New-York tribune., 1875-10-16
Fluctuations IN NATIONAL BANK CIR
CULIIION.

|
CULATION
Our incOnvertible paper circulation is liable
at times to he deficient in the quantity re-
oured for the smooth working Of the credit
system and at other times to be in excess 1t
is. indeed, more subject to such vicissitudes
than convertible currcncy, as might logically
be inferred from the fact that 1t Is non-e1-
portable and nOn-importable.
1t seems to us that some of the friends OF
convertible currency make a great mistake
when they bring forward the voluntary sur
render by the National banks during the last
fifteen months of $25.042,749 of their circu-
laton "a an index of the cOuntry's needs in
the matter of money. The thing TO be desired
is the restoration of the bank notes and green
backs to par value with gold coin. This, We
maintain il not consideration with the Ma
tonal banks when they take out circulation,
nor at other times when it Is to their advantage
to get rid OF the notes they have. Measured
by the gold standard. the country has now, as
at all times since 1861, great deal more
paper money than it ought to have. 1t also
has for the time being, more than 1t wants.
At all times, however, the standard should be
the gold dollar and not the 60 wants of trade
The pccunialy interests of the banks should
be subordinate to the welfare of the whole
people, which viii he promoted Ivy the speed
lest practicable attainment of the gold stand
ard At present the interests OF the banks are
subserved by a dimnutlon of their circulation.
We are glad that such il the fact. but We shall
not take Il position which requires us 10 accept
a movement Of the banks iii the opposite d-
rectlon as proof that he interests of the public
require more paper money dcbased ana
fuctuating standard is prciu'iicial 10 every in
teTcst, and j. costs us far more to maintain Ii
than it would 20 rid ourselves of it once for
all.
There arc three motives II strikes us, which
may determine Il National bank to deposit
greenbacls with the Treasury. withdraw It's
bonds and abandon its circulation to bc picked
w by the United States. Frot, tlc bank may
be in tight place. We notice that the
three National banks which recently collapsed
in Chicago had previously abandoned their
note circulation. Under the laws bank to
have $50, ,OC0 in bank notes at It's disposal
must have Oh deposit with the Treasury SID
600 worth OF Government bonds. by sending
to the Treasurer sSSj,Ooo any National bank
having circulation To part with may get bonds
which will sell any day in WaIi-st. for from
Sl15. 1000 to 100000. The bank Will part
with productive asset. but ii will add $50
600 to its cash on hand. Tie determining
principle in this case is the need OF the bank
for more money and not tho wants of trade
or of the country.
In the second place there may he bank
directors WHO think that the rest of the 80
bonds will be funded, ard specie payments
Il A. tit,x. ttTn
things should take placc-and undoubtedly it
is not mp0ss sble that they should--a 5-2O
bond of S67, which now sells at 20 per
cent premium III currency, would be worth at
the end of three years only par. 1t would ac-
cordingly be profitable for all banks holding
5-2Os to realize while the premium could be
obtained. III the third place banks i'll the
situation of most of Our Ncw-lork banks for
twenty months past holding reserve greatly
in excess of the legal requirements, may have
been tempted to exchange idle gfeenbacks for
their bonds with the United States Treasurer.
thereby getting rid of their circulation and of
the taxes and redemption charges on ii. Thcs"
banks, OF cour.e, would not sell their United
States bonds, but simply put t!cm away in
Their own vaults.
Turning row to an official statement just
issued hy thc Controller OF the Currency, We
find that the greatest amount Of circulation
surrendered by the banks Of any State undcr
the act of June 20, 1874. is e7,7SG,0j0 by
the banks of New-Y0rk The considerations
which influenced these slurcndcrs undoubtedly
belong to thc classes last mentioned. The cir
culation, with mimpoIta!:t exceptions, has
been given up by ti.c banks of tins city, and
Z ~ pfi .,f
their bonds. -Four States have surrendered
more than l1illion of bank notes each.
Besides New York, they are Indiana. ST.
S91, $50; Illinois, S3.703. 600 aud Missouri,
S2.S40,3j0. Then comes iowa with T963,25O.
We are not sufficiently acquainted with
the circum stances Of the banks of those states
TO Judge Of the motives which may have in
fuenced these surTendcis The aggregate Of
the liabilities of firms which have been de-
clared bankrupt since January /. 1873, being
in the ncighbOrho0d OF $500, ,oOO, ,00O il is not
impossible that some of this Indebtedness may
even now be counted among the assets of
banks. Doubtful assets however cannot do the
duty of cash. We have seen that banks in Il
tight place can realize with great facility the
bonds pledged for their circulation. Tie
opcration is analogous To the pgwning Of a
watch it is not healthy iinancicrng, but it
brings the cash We do net doubt that there
arc hundreds Of banks in this country which
could not continue to exist were they deprived
| of their circulation, and we have seen in the
case OF the three suspended Chicago banks
that surrender of circulation i sometimes
preliminary to death.
! Finally. if the giving up or taking out of
! the privilege TO issue ncOnvcrtiblc paper is a
/ true sign of the wants of trade why is