The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1872-03-02
Mr.. Phillips on the National Banks


In a remarkable speech made by Mr..
WIN. EndicOtt, Jr., to the Board of Trade,
and published by the Boston Advertiser on
the 9TH inst, is this statement
&" The banks having Of capital and surplus
not invested in bonds pledged at Washington
Sos, Sl3. ISL lin this amount is included real
estate and all bonds not pledged) carry loan
Of 1881, 552, 2lO; and this immanse bubble Of
paper credit is steadily expanding"
That is, the national banks on basis Of
two hundred and nine million dollars
Ito use round numbers which are sufficient
ly exact for my purpOse) lend eight hun
bred million. put aside their deposit Of
bonds at Washington. Those sustain their
bill circulation and that whole trans
action may be left apart-by itself it is
one Of gain not loss to them. Their loans
are based on the above two hundred mil
hons and on their deposits For these last
they pay no interest, or very little.
The result therefore Is, as Mr.. Endicott
states it, that on two hundred millions Of
property at the average interest
Of this country, is worth fourteen millions
If dollars year-they loan eight hundred
million and receive ffty-six millions an
nually These fifty SIX millions come
finally out Of the labor Of the nation.
The difference between the interest of the
$50 million they really possess, and the in
terest Of the eight hundred millions they
undertake to lend is the gross gain or
profits of the banks that difference
amounts to forty-two million dollars an
nually. In other words, the business
and labor of the country pays these mid
dlemen, or bankers, forty-two million dol
lars for their services in arranging this
loan. Are such services worth that
amount Cannot this heavy tax on in
dustry be saved
Suppose we abolish all the national banks,
and bring the government face to face with
the borrower The cost to the banks Of
this loan Of eight hundred millions is real
ly only the interest of the property they
use in making it, viz, two hundred mil
lions of dollars. The interest on that sum
is fourteen millions, which is less than two
per cent. on eight hundred millions. Why
not, then, have the government lend this
same amount of eight hundred millions
directly to the people at TIVE per cent. a
year, or adding one-half per cent. for ex-
penses, at two and half per cent. year
This change would make no initiation.
Not one dollar would be added TO the cir
culation. The security would be the same
As now, or perhaps better than at present.
We should have the nation as security /;
and the nation now is the bottom of the
banks. II that fails, the banks fail but
even il that stands, it is not absolutely
certain the banks will. On my plan the
security would last as long as the nation
did. So the circulation would be, if any
thing, more secure than now One change
would be that we should. lose whatever
check banks are supposed to be on the
government. How much does that really
amount to Can no check be devised less
expensive than this, which costs forty-two
millions a year
The great change would be that the peo-
pie would get the use Of eight hundred
millions-to build houses, ships and roads,
and open lands and mines-at two and a
half per cent. year instead of seven per
cent as now. Then we compete with
England and France on equal terms.
Now, if an Englishman has q hundred
thouaand dollars he puts it in ship; it is
the best thing he can do with his money.
A man here worth that sum puts it into
bonds or banks. They pay better than
business. We shall never develop the re-
sources Of this country while banks sit like
an incubus on it and charge forty-two mil
lions for acting as middlemen between
capital and labor The government could
perform the same service for sixteen mil
lions, instead of the ffty-six millions
which the banks charge.
WENDELL PHILLIPS.
Boston, Feb. 10, 1872.