National Republican., 1875-09-07
THE PRoPLEs onRRRNoY.

Ah6 SOnh6NS4s
The war which the Democratic party is
now waging against the national banks is
perhaps the most dangerous and insensate
that il is possible to prosecute in the name
and behalf Of the people. It is surprising
to see such sincere friend of the people
especially the down.trodden-as Wendell
Phillips has always shown himself to be,
joining this hue and cry against the national
banks. That he does not do so from any
affection to the Democratic party is well
understood, and that he is incapable Of ad-
vocating the abolition Of the national banks,
and substituting greenbacks for the volume
of their present circulation, without sim
cere conviction that such policy would
result to the public benefit wefully believe.
Consequently we can account for the posi-
tions assumed in his recent letter, "Paper
versus Coin" only upon the hypothesis
that Mr.. Phillips is not familiar with the
subject of which he wrote. That such
was his unhappy predicament fully appears
upon the face Of the letter. He assumes
that the policy Of the Government is con-
traction, whereas the present practice is
twenty per cent. of initiation. Again, he
assumes that national banks are first paid
interest upon their bonds and then are
furnished freely with circulation of like
amount to loan to the public. Here again
he is in error. The banks get but ninety
per cent. of the face of their bonds in na-
tional currency, (and the cost OF printing
and preparing this is now charged to them,)
whereas their bonds could be sold in the
market for ia to 100 in greenbacks. Then
the banks must keep five per cent. of their
circulation at the redemption agency and
twenty-five per cent. as a reserve to secure
the safety of their deposits. Then the
banks are taxed upon their circulation and
capital and deposits in the aggregate to the
extent of five per cent. upon this circula-
ton, So that really there is no profit left
upon their circulation proper. They could
really make more money by loaning the
capital invested in the bonds, so far as the
circulation is concerned
"Ahl" say the Democrats and Mr..
Phillips, "whY do they not do it then?
why do they persist IN shaving the
"people BY charging them interest upon
'fheir own money!" (This is the clever way
they have ofputtlng IT. Simply because the
bank, with its capital and circulation, forms
q nucleus which attracts the deposits of the
trSdesmen and manufacturers, and at times
even those Of the Government itself. 1t is
upon the average amount Of these deposits
that loans are made. The circulation of
the bank available for loans after all the
taxes, reserves, &c, have been satisfied,
would not be drop in the bucket" as
compared with loans made from deposits.
Now, if these banks were abolished, and
their depositors retained their currency in
their iron safes or pockets instead of en-
trusting it to the banks, no loans could be
made of it. 1t would be virtually with
drawn from circulation, and the contraction
from such a course would be
worse than any other possible lookup.
Banks cannot lookup currency without
being themselves great sufferers from
such conduct. Their profits depend upon
3 lively circulation. This is a necessary
result of their business. Their profits are
derived from their loans, and the greater
the frequency of their loans the greater the
ability to accommodate stheir customers,
for Immediately they make a loan the
money is checked out and at once re.
turned again, in the shape of deposits,
which again form the basis of other loans.
The national banking act throws abun-
1ant safeguards around the rights Of both |
Dill-holders and depositors. 1t is a better
aw in these respects than any which has |
ever preceded it in this country 1t pro-
7ides currency uniformly good in every |
section at the same time that it affords full |
to the customers of the bank. 1t |
S simply impossible that great losses can
'esult tothe people doing business with the |
aational banks if the bank officers and bank |
examiners conform strictly to the require
nents of the law.
In view of these facts, it appears
Incredible that leading politicians should |
inter upon crusade against these institu-
ions. To abolish them and issue green
packs to fill the place of their circulation
would be an act of folly akin to that of |
manufacturing company enjoying water
,ower, distributed by nature over miles of |
urface through succession of available |
alls, exchanging it for that of the falls of |
he Niagara, which occurs at single point,
nd is of such immensity that it cannot be
Utilized without great expense of distrlbu-
ion. This little stream of numerous falls
dmits of the frequent use of the same vol
lme Of water, but the Niagara furnishes
90 much water and too much fall to be of
ny utility as power.
Mr.. Phillips and the Democrats and infa-
ionists are all barking up the wrong tree.
They do not seem to comprehend the phil
sophy of banking or of circulation. The
eople, on the other hand, appear to have
be utmost confidence both in the banking
ystem and in the circulating medium. But
capitalists appear just now to have bu. little
aith in the soundness of speculative opera
ions. They do not like to loan except
pom ample security. They appear to in
ulge belief that prices are too high.
hey may be right or they may be wrong,
ut it is nevertheless their privilege to en-
oy their own opinion. As we have fire.
uentlY said before. it is neither the banks
or the Treasury nor the capitalists who
ecide the volume of effective circulation,
ut it is the requisite amount of public con-
dence in the legitimacy and healthfulness
f business affairs, which enlarges or con-
racts the efficiency of circulation by accel-
rating or impeding its activity in the
quidation Of debts and in effecting CON-
1ercial exchanges. |
EDITORIAL COMMENTS. /