The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1869-05-17
FINANCIAL AND COMMERCIAL.

The folly OF which Congress was guilty IN the es-
fablishment OF the national bank system Is often
illustrated in our general finances. but tue condition
of our local money market at the present time az
lords very striking proof OF the lack or sagacy Of
our federal law makers. AS all business men know,
this y the season when money flows into New York
in the return tide after the great spring OUTLAWS In
sbe rural districts. Money has been coming here
steadily every week since the 10th or April and our
banks have camel largely in funds tina: the exhibit
Ofdeposits yesterday showed nearly two hundred mil
lions OF dollars. Although the receipts OF currency
last week five millions the BANKS have lost
In legal reserve. The amount is trning, perhaps
a few hundred thousand dollars, but it is neverthe-
less curious fact that there should be such
contrary course OF deposits and reserve.
Inquiry at the banks solves the mystery.
Tue shipments Of currency to this centre during
the past week were composed in great part OF ma.
tional bank notes. which are now drug with the
banks. Heretofore it has been usual to transmit
greenbacks in making these transfers OF funds from
one point to another; but the diffusion OF the real
government money has been so extensive that the
country banks have great trouble In keeping up any
thing like reserve, not TO speak of the difficulty Of
making shipments in 1t. The city Is just now flooded
with these national bank notes. representing inst-
buttons in every portion Of the country. Our banks
increase their liabilities through receiving them ON
deposit. But they cannot c0rrespOndingly increase
their reserve to the legal twenty-five per cent. be
cause the greenbacks received are not in
that proportion. Hence they showed yester-
day o falling or In reserve, although they
actually had several millions more OF money
on hand. II we look farther for the cause
OF this we shall find that missing greenbacks
III the South in the pockets ana p0cketbOOks OF the
people there. When they come to pay US for the
goods which they buy OF US they send us national
currency, encroaching upon their greenbacks as
little as possible. The greenback Is their idea Of
sound currency. 1t was the first kind of paper to
reach them after the inundatiOn OF Confederate SHIN
pasters. 1t is simply printed. 1t Is honest looking
They are familiar with 1t. COunterfeis Of 1t less
deceptive with them. 1t is the money of the great
United States government which It's myriads Of
soldiers marching across their country. Everybody
IN the South is not an arisocrat and o planter
There are people there OF the humble classes and
they respect the power and dignity Of the nation
On the other hand the national bank note is dingy
obscure piece of bank paper suffering from too much
rather than from too little engraving. Itpurports
TO come from every little village and hamlet IN
the North, East and West. 1t IL not recognized as
government paper and is tacitly tabooed Hence it
comes back to US when it can be used to represent
dollars well greenbacks. Congress made great
mistake in establishing the two kinds OF currency.
Inc ontagOnlSm between them Will only increase
and lead to embarrassment unless the banks, or
Congress for them, ordain system OF exchanges
The people now pay the national banks eighteen
million dollars year. in gold for the privilege Of
ceivlng and dong business with their paper. Con-
siderng this generosity the banks ought to be more
willing to accommodate the people and preserve
the equilibrium OF the money market. There are
some who think that this privilege is very dearly
bought at eighteen millions a year, and that they
might obtain 1t for nothing, but they do not know
the extent OF Uncle Sans love for his nephews.
Secretary Boutwell, is ut the pains OF great deal of
labor and trouble to arrange for saving three mil
lion dollars annually in gold interest while the law
coInpes him TO pay out SIX times as much upon the
collateral bonds which he holds against the national
bank currency.
The weekly statement is favorable, except In the
particulars of a loss in legal reserve accounted
for in the preceding paragraph. The loanable re-
modations to the business community and in
duce lower rates on call loans, the deposits
having increased about five and o half millions
against an increase in loans OF only one million. The
increase in legal tenders Is less than million ana
half, and the discrepancy as compared with the de-
posts to the large excess Of national currency
the packages shipped to this city. There Is fall
ing Off in specie of seven hundred thousand dollars,
which is about the amount OF the exports for the
week This Is the only means OF accounting for the
loss the Treasury disbursements for the week,
connt OF the May interest, having been s2,6ls,676
and the customs receipts $2.6s4 900. The last two
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