National Republican. (Washington City (D.C.)) 1872-1888, 1873-10-31
HANK BALANCES.

The practice on the part OF the national
banks Of sending large sums of money to
New York upon which they draw heavy in
tcrest, is Vicious and repreheusiolc, and should
receive the attention OF Congress at It's next
session. II Is violation Of the spirit, II not
OF the letter of the law, and to II may be
traced a good deal OF the trouble under which
the country Is at present laboriug. The na-
tional bank circulation Is divided pro rata
among the different sections Of the country;
but the banks, by the action alluded to, de-
feat the objects Of the law, thereby work.
Ing great and grave injury to the business
communities In which they arc placed. 1t Is
all nonsense to say that they arc compelled
to keep large balances In New York to meet
the cxigcncics Of exchange. That they arc
obliged to keep some portion Of their capital
ut the commercial centre Of the country Is
undoubtedly true, but their balances are out
Of all proportion to the volume Of business
transacted. The money thus deposited Is In
turn advanced to the brokers, who arc thus
enabled to indulge In all manner of Wild
cat speculations. u national banks were
prohibited from paying interest upon
the balances Of their corresponds the
commercial community would be not only
greatly relieved, but check would be given
to reckless speculation and TO consequent
failures and panics. Mr.. Boutwell,, In his
recent lecture In New York, called attention
to this subject, as follows: with the ordi-
nary safeguards this (the accumulation Of the
capital OF tho summer months would only
produce a pressure 10 the money market; but
there had been another cause operating which
was calculated to produce panic, and the
Treasury Department had from time to time
demonstrated against Ii. This was the prac-
ticc Of the banks paying interest on deposits.
The banks arc organized upon the principle
that they bare money to lend and not that
they arc borrowers. 10 times when mer-
chants arc disturbed and fearing for the con-
sequences, then the banks, either indl-
vidually or "a o whole, should he as
firm and stable IS tho Treasury OF
tho United States. The merchant who
gives his paper on time knows what he has
TO depend upon, and eau calculate when his
paper becomes due and make arrangements
to meet It, but paper given on call Is liable to
become due at any time. Men who have
money to lend under the present system will
no to the bank and deposit 1t, receiving In
tercst for the time 1t Ia left, and call for 1t
when they choose, but the bank does not
dare to lend 1t to tbs business men on time,
because the bank does not know when 1t
will be wanted, so it lends money upon stocks.
This money Is loaned to spectators, who cx-
pcct to gain wealth rapidly, and the conse-
qucnces to the community arc disastrous"
This Is the correct doctrine. The banks
should use their money at home, instead Of
abroad, and thereby aid those whom 1t was
Intended they should aid. Without their
assistance the bulls and bears OF Wall street
cannot carry on Il cir unhealthy speculations.
Stock gambling would come to an end to the
immense gain of the mercantile classes, II
the banks would only do their whole duty In
| the premises,