The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1871-01-25
TIE BANK OF BANKS.

Letter from Amnsa Walker to the House
COmInItIee on Bnnking and CURRENCY.
The following letter from the Hon. Amasa
Walker, upon the proposition now pending in
the House Committee on Banking and Currency,
to establish a central redemption agency, or
clearinghouse, in New York city, for all the
national banks, was read to the committee yes
terday:-
The Hon. JAS. A. GARFIELD--Dear Sir: am
greatly pleased to learn that proposition is
now before the Banking and Currency Commit
tee of the House of Representatives, of which
you are chairman, to provide by law for bank
of redemption at some central point, to perform
the functions of general clearing house for all
the national banks of the country. No more
important measure has ever been proposed in
reference to our existing monetary system than
this. 1t is the ore thing most needed, for. with
out such an institution, there is want of ae-
countability and responsibility on the part of
the individual banks altogether inconsistent
with their own permanent prosperity and pre-
judicial to the best interests of the public.
A general clearinghouse should have been
established at the very outset, for neither
the Comptroller nor Congress itself can exercise
any effective authority until every bank in the
nation can be made to provide for the prompt
redemption of its notes. AS matters now stand,
many banks will be reckless in their operations,
and when any catastrophe happens will fail.
This will cause suspicion. general run will
be made upon all the banks, not for the redemp-
tion of their notes, for that is impossible since
they are scattered broadcast over the whole
nation, but for the redemption of their
deposits, which amount to nearly twice as much
as their circulation the latter being about
$3O00OO000, while the deposits, what the
banks owe, payable on demand, amount to
more than $500, ,000,000; and besides are
due to persons residing in their imme-
diate vicinity and may therefore be drawn for
instantly if any alarm is felt. This is the great
peril to which our banks are exposed at the pre-
sent time, and hence the most prudent and we'll
managed establishments desire, of all things,
that this Central Bank of Redemption should
be established, so that some restraint can be
placed upon such banks as conduct their busi-
ness regardless of their own permanent welfare
or the safety of others.
The want of plan of general redemption is
seen in the fact that the banks now extend their
Indebtedness, in the form of deposits, in far
greater degree than the State banks ever did
Up to the late war the deposits we're on an
average but little more than their circulation.
In 1860, when the deposits were greatest, there
were but $253, 900 against $207, ,000 600 of
notes, or an excess of about 25 per cent. In
October last per Comptroller's report
there were $500, 600 against 1921 100000,
equal to an excess of about IT'S per
cent. while, at the same time, the whole means
of the banks for the immediate payment of
their circulation and deposits amounting to-
gether to $791, 100000 were:-Specie, SIS, ,000,
600: legal tenders and fractional currency,
8S,000,000; total, $106, 0G0,0 900, or less than
1879 cents on the dollar.
1t may be objected that central institution
OF the kind contemplated may be found dan
gerous element, on account of the great power
it will be able to WELD over the entire banking
system; but if the law which creates this Cen
trail Bank is wise and udicious in its provisions,
it will be invested with no power except to
compel the observance of the laws of Congress,
enacted for the safety of the country and the
prominent interests of all concerned in its bank
ing institutions: 1t viii oppress no one, and
restrain only those who are disposed to do
wrong. Hoping for the success of the proposed
measure, am, yours, truly,
AMAsA WALKER.
Washington Jan. 81, 1871.