The New York herald., 1877-08-25
THE BANK RESERVES.


MONEY.
To THE EDITOR THE HERALDsc
You are right In your comments upon tho extracts
sent you from the speech made by Mr. John Sherman
In the Senate In 1862 Mr. John Sherman g personal
sisency Inconsistency is subject Of no very great
consequence 70 anybody 1t is OF supreme importance
however, that shall be right in hts financial policy
row. no matter what no may have thought or said or
done eight years ago. seeing that his policy Is the
tual policy Of tho government; but whether right or
wrong--whether wise and just and expedient or ut
tcrly otherwise-s question tho examination OF
which may, for the present at any rate be deferred
Until after Congress meots 1t seems worry certain
change will he made In 1t; 30 that we may now give
attention to Mr. John Sherman's methods OF dealing
with the American people, whose officer and servant
be Is and whom ne owes all loyalty and candor as
suppose We may safely assume.
In his speech at Mansfield the other evening Mr.
John Sherman mado statements the intent Of
which was to create belief in the public mind that
there accumulation of unoaned and unIoanable
paper money at this time lying idle and unemployed in
the vaults and at the command Of tho national banks
There are deposited with the Treasury" said Mr.
John Sherman, ''by private corporations, banks aud
individuals $751; 00O, ,o00 OF which there deposited
by the banks at the date Of their last
ment, June D. $44, 10000; and they (the ma
tonal banks have in the cash reserves held by them
$42, 50O 600 than the amount required by law
thus clearly showing" said Mr. John Sherman, "that
there is want OF currency when demanded for the
requirements OF business"
There mstakng Mr. Sherman's designs in
making these statements He intended to create q
belief that the national banks have their vaults and
at their command $s7 900 Of surplus unemployo Cd
money which they ready to loan upon adequate
k,N
$44,5oo,o0O lying idle and unemployed in the GUS
tody OF the federal treasury, and $42 900 lying
idle and unemployed In their own vaults.
Now what are the actual facts?
An examination Of the condition of the national
banks the 22d of June last, as appears from the
Comptroers statement. shows that they hold at the
close Of business on that day certificates Of deposit
with the federal Treasury amounting to 50 410 900
If these certificates Of deposit idle
ployed and surplus funds they assuredly would not
appear among the ''lawfu money reserves" Of the
banks But they do so appear and without their ap-
peaance there the returns made by the banks the
22d OF June last would show 10 short OF the
reserves required by law 10 an amount aggrsgating
nearly S25 OO.OOO! IL happens, moreover that these
certificates Of deposit form SEQ, only an IN
tona banks but used clearing house purposes
also, and Ia this respect perform most important
Office It is very doubtful indeed, whether the
senied by these certhcates-which Mr.. John Sher-
man seeks to make us believe are IDLE and
and important than those performed by any other
equal sums either III or out OF the custody OF the
do warrant the belief Mr. John Sherman seeks to
establish.
Mr. John Sherman alleged also in his speech At
Mansfield the other night that the national banks held
in their leash reserve" the I'D OF June last
$42 O0O "more than the amount required by law.
IL would be interesting TO have Mr. John Sherman
point out where this $4 900 excess of .'cash re-
servo to be found The cash reserve is made up OF
four ltemsspecie legal tender notes, United States
certificates Of deposit and the five per cent redemption
fund.- On the I'D OF June last the national
banks held according to tho statement Of the Comp
trocr, OF specie. S2l, ,34O, III; Of legal tenders,
SIS, ,Oo4 1885, United States certificates Of Deposit
$44, 0O00, and Of five per cent redemption iund,
banks, $l5S, 366, $50. lhe statement OF the Comp
rocr docs not show the amount OF cash reserves tbe
banks ought ~ have held the ga OF Juno last, out
assuming $l40, ,00O 900 TO DO correct estimate (the
amount the last preceding statement OF
the Comptroller April H. 1877 $l44 700 000) and
we find the amount OF leash reserve'' in excess OF
The amount required by law to be slightly over
$4,000, O0O wide of Mr. Shermans report nearly
$25 100000! Clearly, Mr. Sherman's ''cash reserve
in excess Of the amount required by law" exists
somewhere else than IN the banks
One OF the methods by which the infationists are
confronted with large uccumulaions OF 'surpius paper
money in the national banks is as iolows:-rhe
banks dvucd into three country banks,
"ci.y" banks aud New York city" banks Under the
national bank acts the ''country" banks may deposit
certain per cent OF their reserves with the "cy"
banks Qocatcd IN Albany Baltimore, Boston, Charles
ton Cnicago. Cincinnati, Cleveland Detroit, Louis
vile, Milwaukee, New Orleans, New York, Phil
adclphia, Pittsburg, Richmond, ST. Louis, san
Francisco and Washngton) and in turn the
''cty" banks may deposit a certain per cent
OF their resources with the "New York city, banks.
But while 1t is quite true that these deposits Of the
'New York; banks, are technicsily 'tawiul money
serves" 1t is perfectly well known that tho 'city"
banks and the New York banks loan those deposits
just they loan the deposits Of their private Gus
toners But 1t is only by counting tncse purely tech
ncal real potent al that The
made TO appear stuffed with money Tor which they
can IND no employment
An example VIII illustratc:-on the 14th Of April
last /, ,s39 country" banks had deposit with 1856
"cy banks $50 0U0 besides $4S 900 900 in their
own vaults and 1856 city banks had deposit with
Al New York" banks 500 0O0 O00 besides S42 400 900
in their own vaults the reserves oil the s'New YorkD
banks being at the same moment S5l 900 0o0 Putting
these several sums together and The apparent reserve
would be $3.50 zoe, 900 But the real reserve held by
the banks ON the 14tn OF April last once available
for the icdcmpton Of their liabilities as foIlows
1859 country banks. $48 039, 900
lo0 ely BANKS ...-................. ~ 327, 600
AZ New FORK banks. ks................... 549ll, 900
san Francisco banks.... 921, 900
AZ 2V4. 600
Or less than million and half In excess of the
actual cash reserve required by law, which the
14th OF April last sl44, zoo, 900.
MIR. sherman cannot take refuge behind technical
reserves, because there Is no question about
serves. The Issue is, whether not IN seeking to
create public bccf that there is large surplus OF
money lying idle and unemployed the banks or ut
going analysis proves beyond doubt that he is not
borne out by the facts put that he has avacd him
self of his great Office 10 misead the people Edm und
Burke said he never knew a pedcr who was a
statesman, but he had known numerous persons the
rank OF statesmen who ought to have been pedlers.
Mr. John Sherman attempt to inspire MISLEADING be.
efs may possibly be justified by the daily increasng
exigcncics OF the party Of honest money a. e. bank
rags) and the public honor; but probably not he
truth Is that the national banks nave no inc re cash
reserves ~ or any other KIND of reserves than are
necessary to the sale adm minislraton of the,r cur.
rent business. There Is no plethora of money
either in or out OF tho banks: certainly
not In New York, at any rate, If 1t be trucas con
Temporary OF the HERALD stated on the morning of the
9Th INST THAT tho national banks OF that city were
employing Stock Exchange brokers to borrow money
for them The credit Of the national banks is strained
at this very hour; aud their condition, less than
that of the country at large, Witnesses the urgent
cessity OF prompt expansion of the currency Your
obedient servant, J. W. SCHUCKERS.
AUGUST 23, 1871