Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1873-12-11
Report Of the Comptroller Of the
Currency.

The Comptroller of the Currency. in his report.
gives a history of the working of the free banking
system III the country previous TO the establish
ment of national banks. and goes on to say that the
amount of national bank notes now authorized to
be issued Is 1854 OF, 900, and the amount of legal
tender notes $356, 000,0. o, so that the proportion of
legal-tendcrs in which national bank notes are
now redeemable is nearly identical though slight
~ in excess. If the national banking law was
amended so as 10 require the redemption of nation
al bank notes i'll legal-tender notes at one-fOurth
of one per cent. discount, as III the New York
Stale law, instead Of at par, a. provided in the
national currency act. and the national banks of
the whole country would agree to such d provision
OF law, the prompt redemption of national bank
notes would be insured. but the redemption of the
vast amount of circulating notes. if redeemed but
once a year, would result III a great loss to the peo-
pie of the United States. \ system of redemption of
this kind would also at once increase the rate of
exchange from the rate of Onc-tcnth Of one per
cent. now existing at most periods Of the wear he
tween different cities of the Union. 10 from one
half to one per cent, thus restoring TO a considera-
bic degree the condition Of exchange az the time
of the Inauguration of the national banking system.
and insuring a loss to the people annually Of
millions or dollars. Such a system would.
however, undoubtedly result in the return
of the notes of the national banks at
certain seasons of the year, when they were not
needed, 10 the vaults OF the country banks. to be
PAID on. when the demand for currency increased.
Such a system would also give what l. exceeding
ly desirable at present-elastiCity TO the cUrrGACy.
In order to insure the prompt redemption Orthe
~ jain HCttS INC illtII l~SUtd lllNt Ne
so much increased that the notes will be, say. one
eighth of one per cent. discount. and this would
probably not be accomplished until an addition
was made to the present circulation of 81, @. 600
eco. The same result would follow from a reduc-
ton of the volume of legal tender notes stimuli
taneously with the increase of the issues of bank
notes. but Congress has so frequently refused 10 di-
mlnlsh the amount of legal tender notes. so that the
Comptroller IL of the opinion that any general sys-
TEN OF free banking accompanied with resumption
must be postponed until the resumption of specie
naEmpn1S The t'nOnnfr0ilpr in order To avoid any
1misapprehensiOn of his views upon this subject,
desires to state that he is not an advocate of any
permanent system of currency usually known as
irredccmable currency. He believes, however.
that the people of this country ought not, and viii
not, submit 10 the high rates of exchange prevail
ing previous to the war, and that an amendment
TO the national currency act which shall result in
restoring the high rates of exchange viii also re-
suit in the downfall of a system of banking
which, II is believed. Will yet become
the most satisfactory of any system ever establish
ed. During the past year. as far a observation
has extended, national bank notes have been rare
ly at any perceptible discount for legal tender
notes, and during the late panic no distinction was
made by the people between legal tender notes of
the United States and national bank notes; both
were boarded alike as 4 thing most desirable of all
Others to hold. And il is probable that when spe-
Gle payment shall be resumed the faith of The
people will be SO well established in the safety of
the currency of tie banks that no such general
system of redeml ton will be required as Of the
unsafe currency issued by the different States pre-
vious to the war. If circulation should become
redundant, as is sometimes the case with silver
coinage, ii will only be necessary TO present the
surplus TO the agencies in the city of New York.
where more than two-thirds of the circulation is
now redeemable,i in order to restore 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 curren-
cy without mourning the expense and burden of
general redemption, and without loss resulting
from the high rates of exchange which have al
ways prevailed under such a system.
Regarding the question of interest on deposits
and certifcation of checks, the Comptroller says:
In my last annual report | referred briefly to the
evils resulting from the payment of interest upon
deposits, and my predecessors have frequently re-
feTTed 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 the authority of the different States
in direct competition with national banks IN secur-
ing the accounts n correspondents and dealers.
The national banks will be DESTROYS of retaining
their business. and the more INSCRIPTIONS would
not stop to evade the law by offering to make col
buy and sell stocks without commission. ana re-
discount paper at low rates.
The kind of legislation needed is that which
shall apply to all banks and bankers alike. whether
organized under the national currenCya act or other
laws. A law prohibiting the payment OF interest
on deposits by National Banks will have little eff
feet, unless followed by similar legislation under
authority of the different States, and there is little
hope that such legislation can be obtained"
The Comptroller repeats the recommendation IN
last years report for repeal of Section 8, of the
act of July. 1870, which provided that after the
whole 50. 000,0O O of circulation shall have been
distributed, S25,0C0,000 additional shall be with
drawn from the banking associations organized IN
States having an excess, and distributed among
States having less than their proportion Under
this section that amount would be withdrawn from
New York, Massachusetts. Connecticut ana Rhode
Island, and the Comptroller also recommends the
authorization of $25, 100000 more currency, TO he
distributed among States which are dNfcient'
namely those of the South and West. He is Of the
opinion that it would require from three TO five
years to distribute this additional amount.