The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1873-12-05
THE CURREN( Y.

Abst act of the Report Of the cOmptrol-
Ter of the Currency-His Views on Free
BanISinS-l on Deposits and Ger
tincation of ChcCISs-Thc Causes of the
Panic.
The annual report of the Comptroller Of the
Currency is VOluminOus document, and we
have room for only an abstract of the most
important portions. He gives the history OF
the working of the frce-bankinG system in the
country previous to the establishment of ma
tional banks, and goes on to say that the
amount OF national bank currency now au-
thoriZed to lie issued is S354, 10000 aud the
amount of legal tender notes S356, OOO,OOO, so
that the proportion of legal tender IN which
National Bank notes are now redccmablc Is
nearly identical. though slightly in excess.
If the National Banking law was amended SO
as to require the redemption Of national
bank notes in legal tender notes at OF l
per cent. discount, AZ IN the New York state
law, instead Of at par as provided by the Ma
tiOnal 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 TINS vast amount
Of circulating notes, If redeemed
but once year. would result in
great loss to the people of the United States.
\ system Of redemption of this kind would
also at once increase the rate Of exchange from
the rate Of Ito of l per cent now existing ut
most periods of the year between the different
cities of the Union, to from } cent TO per
cent thus restoring to considerable degree
the condition of exchange at tho time Of the
Inauguration of the national banking system
and msuIing loss 20 the people an
nualy 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 hunks. TO be paid
out when the demand for currency increased
Such q 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 80 much increased that the notes will be.
say, at Of / per cent. discount, and tins
would probably not be accomplished until an
addition was made to the present circulation
of 100000 00O Tie 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 20
frequently refused TO diminish the amount Of
legal tender notes that the Comptroller IL 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 misapprehensiou of his views on
this subject, desires to state that he Is not an
advocate OF any permanent system OF curren-
cy usually known az irrcdeemablc currency.
nc UtllcNts. uONtNtls bLdl bllt ltpllt VI tlle
country ought not, and will not, submit to the
high rates Of exchange prevailing previous to
the war, and that an amendment TO the Ma
tlond 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.
DWug the past year. as far az his ObscrYa- /
ton has extended, national bank notes have
been rarely at any pcrcep,ib.e discount forlcsal
tender notes Of the United States and rational /
bank notes. Both we're boarded alike as the |
thing most desirable Of all others to hold. and |
il is probable that when specie payment shall
be resumed, the faith of the people VIII be /
so established in the safety OF the currency Of /
the banks that no such general system OF re- |
demptlon will be required as was required OF /
the unsafe currency Issued 10y the different /
States previous to the war. Ii the circulation
should become redundant, as Ia sometimes the /
case with silver coinage, IL will only be neces-
sary to present tile surplus to the ageu-
cies 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 |
and without loss resulting from
the high rates Of exchange which have always
prevailed under such system.
On the subject of interest on deposits and
certifcation OF checks the Comptroller re- /
marks: In my last annual report L 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 |
with the national banks in sccur- |
Ing the accounts Of correspondents and deal |
ers. The national banks will be DESTROYS of [
their business, and the more uu-
would not stop to eyade the law .
by Offering to make collections throughout the .
country free Of charge to buy and sell stocks
without commission, and TedlscOunt paper at /
low rates. The proposed action of the Clear
ug-House 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 OH de-
posits than any Congressional instrument, but
hc evils resulting from the payment Of in
lerest upon deposits are by no means confined
10 the city banks. 1t may be safely said that
his custom, which prevails in almost every
'ity and village Of the Union, has done more
han any other TO dcmO3liZc the bust ness Of |
banking State banks, private bankers. and
under the guise of savings banks
everywhere offer rates of interest upon de-
lOsits, which cannot safely be paid by those
Engaged in Legitimate business. National
Janks dcsirous of retaining the business of
heir dealers also make similar offers, and
he result is not only az increase Of rates OF
interest paid by business men, but ar a con-
sequence investments IN unsecured loans