The Hillsdale standard. [volume] (Hillsdale, Mich.) 1851-1909, 1878-07-16
snaEDEEuaBLE FALsEuOODs
ABOUT BANKS.

I ttbloullkt ullluOilo 10 iift bllaliA''a Cpii
munity and of course 30 every consum-
er; and IL therefore looks as absurd "a
kick against banks as it would be to
stand IL the path of n moving machine,
bat, with locomotive, or knock ones
brains out against telegraph poles. -
Banks help civilization. enterprise, pro-
gress, and are the friends Of honest la
Dor and frugality. The workingmen OF
to-day would have less employment aud
lower wages but for the capital invested
in banks. because many vast enterprises
would have TO stop If it were not foI
''loans, discounts, and exchange"
DOUBLING UP" CIRCULATION.
One day recently "A bright, honest.
looking young man called on us from
Grand Ledge, and desired information
upon the national banking law. He said
it was stated 10y the noisy irredeemables
of that village that under the present
system national bank currency can be
doubled-yes, quadrupled-on a single
purchase of bonds. The operation
would be as follows:
Five persons organize n national
banking association, buy 100000 OF
| United States bonds, receive from the
Treasury Department $50, 900 in cur
rency, put it all in bonds, and get about
SSl, 900 more of currency providing the
bonds cost only par, take the second
batch of currency, invest 1t also IN
bonds, and receive about S73, 600 more
of currency, and keep on buying bonds
with currency and getting currency is
sued for bonds until the limit of $50, ,000
is reached, below which no banks can
be organized.
This of course would be gorgeous
thing for the national banks were it not
for one little obstacle-the national bank
ing law (section 5171 United States re-
vised statutes) declares that ''the amount
Of circulating notes TO be furnished TO
each association shall be in proportion
10 its paid-up capital rs follows, and NO
MORE: For banks with $500, 600 or less,
ninety per cent for banks with more
than $500, 900 capital, eighty, seventy
five, or sixty per cent, according as the
capital may be increased up to s3, ,00Q,
900. No national bank, therefore, can
ever get more than ninety per cent. OF
itc capital into circulating notes, under
any circumstances, for the possession of
its bonds by the United States Trsasur
. er will always show the amount of cir
culation to which il is entitled, and no
more will be printed at the Treasury
Department. This would stop any such
game at the outset.
But nothing will stop an irredeemable
from lying about the banks and the cur
rency.
The regular and full reports from the
national banks, which they are required
to gve five times a Year,, show that they
live up to this rule OF the 2, $50 banks
whose statistics are published in the re
port Of the comptroller of the currency
for 1877, NOT ONE had more than 90 per
cent. of It's capital in circulating notes.
considerable number has less: the
Lansing national bank had only - PEI
ccu,. Of tho amount OF the amount OF
/ circulating nntes to which IL was emit
| lied; the four Detroit banks had only
55 per cent the l3 Chicago banks had
I only D., and tAe banks OF ths ~hol,
country had only 60s per cent. The
banks CANNOT and Do NOT double up
,Aeir circulation.
BILLS DESTROYED OR LOST.
Brick Pom,roy, the great apostle oi
/ irredeemable doctrine. who sells his iy.
ing newspapers and his trashy ''picb
/ up pamphlets at 100 per cent profit &
week, while cur5ing the bcnd-holdcl
who receives four or five per cent. Il
Toar, has put forward another lie. which,
we presume, viii have its run among the
/ irredeemables We have already heard
| II repeated in Lansing. He says:
"a national bank has two years time
/ in which 10 wind up its business after
| failure. During this time the govern
ment receives the issues of the brokel
bank, being secured by the bonds left
on deposit. but all this time pays for al
the interest on the bonds to the nationa
banker. At the end of two years all the
bills or currency that have come int
the government are charged up a'
against the bonds deposited when ths
settlement is had, and the balance thai
may be due 20 the banker is paid &
him. all national bank bills being lost
or destroyed, not coming to the govern.
ment for redemption within the two
years, proving to be a gain to the
banker
There is not n speck OF truth in thi.
statement about the loss or destruction
of national bills proving TO be q gain
to the bankers" Sections 5227 10 523C
inclusive, L. =. revised statutes, IRE
scribe the method of winding up ma
tional bank after it's failure 10 redeem its
notes The bonds which it has deposit
ed with the u. 5. treasurer are 20 be de
clared forfeited and at once sold. Tn,
circulating notes of the banks are to b,
redeemed with the proceeds of il.
bonds. The United States has "a par
amount lien on all the assets OF th,
bank" for the redemption of these notes
so that If by any possibility the howl OF
the irredeemable should depress then
below 90 per cent, all tho other proper
ty of the bank must first be applied t.
redeem It's notes, and not dime of tha
property will ever go TO the stockhold
ers until after its circulation is first re
deemed or secured, and It's deposition
and other creditors subsequently paiC
of.
Whore a bank voluntarily goes int,
liquidation, il must deposit "lawfu
money Of the United States (greenback
or specie) sufficient to redeem all it
outstanding circulation" 10 the last dol
lar, before IL can receive its bonds bacl
from the treasury department. The ma
tional banks cannot gain one cent b,
the loss or destruction OF their bills, 70
the government takes precious goo,
care in the first place 10 exact ample Sc
curity, and secondly, to forfeit th
bonds unless the notes are redeemed
and If n bank wishes to surrender IL
charter, il must deposit lawful none
enough 20 cover every dollar Of its bill
il has issued. The language Of lyiul
Brick Pomeroy, redemption withii
two years time" is nowhere containe
in the national banking law. The oil
of broken banks, five or six years old
are in circulation to-day alongside G
those of sound banks. The owners q
bank stock cannot make n cent nor Oh
people at large lose q cent by the loss @
destruction OF our national bank Gun
rency, after two years or at any time
unless Brick Pomeroy and his band q
thieves should be able 10 rob the treas
ury Of the bonds held as security, i
case they come into power, with thei
bayonets in reserved for any who resis
devilish demands.
This ingenious and inexhaustible lia
NAV sometime have rcsd copy Of th
Michigan S,ata banking law, undo
which The associations issuing paper cul
roucy on lie deposit II bonds with th
State Treasurer we're allowed 10 win
, up after two years advertising of the
intention. and 10 get the benefit Of a
their circulation which was not present