Evening star. [volume] (Washington, D.C.) 1854-1972, 1870-12-05

tinually on the increase, and BY its ali the
national banks are enabled 70 bring their ears
ings up 70 an average that has hitherto proved
satisfactory to their stockholders. In view OF
all the facts, however, II seems desirable that
the old relation between the rate of interest an
the rate of taxation, est ablshed and observed
by nearly al the states in which banks o. issue
were authorized, should not be entirely ignored
with regard 20 national banks and inasm lch a.
tne power OF the States over the national banks:
in these two important particulars. Is exercised
only with the consent OF the general govern
ernment, il would be q wise precaat.on for Con
gress to nx such limitations wolld prevent
unWise, uniriendly, or otherwise damaging
AIlusion has been made in former rerorts 20
the custom OF paving interest on deposits by
national banks. The practice existed long I've
fore any national banks had an existence, and
they only continue 20 DO what their predecessors
did before them, and what bankers everywhere
consider themselves compelled 10 do.
The use OF other peoples money in the shape
Of deposits, without interest, or az low rate OF
interest, has come TO be considered a cardinal
necessity of modern banking. There will AL
WAYS be those ready 10 accept its custody. as
sumo all the risks, and pay interest for its use,
for q margin of profit ranging from one to three
per cent. IL is not always the strongest or
wealthiest bank or banker who is willing TO pay
the highest rate for this use of other peoples
money. Ordinarily, Judging of banks as of indl-
viduais, the one most in need OF money Offers the
greatest inducements TO depositors. In theory
the custom is dangerous; IN practice IL is not
always safe but, nevertheless, IL Is so
thoroughly entrenched in its position by long
Observance, that any sweeping enactment pro-
hibiting the payment OF interest on deposits BY
national banks would be evaded in some way.
or the banks I'D lose their deposits. There
are scores of banks ard bankers, not subject 10
the control OF Congress, who would rejoice over
such a prohibition as over the discontinue of
an enemy; yet there is one point that should be
guarded. The reser YES of the whole country are
PhiIadelphia, and other large cities. These
reserves should be protected. They should be
placed under such restrictions rs would obvi ate
AL necessity for their use by the depository
cannot afford to allow them to remain unem-
ployed, SO that they may be in reality what they
are in name, relief should be afforded in some
ether way. Ii Is OF vital importance TO the
country that no portion of the percentage,
which the law requires banks to hold
reserve on circulation and deposits, should
be loaned out, subject to the yicissituies
and lamentations of men and property.
There may be prosperous and easy times for
years; but there may come a day when upon
the ability of single bank in New York city to
paw the deposits of its country bank correspo
dents-their reserves-will depend the safety of
the whole country. The banks of New York
the year ending with the 3Oth OF September,
the sum Of - SAC, tS9. 10; the Boston banks
s5ss H25S; the Philadelphia banks, sil9 col. a.;
while the aggregate sum paid by all the banks
that allow interest on deposits il Sc, iSe i.2 G6
These large sums indicate the wide prevalence
Of the practice under consideration, and the
difhculty that would be experienced in any
attempt to effect its entire sbrogation. IL by
any means, however, the moneys held in the
large cities, constituting the reserves of the
country banks, can be exempt from the opera
ton of this custom, the main point, and the one
in which, above all others, the entire public is
interested, will be gained
The further consideration of this subject il
submitted TO the wisdom Of Congress.
The necessity tor some arrangement by which
the notes of national banks nav be assorted and
returned to the several banks OF issue for re-
demption Is becoming more and more apparent
as the difficulty of dealing with the worn and
mutilated notes now in circulation Is eNpe-
rionced. The arguments contained I'm former
reports in favor OF general redeeming agency
in the city Of New York, will not be repeated or
extended on the present occasion. The con-
victon Is expressed. however. that IL the banks
we're authorized to establish an Institution of
their own for that purpose, owned, controlled
and managed in their interest, they would lind
1t greatly to their profit to do so.
Such an institution would also serve as the
custodian of the reserves kept in New York
thereby exempting them from the risks Incl
dent to funds deposited in the ordinary way and
drawing interest, and would perhaps obviate
the necessity of specific legislation upon the sub
1ect OF the payment OF interest on deposits while
the benefit to the whole country, arising from a
FISCAL agency so truly national IN its character
regulating the currency, the exchanges. aud
the banking Interests of the country, beyond the
control of any ring or clique-bscause managed
by all for the benefit of all-would be OF the
most substantial and enduring kind.