cent. certificates within
q reasonable time; and, aS compensatlng meas
ure for the reduction In the amount OF currency
which would thus be caused, that authority be
given to grant charters for banks III the States
where the banking capital is less than the share
to which they would be entitled, TO an amount not
exceeding thirty-five millions OF dollars In the
aggregate. The redemption OF the three per cent.
certificates and the additions to the banking capl
nj ,i0tt ha cno a Il
ous disturbance in the finances or business OF the
country, while additional banking capital would
be supplied to the sections now IN need OF IL, ana
this without any increase OF the volume OF sircu'
lation.
BANKING EVILS.
There are two evils in the present banking sys-
TEN which require remedy by prompt ana eul-
cent legislation. The first is the practice on the
part of banks OF allowing interest upon deposits.
The effect OF this practice Is That monies IN the
hands OF individuals, which otherwise might be
leaned for regular mercantile and other business
purposes, are diverted into the custody OF banks.
upon the idea that, II the security is not better,
puymcnt can be obtained at moments notice.
Country banks, and others remote from the
large centres Of rai!le, having received money OH
deposit for which they pay interest, are anxious
10 transfer such funds TO other banks, from winch
they will receive an equal or larger rate OIL In
terest in return. They are stimulated also by
tile desire to place their funds where they can
be at all times commanded. Thus Influenced,
large sums are placed on deposit with banks III
the cities. especially i'll tho C,ly or New YORK,
which Is the great centre or trade and iin2nce for
the Atlantic coast. In the ordinary course or
trade the currency OF tile country TENDS rapidly
20 the cities and 10 is unwlse 10 stimulate ths
tendency by artificial means.
Bat the evil does not end with the impoverisll-
meut OF the country. As the banks Ill the cities
may he called upon 1T any moment 10 respond 10
the drafts of their dcpositors, they decline TO
make loans representing such funds upon COM
Mcrcial paper payable on time, but insist upon
making call loans, as they are termed, with gov
crnmcnt bonds CT ether obligations pledged as
collateral security. Merchants generally VIII not
borrow money in large sums payable upon de-
mand Tie consequence Is that the monies thus
accumulated in the city banks are loaned To per-
sons engaged in speculative pursuits.
The extent OF this evil is seen III the TACT tnat,
of the bank loans in the city OF New York In Oc-
tober 1868, s9s 000, 900 were upon commercial pa
per and SIS, 600. 900 upon demand, with pledge
OF cOllaterals; and In October, 1862 500 900 600
were upon commercial papar and $50, 900 upon
demand In the fermcr year Al per cent, and In
the latter year 81 per cent, OF the loans MADE DJ
the New York banks were upon demand.
A further result Is seen in the fact that parties
borrowing money upon commercial paper for legI-
innate commercial purposes pay from three 10 SIN
per cent. additional interest per annum az compar-
ed with persons who borrow money for speculative
purposes therefore respectfully recommend
that law be passed prohibiting absolutely the
paylnept Of interest by banks upon deposits, anu
limiting also their leans upon collaternls To an
amount not exceeding ten per cent. oi their
capital.
ing cheeks, even when funds arc in the bank to
The credit OF the drawer OF tie check, IL lraHght
with evil, and that it ought 10 be entirely pro-
hbicl.
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