New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1878-08-21
NATIONAL IND PRrVATE BANKS.

War upon the National banking system does
not mean mischief to capitalists. IL means
permanent harm to borrowers, producers, and
labOrers, especially in the smaller towns and
the agricultural regions. In short, the very
people who clamOr most for the overthrow OF
that system would be most harmed by 1t. BY
students of finance, it has long been recOg-
nized as the peculiar characteristic OF that
science that it is full of paradoxes; the OBJ
vious truth is usually a falsehood, and the
apparently inevitable result is precisely that
which almost never follows. Hence it is that
the shallow reasoners are almost always at
fault, aud the legislators and politicians who
act upon what seem TO them self-eyident
truths" and have in view obvious cOnse-
"qaenees,n in nearly every case arrive at
results precisely opposite to those intended
They meant To initiate the currency
when the "free banking" clause was
fastened upon the Resumption Act; the actual
result was contraction. They meant to raise
the price of silver bullion when they passed
the Silver Bill the actual result has been to
lower the price They meant, by the issue of
silver, to increase the circulation ; the actual
result has been to diminish the amount Of
paDer in circulation, while the silver flows
back into the Treasury in place of gold almost
as fast as 1t is issued. So they mean to strike
blow at mOney-lenders and bankers by re-
neal of the Bank Act, and TO benefit labOrers
producers, and especially farmers The result,
if they succeed, will be disastrous chiefly TO
those whom they desire to aid.
All over the country, under the operation of
the National Banking Act, small banks have
Il af
centres, and in places where the business
would not suffice to render profitable bank
having no advantage of circulation. Thus the
number of banks has been greatly increased.
In 1850, there were only 1862 banks in the
country; now there are over 1000 National
hanks, besides 633 State banks, and about
3 800 private banks, and in many parts
of the country the banks which supply
the needs of smaller towns and a0ricul-
tural counties are almost all organized on the
| National system. This is not unnatural,
for it is known that the mode of organization,
| and the supervision by United States officials,
render these banks safer than any ever organ
lied under State laws, and UNNECESSARILY safer,
rs n rule than the private banking houses
which start mp in places of limited business.
| Men who have real capital to invest in bank
| ing in such localities, and intend to use il so
prudently that they need not fear the visits Of
! Government inspectors, are very likely to pre-
| fer the National system with all its restraints
| and with the advantage of circulation, which,
| i'm agricultural regions and small towns, is OF
more value than in the large commercial
cities. Because Of this advantage, and because
such banks are believed to be peculiarly safe,
the National banks have increased in number
rapidly in localities which would otherwise
! have remained without banking facilities, OF
! exposed TO all the risks incident to complete
dependence upon unrestramed and unregulated
| private banks
| Let the system be abolished and the change
viii hardly be felt by the capitalists of the
larger cities in respect to their facilities for
the employment or the borrowing of money.
! Doubtless all the National banks now doing
business in this city, or Boston, or Philadel-
! pbia, or Chicago. would az once reOrganize
under State laws. and continue operations as
before, excepting that, after the sale of their
deposited bonds, they would have little
more money to lend than before, and would
be less restrained as to their reserves or by
| official supervision. But while the money
| lender, tho capitalist and the manufacturers
and merchants in the larger cities and tOwns
would probably enjoy as great facilities rs be-
fore, excepting as the destruction of the Ma
tiODal system would shake public credit. dis
organize the machinery Of commerce and
render less secure and therefore more costly
all Its financial operations, the effect would
probably be very much more serious else
where.
| National banks in the smaller towns and at