Marshall County Republican. (Plymouth, Ind.) 1856-1878, 1873-12-11
THE CURRENCY.
Abstract OF the Report OF the Comptroller
of the Currency-His Views on Free
Banking-Interest ON Deposits and Ger
tifieation of Checks-The Causes OF the


tifeation Of Checks-The Causes OF the
| Financial Panic.
The annual report of the Comptroller of the
| Currency is voluminoas document and we
have room for only abstract of the most
important portions. He gives the history of
the working of the free-banking system IN the
country previous to the establishment OF The
| national banks, and goes ON to say that the
amount of national bank currency now az
| thorized to be issued is 1854 900, 600, and the
| amount of legal-tender notes 1856, coo, OOO, so
that tie proportion of iegal-tender i'll which
national bank notes are now redeemable is
nearly Identical though slightly in excess If
the National Banking law amended so as
to require the redemption of national bank
notes III legal-tender notes at ! of per cent.
discount. as in the New York State law, in-
stead of at par, as provided by the National
Currency act. and the national banks of the
whole country would agree to such provision
Of the law, the prompt redemption of national
| bank notes would be insured; but
the redemption of this vast amount
of circulating notes. if redeemed
but once year, would result IN
| great loss to the people of the United States.
A system of redemption of this kind would
also at once increase the rate of exchange
| from the rate of lilo of per cent. now exist
| ing at most periods of the year between the
different cities of the Union, to from ] cent
| to per cent, thus restoring to a considerable
1 uCbIcC tlc VI cACudiiSc AT ZIG tiAiiC
of the Inauguration of the national banking
| system, and insuring loss to the people an
nually of millions of dollars. Such system
would, however, undoubtedly result In the
return of notes of national banks at certain
seasons of the year when they are not needed
to the vaults of the country banks, to be paid
out when the demand for currency increased.
Such system would also give, what is ex-
ceedingly desirable at present, elasticity to
currency.
| In order to insure the prompt redemption of
national bank notes the amount issued must
be so much increased that the notes will be-
say. at / of l per cent. discount, and this
would probably not be accomplished until an
| addition was made to the present. circulation
| of 800, 900, 600. The same result would fol-
| low from reduction of the volume of legal
tender notes simultaneously with the increase
| of issues of bank notes; but Congress has 80
| frequently refused to diminish the amount of
legal tender notes that the Comptroller is of
the opinion that any general system of
| free banking accompanied with redemption.
must be postponed until the resumption of
specie payments. The Comptroller, in order
| to avoid any Misrepresentation of his views on
this subject desires to state that he is not an
advocate of any permanent system of curren-
cy usually known as irredeemable currency.
He believes, however, that the people of this
country ought not, and will not, submit to the
high rates OF exchange prevailing previous to
the war, and that amendment to the Ma
tional Currency act which shall result in re-
storing the high rates of exchange will also
result in the downfall of a system of banking
which, it is believed, will yet become the most
satisfactory OF any system ever established
During the past year, far as his observa-
ton has extended, national bank notes have
been rarely at any perceptible discount for legal
tender notes, and during the late panic no dis
| tinction was made by the people between legal
tender notes of the United States and national
bank notes. Both We're boarded alike the
thing most desirable of all others to hold, and
it is probable that when specie payment shall
be resumed, the faith of the people will be
so established in the safety of the currency of
the banks that no such general system of re-
demption will be required as was required Of
\ the unsafe currency issued by the different
States previous to the war; If the circulation
| should become redundant as is sometimes the
case with silver coinage, it will only be neces-
sary to present the surplus to the agen-
CTS in the city of New York,
where more than two-thirds of the cir
culation is now redeemable, in order to
restore the equilibrium, for it is to be hoped
| that previous to the return to specie payment
some system will be adopted which will give
abundant elasticity to the currency without
mourning the expense and burden of general
| redemption, and without loss resulting from
the high rates of exchange which have always
prevailed under such a system.
On the subject of interest ON deposits and
certifcation of checks the Comptroller re-
marks: In my last annual report 1 referred
briefly to the evils resulting from the payment
of interest upon deposits, and my predecessors
have frequently referred more at length to the
| same subject. The difficulty has been that
the proposed legislation by Congress upon the
subject would apply only to national banks.
The effect of such legislation would be to
| bring State banks and savings banks organized
by authority of the different States in direct
competition with the national banks in secur-
ing the accounts of correspondents and deal
ers. The national banks will be DESTROYS of
retaining their business, and the more TN
scrupulous would not stop to evade the law
by offering to make collections throughout the
country free of charge; to buy aud sell stocks
| without commission, and rediscount paper at
low rates. The proposed action of the Clear
ingHouse in the city of New York, if adopted
by the clearinghouse of the principal
cities of the Union, would do more to
prevent the payment Of interest ON de-
posits than any Congressional instrument, but
the evils resulting from the payment of in
terest upon deposits are by no means confined
to the city banks. 1t may be safely said that
| this CUSTOM which prevails in almost every
city and village of the Union, has done more
than any other to demoraliZe the business of
banking State,banks. private bankers, and as
sociations under the guise of savings banks
everywhere offer rates of interest upon de-
posits, which cannot safely be paid by those
engaged in legitimate business. National
banks DESTROYS of retaining the business of
their dealers also make similar offers, and
the result is not only increase of rates of
interest paid by business men, but as con-
sequence investments in unsecured loans
bringing ultimate loss upon the shareholders
of the bank and depositors. The kind of
legislation needed is that which shall apply to
all banks and bankers alike, whether organized
under the National Currency act or other laws
A law prohibiting the payment of interest on
deposits by national banks will have little
effect unless followed by similar legislation
under authority of the different States, and
there is little hope that such legislation can
be obtained
The National Currency act, which was passed
during the war. provided for tax of one-half
of l per cent. upon all deposits, and suisse
quent internal revenue legislation extended
this tax to all deposits made with State Banks
and individual banks. This was essentially a
war tax, and should, in my Judgment, be re-
pealed with other similar internal revenue
taxation, and recommend that if legislation
is proposed on this subject, the law be so
amended as to repeal this tax SO far as it ap-
plies to demand deposits, and that an increased
rate of taxation be imposed uniformly upon
All deposits which either directly mr. ind;rectlv