Vermont phÅ“nix. [volume] (Brattleboro, Vt.) 1834-1955, 1873-11-07
Farm and FzreSzde.
.v.sTIO.v.sL, STATE, .s.V'D PEI
I..FTR B.f.vKS.

The National Banks were established
uuder the National Currency act, which be-
came law on the 25th of February, '63.
Supplemental acts limited the entire issue
OF circulating notes to about S345, 000
The Banks were required 10 deposit with
the Treasurer of The United States sufli e
cient amount of L. $. bonds TO secure the
redemption of their circulation. The per-
centage of circulation depended in meas
ure u pon the amount of capital invested.
One great advantage of this system has
been the uniform currency bills of any ma
tional bank being at par in current funds
throughout the United States, whereas
under the State Bank system ii was
difficult TO use The bills issued by banks of
one part OF the country for business pur-
poses in any other. Before a merchant
could deposit bills which were received on
trade they were first taken 10 the uncur-
rent money broker who gave in lieu of
them current bills, for which exchange Il
small commission was charged, All this
trouble and inconvenience was done away
with under the national system which was
devised by the late Chief Justice Chase,
who was at that time Secretary of the Treas
ury. The national banks pay the follow
ing taxes into the U. S. Treasury: One per
centum annually on outstanding circula-
ton; one-half of one per centum upon de-
posts, and also upon capital not invested
in L. S. bonds. They are also liable to
municipal taxation. Twenty-Five per cent
um of tie deposits and circulation of the
banks of New York city are required to be
held in The vaults as reserve. 1t must
consist wholly of legal tenders, that is
greenbacks or L. $. 8 per cent, certificates.
BY this law the country banks are requir-
ed to hold an amount of reserve equal to Is
per cent. three tiiths of which may be on
deposit with national banks which are
their agents in redemption cities, while the
banks in redemption cities must hold re-
serve OF 25 per cent, one half of which may
boon deposit with the nationl banks in New
York city. Apparently all national bank
ing institutions outside of New York city
have an advantage over the latter. During
certain dull seasons of the year the country
banks forward their surplus funds to New
York to swell their deposits for interest,
at such low rates are likely 10 lose by it,
consequently speculation is stimulated,
and money is loaned upon doubtful secu-
rites which find their way into a glutted
money market.
Sine the organization of the national
ban king system the number of State banks
has diminished, although some of them
which became national banks at an earlier
period have now recognized under the
State system. AT present there is no State
bank circulation-the result of an amend
ment TO The national revenue law, passed
June 80, 1864, imposing a tax of ten per
cent on the amount of notes of State bank
ing associations, paid out by them after the
LIST day Of July, 1866 A subsequent Sec
ton provided that organized State banks
should have the privilege of recognizing
under the national law in preference to
new associations, which was generally
done, especially in the Eastern and Mid
die States. Within the last few years pri-
vate bankers have done large amount of
business which would otherwise have been
transacted with incorporated institutions.
Enormous amounts have been lodged with
banking firms of long business standing
and undoubted integrity. They have car
ried on large letter of credit and remit
lance business, especially with firms a.
broad. A debtor in New York pays his
creditor in London by depositng the mon
ey with bank or banker in New York,
who, for slight charge Called Exchange),
gives him draft for the amount on bank
err, his correspondent in London. This
draft is forwarded to his creditor, who pre-
sents II to the banker in London and re-
ceives the money thereon.
Another branch of private banking Is
that of negotiating bonds OF railroads and
other corporations-the abuse of which has
largely contributed to bring about the
present panic. Advancing large sums of
money 10 build roads in advance of the
sale of tho bonds is fraught with hazardous
results, often involving not only the capital
but in many cases the money belonging TO
depostors.
The duties of the different officers in a
we'll regulated bank, say in New
York city, are these; The President has
supreme control of the affairs of the bank.
To him come up all matters for decision
which are beyond the discretionary pow
ors of the Cashier. He also carries out the
instructions of the Board Of Directors. The
Cashier is In constant communication with
the President All matters of minor de-
tail are referred to the Cashier, such as