The New York herald., 1875-12-01

changeabe in Of 500 for certificates OF funded
stock bearing interest at seven per cent but Secretary
ascertained that the ANAL Treasury notes
fundable At an interest OF seven per cent,
though. OF convenient denomination for common use,
would be converted into stock almost as soon as Issued
The experience Of 1915 will be repeated with the ISSUE
OF additional greenbacks interchangeable for 50 notes
These interest bearing notes not at present OF
standard sufficiently high for funding purposes, the
law now being in force authorizing the issue Of ~ and
also per cent bonds, and are therefore in this re-
spect unlike the notes which issued in 1915,
but the principle OF interchangeability VIII
cause the non.intcrest bearing notes TO be
exchanged for them 'almost as soon issued" The
nonnterest bearing certificates Of deposit now held
by the banks, and amounting to $50 1000 will at
gether with the $3.50 900 coo Of cash reserve also held
BY the different banks and bankers OF the country, will
be speedily exchanged for 3 % notes These latter
notes will he used by every clearing house in the
country, for the payment OF oaances and
consist OF the new inconyertibe interest
bearing notes. that the whole authorized issue OF
these bonds will soon be IN demand II the amount OF
tho interest bearing notes be limited to $500 600
and reserve OF twenty-five per cent in legal tender
notes be held the Treasury the amount OF the latter
bonds will be $500 600 600 This sum will purchase
$3.50 600 Of six per cent bonds assuming that the
average premium is not greater than at present
LOSS TO THE GOVERNMENT
The amount OF interest saved upon the $3.50 900 900
OF FIVE. twenty bonds retired will be SIS 600 000 while
the interest paid by the government on the $4O0 900
OF 65 notes outstanding win be So oOo the net
But through this process the present tar on bank
circulation amounting to So 600 will be lost so that
instead OF saving $400 600 the government WILL by this
experiment be actually the loser Of 81 600 IT.
however, the issue Of 365 notes shall be in
creased TO amount equal 10 that OF the legal
tender and national bank notes combined the loss
in interest to the government would be somewhat less
than before stated, but equal TO at least 81 500 900 II
therefore evident that the substitution of the
proposed expedient in place OF q system which has
been in successful operation for the last thirteen years
will result in loss TO the governments instead Of
gain.
The national banks as has been seen are disposed 10
retire their circulation and It is probable that during
the year very large proportion Of 1t will be voun
tary surrendered; but If the proposition under
consideration should be adopted many OF the banks
4 very great extent be called in for the
purpose OF distributing their present capital
and surplus among their stockholders who would,
without doubt generally organize under State systems
and private bankers BY this course large proper
about two per cent upon capital would be saved to the
banks result OF conversion Of their capital or
deposits into interest bearing notes, which, like other
issues Of the government would be subject to taxation
neither by national or State authorities
THE FAILURE OF NATIONAL RANKS
Since the organization OF the national banking system
in 1888 TO October 1875 hirtycight national
ban failed with total capital of So oil, 100 and
w.t.. ciro, laon amounting TO So SI4 Ssa The oxpe.
ence of this country previous to the organization Of
the national banking system has shown that in twenty
years amount equal to its whole banking circulation
lost the hands OF the people, the loss by bills of
broken banks alone being computed to have been
at the rate Of five cent per annum There has been
banks, and loss to the blholders long
the present laws shall remain in force The total
amount Of claims proved against all the national banks
rs $14 672 106 Dividends amounting to S. 92 SIT have
been paid upon these claims, and IT s estimated that
the total loss TO their creditors since the organization
in 1853 will not exceed $39 600 This total loss Is
less than that realized In more than instance from
the failure Of single banking house During the period
first mentioned there has already been paid upon the
total amount OF proved claims average Of sex per
cent and it Is estimated that the proportion paid and
to be paid upon such claims will be about seventy three
per cent Six
and one in Brooklyn have failed, with an aggregate
with capital OF 81 200 900 have paid their depositors
in full the amount so paid being 81 332 0S1 The bank
IN Brooklyn which failed with 81 l9l $50 due to de-
postors has paid that class OF its creditors ninety six
per cent in dividends amounting to 81 143 I25 The
whole amount Of claims of the depositors Of the
seven banks mentioned is 81, 4S2, sos, upon which
$3sIS,755 have been paid, being an average
dividend of se4 per cent The total
New York and Brooklyn is estimated at $246, ,130 or
five and two-nfths per cent upon the amount of claims
proved There have been losses by failures of ma
tional banks in any of the other principal cities
cepting Chicago, New Orleans and Washington. One
bank only has failed in the New England States, and
but $l,372 The loss TO all OF the creditors
Of national banks in the Middle States is
ern rr'''N'l States at s84i, 7sa. The % largest
proportion of losses has been in the Southern States
where business has continued unsettled throughout
the entire period since the organization of the system
the losses in those States being estimated at 81 994
upon $6,63s,074 Of liabilities. 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 sys
tenn which has often been tried without success, and
which will inevitably lead TO loss OF credit and par.
tial or complete reputation, not unlike that which
has recently overtaken the Turkish government The
national banking system
SHOULD REPEALED
but should be so moulded as TO become and continue
both profitable the people and advantageous to the
government The interests of the national banks will
be promoted by the reduction to low rate OF the
interest upon the public debt for such reduction will
carry with It 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 systems which pre-
ceded IL in this co1ntry and equal II not superior to
any other system Of banking yet devised; and the
principal reason adduced for desiring its overthrow
that money be saved to the government by
authorizing TO furnish the circulation of the country.
Such course will not result in true economy for it
will Immediately and in due time injure credit
abroad and have the effect Of preventing the sale in for
egn markets of United States bonds bearing lower
The Comptroller has endeavored to answer as sim
cerely as possible, The objections urged against the
why the SYSTEM should be continued
THE MONETARY PROBLEMS
to be solved during the few years the consoda
tion OF the national debt into bonds bearing low rate
Of interest and the resumption Of specie payment The
conversion of the present national debt into bond
bearing per cent interest would the governments
nearly $40 600 900 annually, while the reduction OF
interest resulting from the funding Of the debt into
n four per cent bond would amount TO
s2 500 900 annuay and there appears no GOOD reason
why during the next ten years. the public debt should
not be consolidated into bond bearing interest at
greater rate than four per cent In order to
psh this most desirable end IL will be necessary TO
enlist in It's support all OF the leading monetary nsttu
tions of the country This assistance as VIC have
needed during the 1872 and has been needed
from the time Of the organization OF the Bank Of North
America until the present system OF economy
expenditure, together with increased amount of
revenue, will soon give to the country credit not ex
cecd by that Of other countries which readily obtain
loans at less than four per cent
GFNERAT uANr0CKiC RFpOPT