Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1874-06-24
THE ABOLITION or THE BANH
RESERvEs.

| currency Ulll. Which, Oldne SiS-SN WV
days after, the Ne,c York Tribune says:
"The President cannot be expected to
expose himself to contempt by attach
ing his name to such piece of idiocy."
We regard the TFi6une's structures on
the bill itself as uncalled for, if not
unjust with the following exception:
If the bill " releases any legal-ten-
der notes from the bank reserves for
imitation purposes, bank suspensions
may be looked for to take place quite
often in the future.
We stated yesterday that while the
bill authorized virtual initiation by
the release of some SIS. 900, 900 hitherto
required to be held as reserves on cir
culation, it was doubtful whether these
released reserves would actually 60
into circulation, assigning as our rea-
son that tire banks have heretofore
always held more than the old law re-
quired. The Tribune hints at the ute
rior reason. Sound banking requires
that certain amount be held in the
vaults, and the rules of sound bank
ing, loans, discounts, etc, could
not be violated with IMMUNITY if Con-
gress should legislate away all re-
straints whatever. After noting that
'the present law requires cash re-
serve of specie and greenbacks to be
kept by the country banks, equal to not
less than six per cent. of the combined
circulation and deposits" the Tribune
gives the following illustration of how
the new law viii work:
Take, for instance, the banks of In
diana. The provisions of the new bill
require cash reserve of 1864, 900 on
the ST., 400,000 of deposits held on Feb.
81 by the banks of that State. At the
same time it is provided that five per
cent of their note circulation of S14,-
470, 900, being S723, 500, shall be kept
in greenbacks In the United States
Treasury, and counted as deduction
from the reserve required against de-
posts. Now, if we subtract S723, 500
from 1854, 700, the remainder, which
will be the cash reserve required to be
held by the Indiana banks, will be
$4,000 less than nothingl In ike
manner the banks of Massachusetts
(oCtside of Boston,, Rhode Island, and,
In fact, of all New England, will be re-
quired to keep large sums of money in
the United States Treasury, and not
single dollar for the security of their
depositors,
Let US contrast with this the manner
in which the banks of New York viii
be effected. On the same date, Feb.
%, their deposits were S239, S64, 800.
Six per cent. on this would callfo a re-
serve of 1881, 1853. Their circulation
was only $40, 100, and the five per
cent. to lie in the Federal Treasury
would be 81 1888, 755. Subtract 81, 1885,
rs from ,391 .S5S, and the remain
der lying in New York banks, to secure
depositors, will be S13,053, l03. This
would be a small amount to secure de-
posits of S239,864,3OO. We are not
astonished, therefore, to find these
banks holding. on Feb. 81, in the two
items of gold and greenbacks, SSS, 403,-
800. Sound banking required, as it
will continue to require, something like
this.
In the above contrast we have
adopted the T5-iJuae's six per cent.
basis, while we construe quite differ
entity the second section of the new
law, in connection with section 81 of
the old. We take it that the Indiana
banks cited would have to keep a
revenue of Is per cent, or Sl,7l0,OOO,
on deposits, which, after subtraeting
the S723, 500, would leave in their vaults
1885,, 800. But the New York banks
would be required to hold % per cent.
on deposits, or S59,967, O75. We may
be wrong, but we see nothing in the
second section of the new law abolish
ing the distinction set up in section 81
of the law of 1864, between "the cities
herein named" as redemption cities
and all others. The per cent. of re-
serves for the one was % and for the |
other -.
We are not surprised, however, that |
New York should feel disgruntled over
the new arrangement, which takes from
it the millions of reserves it has here
tofore held as our chief redemption
center. We rather suspect that those
millions which the law expected to re-
main in innocent idleneSs have had
much to do with stimulating the un-
healthy speculation that has disgraced
the emporium of the continent and
brought dismay and panic to every
hamlet in the land. Wall street may
find other means of gratifying its IN
wholesome appetites, but this one, re-
sulting from centralizing legislation,
has been, happily for the business in
terests of the country, removed.