Ottumwa weekly courier. (Ottumwa, Wapello County, Iowa) 1872-1899, 1878-11-27

! EXTRACT
From Comptroller Knox's An.
nual Report to the President.
PROFIT ON CIRCULATION.
The profit to the National Banks
derived from the issue of circulating
notes is not great, as is frequently as.
serted, being about q per cent. per
annum on the capital invested in the
bonds pledged to secure the circula-
ton more than could be obtained by
lending the same amount of capital
on such securities as money can be
safely invested In.
The currency value Of the bonds,
which represents the amount of capt.
tai invested in them, is $36S, 534, 279.
If this amount of capital were placed
at interest at per cent. per annum,
estimated at the average rate of in
terest obtainable throughout the coun-
| try, it would produce $50, 49,, ZAP. The
annual interest on the bonds of the
banks amounts to $l7,311 1853 in gold
and 1886, 040 in currency, the total
value of the interest on Nov. l, 1873
lgold being quoted at the New York
Stock Exchange on that date at of
| per cent. premium), being ST. $685.
372, which Is the whole amount re-
ceived annually by the banks; but as
they are required to pay into the
Treasury of the United States a tax
of per cent. per annum upon their
circulation, which, upon the amount
issuable, is "a, 144, $50, the net amount
of interest received by them is there
by reduced to $14,544,692. This
amount, together with the interest
which the banks receive on the
amount of their circulation available
for use, gives the whole income deriv-
ed by them from their circulation
and the bonds deposited to secure 1t.
Two and forty-three hundredths
per cent. on the capital employed
1896, 534 ,279) is 1886 1888, which is
about the value of circulation to the
National banks if they could keep the
whole amount of their issues loaned
out all the time.
In this calculation no deduction is
made for the costs of the redemption
Of the bank circulation, which lessons
by so much the profits on circulation.
The cost of redemption for the fiscal
year ending June 80, 1878, was $317, )
942.4S; for the year ending June 80,
1877, was 1857 ,O66.10; for the year
ending June 80, 1876, 1856, 1881; and
for the year ending June 80, 1875,
$3.50, 965.37.
Another important consideration is,
that the average rate of State taxa
ton upon the capital of the National
banks is about 2 per cent. per annum;
and, If they should go into liquidation,
and the owners of the bonds should
continue to hold them the amount o.
State taxation saved to them would
nearly or quite equal the benefit they
now derive from circulation.
4 NO SAVING TO THE GOVERNMENT.
The amount of legal-tender note.
outstanding is $346, 0OO, 900; of Ma
tional-bank notes, 1922 ,OOO, 900; max
ing total of $66s, COX, 900. That ad
ditional legal-tender notes can be con
stitutionally issued is at least doubt
: full, and therefore if Treasury notes
J shall be substituted for the presen
, National bank notes they canno
probably be made a legal-tender IL
/ the payment of all debts. Two kind
of Treasury notes will then be in cir
culation, one of which will be a legal
, tender in payment of all debts, ant
, the other not a legal-tender even be
tween National banks, as is now thu
case with NatiOnal-bank notes. TIL,
. full legal-tender notes will be of great
: err value than the other class, unles
both are alike redeemable In gold a
. the commercial centres.
The banks hold among their re
: BILE, and an equally large amount O
other assets, a large proportion Q
, which is readily convertibleinto mon
+ ey. Their deposits and bank balance
|, amount to more than 600 millions
and their circulating notes are prompt
/, ly redeemed, with but little expens
: to the holders, through theuse ofthei
. assets, which represent their capital
! surplus and deposits. If more note
= are issued to the banks than are nee
: essary for the requirements of bust
!, ness, they can be easily retired. If
4 larger amount is desired, they can b
!. readily obtained upon application il
the manner provided by law. On tn
other hand, If the entire circulation
: of the country is to be issued by tn
: Government, its amount must be fax
q ed by Congress, and can be neithe
Q increased nor diminished except b,
9 its action. The Treasury note repre-
1 sents no business capital, and the vol
Q ume of the currency will be CONTROL
}. ed, not by the demands of bushes
Q and the wants of the country, but b,
8 the views and action of political PAL
ties and of Congress.
1t is believed by the Comptrolle
1 that this supposed substitution, 9
Y Treasury notes is impracticabie, an
that the repeal of the National ban
8 act will result, not in an additional is
:, sue Of Treasury notes, but in the res
Aftoration of State eystems similar t
those which were previously In oper
alton. Secretary Chase, in his repor
9 for 1861, said that the establishment
!. Of the National-bank system woul,
"avoid the evils of q great and sud
I den change in the currency, by offer
), institutions to withdraw. the circuls
0 ton issued under State authority, ant
substitute that provided by the au
r thority of the Union;" and tina
Q through the voluntary action Of tn
0 existing institutions, ordered by wis
:. legislation, the great transition from
a currency heterogeneous, unequal
and unsafe, to one uniform, equal an,
t safe, may be speedily and almost i'm
0 perceptibly accomplished"
The National banks, as class ar
! by no means enthusiastic advocate
of the national system, as is implied
, in the assertions of those who pro
claim that these banks will form
: at any hazard. The capital stock of tn,
banks is distributed largely among
members of all political parties, and
as rule, is free from the control o
: partisan influence. No formidable
combination Of National banks cal
be organized to save the Nationa
bank act from repeal. On the contra
ry, it will be found that large mum.
bers of them will quietly acquiesce In
such repeal, provided they shall b.
satisfied that the old state systeml
are certain to be revived. Bills fol
the repeal of the act Of Feb. 3, 1865
which taxed the state banks out Of
existence, have already been intro
duced into Congress, speeches favor
ing this measure have, during the
late canvass been made, by Repre-.
sentatives of many states, and resolu'
tions of chambers of commerce in
many of the principal southern cities
ask for the repeal of the 10 per cent
prohibition. The National banking
system, with Its restrictions and wise
provisions, may, under the excite.
ment of an unfounded prejudice, be
destroyed, but its destruction will
soon be followed by q revival of the