Wilmington daily commercial., 1875-12-02
FIRST EDITION.
The National HanIS,.

1
OBJECTIONS TO THE NATIONAL BANKING sYsrAs
| hsswEhED-How WELL THE SYSTEM WORKS.
Tho Comptroller of the Currency, Hon. join
| Jay Knox, In his annual report to the Secretar,
| OF the Treasury, demonstrates tho untrutl ol
the charge that the national banks are "mo
| nopoy." He says Tho reverse of this is true
| for the national system has, in fact, uproote,
the real banking monopoly which has existed ii
this country from the foundation of the govern
ment down to Il late day. Should the nationa
| system be unfortunately overthrown that mo-
nopoly wonld be again and at once revived by
| the repeal OF the provision imposing tax Of
ten per cont upon the issues of State banks
which provision ls acknowledged to be ore o
the compensations OF the war.
THE PROFITS OF THE BANKS.
1t is urged as further objection to the ma.
tional banking system that the dividends paid
TO Stockholders are greater than the earnings oil
other corporations. 1t is true that some nation
| al banks which have accommodated large sur.
plus or are organized in localities where the
proportion OF deposits to capital is large or at
| rates OF interest as high aB in the Western and
Southern States do declare large dividends, but
it is well known that, AZ rule, the rates Of inter
est charged on commercial paper by the national
banks i'll their respective localities are less than
those charged by State banks, private bankers
and individuals but the dividends and earnings
u
by more than two per cent the current rates OF
interest authorized by law in the respective
States, and this additional amount of profit ia
surely not too great compensation for the risks
and expenses incident to tho business of bank
ing, and to which capital loaned directly on
mortgage security is not subject.
MANY DISPOSED TO WITHDRAW.
The national banks, as has been seen, are dis
posed to retire their circulation, and it is proba.
bio that during the next year very large pro-
portion OF it will be voluntarily sufrendered
but il the proposition now under consideration
should be adopted many of the banks would 60
into liquidation and their loans to a very great
extent DO called in for the purpose OF distribut-
ing their preeent capital and surplus among
their stockholders who would, without doubt,
generally organize, under State systens and AZ
private bankers. By this course large proper
tion Of the State taxes, now amounting to an
average OF about two per cent upon capital,
would be saved to the banks as result of q
conversion of their capital or deposits into in
terest-bearing notes, which, like other issues of
the government would be subject to taxation
neither by national or State authorities.
THE FAILURE OF NATIONAL BANKS
Since the organization of the national banking
system in 1873 and down to October L. 1876 thir-
ty-eight national banks have failed with total
tai capital OF S9,0l1, 100, and with circulation
amounting to S5,574, 1913. The experience of
this country previous to tho organization of the
national banking system has shown that in twen-
ty years All amount equal to its whole banking
circulation was lost in the hands of the people,
the loss by bills OF broken banks alone being
computed to have been at the rate of per cent
per annum. There has been no loss whatever
upon tho circulation OF the national banks, and
no loss to the billholders can arise 30 long as
the present laws shall remain in force. The to-
tal amount of claims proved against all the ma
tional banks is 672 LOG. Dividends amount
ing to 2,877 have been paid upon these
claims, and it is estimated that the total loss to
their creditors since the organization i'll 1868
will not exceed SO, $4,000. This total loss il
less than that realized in more than one in
stance from the failure OF single banking
house. But there are those who, seeing evils
which are largely imaginary, desire the entire
overthrow OF the national banking system for
the purpose OF substituting therefor another
system which has been tried without SUCCESS
and which will inevitably lead to loss of credit
and partial or complete reputation, not unlike
that which has recently overtaken the Turkish
government. The national banking system
siIouLD NOT BE REPEALED
but should be 80 moulded as to become and con-
time both profitable to the people and advanta-
geous to the government. The interests Of the
national banks will be promoted by the redno-
tiou to a low rate of interest upon the public
debt for such reduction will carry with it n
reduction OF the present onerous taxation upon
bank circulation, capital and deposits.
1t is very generally acknowledged that the
national banking system is superior to the sys-
TENS which preceded it in this country, and
equal, IL not superior, to any other system OF
banking yet devised and the principal reason
adiuced for desiring its overthrow is, that
money eau be saved to the government by
authorizing 1t to furnish the circulation OF the
country Such Il course will not result in true
economy, for it will Immediately and in due
time ipjure our credit abroad, and have tile
effect OF preventing the sale in foreign markets
of United States bonds bearing lower rate of
int