The Rock Island Argus. (Rock Island, Ill.) 1877-1885, 1878-09-16
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HGeCrary on National Banks

The larger portion of Secretary McCra
rvs keokuk speech was devoted to the
financial question, and drifted into a la
bored defence of the national banks, thus
| adding another proof that the Republican
| party is virtually pledged to that system.
The secretary denies that ''the national
| bank currency costs the government large
SUN annually in the shape of interest on
| the bonds used as basis by the banks. ,"
When a national bank is organized it must
deposit .. s. bonds with the treasurer at
Washington as basis and security for
| the notes it proposes to issue, and for ev-
cry 81 900 bond thus deposited it is au-
| thorized to issue 5000 In notes. ln this
| way the banks have deposited at Washing
ton about $400000,000 bonds as security
for the 1922, 100000 notes they have out
standing. As these bonds bear about five
| per cent. interest, democrats assert that
| the government not only gives the banks
| the privailege of issuing paper money, but
pays them $40, 100000 year for doing
it. Secretary Sherman denies this, He
| says:
at true the United States pays interest on the
bonds held as security for the national bank crcu
aton, but 1t is not true that one farthing of this
/ interest wonld be saved by the abolition of the
banks. II we should strike of existence all the
national banks, the bonds would still remain. and
the government would continue to pay interest up
| on them unless prepared to repudiate. We would
save nothing in the way of interest our bonds
| by aboshing the banks but, the other hand, we
1 would lose a large sum in the form or taxes now
paid by them. The taxes paid by the banks to the
| state and notionAl governments will average over
SIC coo, 600 per annum. The simple truth, there
1 fore is that by abolshing this system we would
| gain nothing in the saving of interest and would
lose at least $40 Coos QUO per AMMAN in taxes"
| The statement that the bonds on which
the banks are based would still remain af-
ter the banks had been struck out of exis.
tence, and, therefore, we should not save
one farthing now paid On them, is moi
true. The abolition of national baLk cur.
Irency involves the substitution of an addi-
tional ereenback currency for it, and these
additional greenbacks would be used t.
pay the bonds held by the banks. This
would stop the interest on them, aud 4
that extent be a saving to the govern
Iment, the net result would be the substi
tuition of greenback debt, bearing no in
terest, tor bonded debt, bearing PEI
cent. interest, and it is absurd for Secreta
~ McCrary to assert that there would no
| be afarthipg saved by the operation.
But the secretary says the banks nov
pay over $l6,000,000 per aDnum in stat
auu uaNloudl tdAcS, duu ILLS WOuIu all u
lost by abolishIng them. This, again, is
wide of the truth. The capital of tn
banks would exist after they themseve
had been abolished. and it would be invest
ed 10 some other foru.-most probably il
! state banks, where it would be surjecte
TO the same taxes as at present. w hli
the national banks would cease, therefore
to pay the taxes which they now pay
their capital invested in other enterprise
would continue to pay them, and nothing
would be lost st Louis Republican.