Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1873-11-27
FREE BANKING.

The annual report of the comptroller of the
currency contains an exhaustive rehearsal OF
the system of free banking from the year 1918
to. the establishment of the system of national
| currency now in vogue. Among other items
in this lengthy document is a statement that
forty times greater than the debt in 1860, and
the national bank notes and legal tender notes
now are twenty times greater than the circu-
lation of free banks in all the States of the
Union in 1860 The amount Irrational bank
notes now authorized to be used is 1854 ,OOO,-
900, and the amount of legal tender notes
1856, 100000. After discussing the merits Of
the banking systems which have prevailed,
and referring to the fact that all free banks
are based upon the redemption of the princi-
pal the comptroller concludes as follows: In
order to insure the prompt redemption of ma
tional bank notes the amount issued must be
so much increased that the notes will be at ]
OF one per cent discount, and this would
probably not be accomplished until an addi-
ton was made to the present circulation of
500, 000,0 900.
The same result would follow from a re-
duction of the volume of legal tender notes
simultaneously with the increase of the issue
OF bank notes, but Congress has so frequently
refused to diminish the amount of legal notes
that the comptroller is of the opinion that any
general system of free banking authorized
with redemption must be postponed until the
resumption of specie payment. The comp
troller, in order to avoid any misapprehen.
sion of views upon this subject desires to
state that he is not an advocate of any perma-
nent system of currency usually known as ir-
redeemable 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 an
amendment 20 the national currency act which
shall result in restoring the high rates OF ex-
change will also result in the downfall of
system of banking, which, it is believed, will
yet become the most satisfactory of any sys-
TEN ever established. During the past year,
as far as his observation has extended the
| national bank notes have been rarely at any
perceptble discount for legal-tender notes,
and during the late panic no distinction was
made by the people between the legal-tender
notes OF the United States and the national
bank notes. Both were boarded alike as the
|
and il is probable that when specie payment
shall be resumed, that the faith of the people
will be so well established in the safety of the
currency of the banks that no such general
system of redemption will be required as was
required OF the unsafe currency issued by the
different States previous to the war Ii the
circulation should become redundant, as is
sometimes the case with silver coinage, i, will
only be necessary to present the surplus to
agencies in the city Of New York, where more
than two-thirds OF the circulation is now re-
deemable, in order TO restore the equiibri-
UNI, for it is to be hoped that previous to the
return to specie payment some system will he
adopted which will give abundant elasticity
to the currency without mourning the expense
| and burden of a general redemption, and
without the loss resulting from the high rates
of exchange which have always prevailed I'm
der such system.