New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1871-01-25
THE BANK OF BANKS.
LETTER FROM AMAsA WALKER TO THE HOUSE
COMMITTEE ON BANKING AND CURRENCY.
Try TELEGRAPH TO THE TRlBUNR.I

LETTER FROM AMASA WALKER To TIE hoooh
COMMITTEE ON BANKING AND CURRENCY.
IBY TELEGRAPH TO THE TRlBUNB.I
WASHINGTON, Jan. 24-The following letter
from the Hon. Amasa Walker, upon the proposition now
pending in tho House Committee on Banking and Cur
rency TO establish a central redemption agency, or
clearing house. New-York City for all the National
Banks, was read TO the Committee to-day:
The Hon JAMES A. GARPIELD-Dedr Sir D.: am greatly
pleased TO learn that proposition IL now before the
Banking and Currency Committee OF the House OF Repre-
law for a bank OF redemption at central point, 70
perform the functions o: general clearing lor al
measure has ever been proposed in reference to our
listing monetary system than this IL Is me one thihs
most needed for without such an institution there Is
want of accountability and responsibility on the part OF
tie iDdiv idual banks altogether Inconsistent win thel
own permanent prosperity ana prejuucai 10 ING pc''
interests Of the public. -
Az things are, the circulation OF the banks Is prac;
tically rredecmabe in gTecnbacks In gold, ana
hence there is reckcssness operation OF many Of
the hanks hight peros 10 the acty OF the whole ys-
tenn Ar consequence the business interests of the ma
ton cOnGtapty exposed - great dlsasr Any STU
sion or any commercial collapse has often DC,
cured IN the past, would throw our entire industry tnh
commerce into inextreable eonfuslon Bcsaes an ms
resumption OF specie payments, either now OF at any i
ture period hear with much pa. 'ne PRO pro
Currency who OF all others best knows how great are
the dangers ard inconvenience resulting from the pres
cnt state OF our banking affairs, and who has several
times strongly urged the necessity OF such an INSTITUTION
OF the Currency has present but nominal control OF
the banks, because he has not the requisite power
at ne Verv outset for neither the Controller nor Con-
gress itself exercise any effective authority nn
prompt redemption OF its notes. As matters now stand
many banks viii be reckless In their operations ana
suspicion. general run will be made upon all the
banks for the redemption of their notes. forthat is
the Whole nation, but for the redemption OF their
aspV& s to as yearly e scs about
OoO,co0 while the deposits, or what the banks owe
a on ssSs amount se to to PERSONS sasn
ing in their immediate vicinity and may, Therefore,
great reri to which our banks exposed at Tire
ent time, and hence the most prudent and well-Han,
Bank OF Redemption should be established so that some
rstrnnt be laced such banks as conduct Their
Tie want OF plan Of general redemption is seen in
the fact the extend their indebtedness IN
the form Of deposits in far greater degree than the
state banks ever aid Up to tie late war, the deposits
collation. In 1900 when the deposits were greatest there
were but s25s against OF 1oe OF an *
per Controllers report there were, 100000
against s29 $4,000 equal TO excess Of about 10 per
cent; while, at the time the whole means OF The
banks for the immediate payment Of their circulation
specie $ls COOO legal tenders and fractional currency,
0C0O total sl0G 10000 or less than l33 cents oa me
dollar This hazardous condition OF the National, as
compared with the former state Banks, arises from le
fact that they practically free rom any rcsponsbil-
u for their circulation which cannot, under the exist
ing condition OF things be returned upon them FOX
dcmpton They able and disposed therefore, to
tend their Indebtedness ia the form OF deposits TO such
dangerous extent 10 imperi the whole currency When
ever such pressure taxes place AZ shall cause the
weaker institutions 20 suspend and thus create pane,
1t must bring down tho whole
1t should ever be borne In mind that banks having
paper issues have always hitherto suspended upon their
deposits and not upon their notes. This notably the
H. New York In 1887, when run upon the banks by
their iepositors for but few hours caused them 10
pend and whole currency OF the nation collapsed
Contrary tho popular opinion, these descriptions or
credit called deposits indicate not what the banks have
in possession the term would seem to Imply but what
the owe their customers account payable on demand
They form the most explosive element IN any currency
of which they constitute part, and should therefore, be
guarded carefully as possible But nothing eject,
nal can be done In tho way or restraint
until the banks held to. the responsibll'
lily OF rcdeeining their notes. Then, ANA not
l thea will the Controller OF the Currency have any
real control over the National banking system For
these reasons, Central Bureau or Bank OF Redemption
should without delay be established by an act OF Con-
gress. 1t may be objected that central Institution or
the kind contemplated may be found a dangerous ee-
ment on account Of the great power 1t VIII be able 10
WELD over the entire banking system; but n the law
which creates this Central Bank IL wise and Judleous
In it's provisions, 10 will be invested with no power
EXCEPT compel the observance OF the laws OF Coneo
enacted safety OF the country and the prominent
interests Of all concerned in its banking insttut ons IL
will Cypress one and restrain only those who are dis
posed wrong Hoping for the success of the pro
posed me isure, am, your, truly, AMAsA WALKER
Washington, Jan. Il, 1871.