New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-07-14
MINING THE BiNhS.

| The business of banking has never been
carried on in the United States in such a
manner as to give our own people much last
! ing satisfaction or the rest of mankind any
thing they deemed worthy of imitation. But
bad as our former systems have been, our
present one, as modified by the recent law,
is likely to turn out worse. We think this
opinion will be sustained by q brief sketch Of
the legal provisions relating to reserves, con-
sidered in connection with the leading facts of
| the financial situation.
f. BY the present law, as interpreted by the
| Controller of the Currency, all the National
banks in the United States, outside the cities of
New York, Boston, Albany Pa ladelphia,
Pittsburgh, Baltimore. Washington, New
| Orleans, Louisville, Chicago, Cincinnati, Cleye-
land, Detroit, Milwaukee, LeavenwOrth and
| Saint Louis, are relieved practically from any
obligation to keep reserve. Some reserve
| they must have, or they cannot do business,
! lust as retail storekeeper must have some
cash in his TILL But the present lawful re-
auirement does not exceed in the case of any
country bank, the amount OF cash which the
bank will require to do its ordinary days
work. A reserve however, is something laid
| by for extraordinary emergencies, and IN this
sense of the word no reserve is now required
to be kept by any country bank. Five per
cent in greenblcks is required to be kept in
the United States Treasury for the redemption
of the circulation, but this is wholly inacces-
siblc for reserve purposes, and it is absurd to
call it by that name
| g We have seen that no reserve is required
by law to be kept by the country banks. Since
those banks are nearly two thousand IN num-
! Der, and are increasing, and already hold
| deposits to the amount of nearly three hundred
million dollars, the question is an important
one will the country banks hold safe re-
serve7 Public opinion, it is true. is more eff
| fective than law IA regulator of the banking
business. But public opinion, to be worth
anything for this purpose, must first have been
well disciplined in the school of experience.
From all the comments we read on the new
currency act we judge that public opinion on
the question of bank reserves is in very UNI
enlightened state. Congress has virtually told
the banks to release their reserves" The
people at all events in the South and West
confidently expect the reserves to be released
We conclude that public opinion will not be
effective in compelling the country banks to
maintain safe reserve.
3. VIII self-interest be effective in compel
ling the banks to afford adequate protection to
their depostOrs 7 1t is evident that the more
money bank lends the greater are its profits,
and the more money it keeps idle in the shape
of reserve, the less its profits. The natural
disposition of men is to be buOyant and hope
fnl. rather than cautious and dlstrustful. The
history of banking in the United States is
| a. &c RI trutb Of
observation. The tendency will be for banks
| to become less strict and to run closer to what
| tbe managers may consider the line of safety.
| Then, too it must not be forgotten that this is
the land of broken promises. The public have
| gradually acquired disposition to deal kindly
with men who cannot keep their engagements.
For all the banks in the country to suspend
their payments occasionally is regarded as
little awkward and incouvenient, but still as
an event which, in the ordinary course OF things,
must be expected to happen People are told
that it is impossible for bank to pay out at
| once all the money it owes. We are, in fact,
anproaching a condition Of things in which all
| obligations to pay money are in reality made
| subject to the unexpressed pr0vis0-"V con-
"renientr The United States Treasury has set
this fashion, and it has become vastly popular.
We conclude that resolute purpose on the
mart of bank managers to sustain their credit
| at all times and under all circumstances, can
not be counted on to give the security which
is no longer required by law; for in the first
place such spirit never did distinguish the
majority of banks in this country, and in the
second place, the whole tendency of things
since the war has been to discourage the growth
of such a sentiment.
We do not of course in the present temper
ate frame of the public mind, look for
ony bad consequences Immediately. We sim
NV wish to state that the facilities for orig
mating and sustaining for q considerable pc
Rod new development of the speculative
mania, whatever form it may take, are now
complete The banks have full liberty to con-
tribute to their utmost power to the develop
ment of whatever madness may next seize
hold of the people. Still, we desire expressly
TO disclaim and discourage the idea that there
is to be any hurry about the business. We
must wait until the spirit moves us. The
memories Of 1873 must first grow little dim.
When grand display of fireworks Is APP
pointed to take place, tedious preparations
must be made. The pieces must be set up
with great care and everything deliberately
arranged beforehand. Finally, the whole
world, great and small, must wait until dark
ness comes on. So it is with the grand fzz-
bang of the wheels, rockets. blue fire. volca-
noes, &C., set up by Congress. Doubtless