New-York tribune., 1878-09-28
NATIONAL BANKS DEFENDED.
THEIR AID TO THE GOVERNMENT.

NATIONAL BANKS DEFENDED.
THEIR AID TO THE GOVERNMENT.
THE ASSERTION THAT THEY BOUGHT GREENBAoKs
VERY cHEAPLY SHOWN TO BIZ DELUsIyE-MoRE
BANKS FOUNDED WHEN THE GOLD PREMIUM
WAS LOW THAN WHEN 1T WAS HIGH.
TFRoM REGULAR CORRESPONDENT OF THE TAIBUNE.l
WASHINGTON, Sept. 25.-A Western man has writ
ten to the Treasury Department. quoting the asser-
tions which form the burden of the assaults made
by Greenback orators and writers upon the National
banking system and making some pertinent In
quIriee with regard to their soundness. An official
of the department, TO whom the letter referred,
has written a reply, giving complete history OF
| the origin and workings of the National banking
system. and exposing the which are so dill
gently circulated by its assailants The following
extract contains the principal points in the reply
The reutation OF the theory Of the Geenbaekers on
the first point referred TO- lies in the condition OF affairs
that existed in the country at the time the National
banking system was generally put into operation.
BY making the notes issued by the Government legal
tender for all debts between citizens Of the country and
for all debts between the people aud the
Government except duties imports on the one hand
and interest Government bonds on the other, and
by the abrogation in March, 1863 OF the right to fund
the United States notes into bonds paying interest In
god gold coin driven out of circulation aud beyond
the needed for the payment sOf duties from which
derived the to the interest on the
public debt. the Of gold that was on hand
at the beginning Of the nearly all sent abroad
and for the most part used in settlement Of nterna
The necessities Of the Government requiring the
question: necessitated the adoption OF extraordinary
raise sufficient revenue, and t would have
for United States notes II they had been issued
baye deoyed 6e credit and parehas NJ power Of the
notes The Government fOundn convenient and neces-
sary after once having paid out tho the amount OF notes
authorized by Congress- TO borrow them again as the
money IN current use.
now BONDS CAME TO BE ISSUED.
To do this, the issue Of bonds became necessary ond
by taking for bonds and ressunS for the purchase
Of supplies its notes the Government absorb
Jog the use Of them to great degree measures had
be taken supply currency for the business needs OF
country Moreover 1t to create class
Snbpv the two thi1gs needed namely the currency re-
qued by the Government TO carry on its operations,
money was be derived in the first place, and
rency which TO conduct the commercial manufactur-
second place. TO Organze~a system under which
currency based on the bonds OF the Government could
The outgrowth of this necessity was the National
banking system, without which the Government
would have found 1t extremely difficult II not altogether
impossible, find sufficient market for It's bonds and thus
provide the means necessary 20 carry on its operations
In the early part Of 1866 the National banks held the
enormous amount OF between $440OOO.0OO and $780,
100000 OF 6oGds and IN & addIoa @ thereto
notes and fractional curreDcy To say that
6p o SOI TG anon When bonds
the issue OF 100000 Of National bank circulation
because Ss sod was o scarce at the time that
of that was worth 100000 Of United States notes
bonds Moreover it could not be had TO any extent
at these rates, which were only quoted during part OF
day.
From the egalizatiOn of United States notes Green
backs until the present day. they aud National bank
notes have formed the currency in which the commercial
operations OF the people have been carried well In
the organization Of National banks in all other bust
the Greenbackers claim that National bank
SrcaSile5 with $4,000 o Sod coa Eey claim
what matter Of ac was impossible beyond an almost
inappreciable extent, II 1t possible at ALL The
large premium on gold purely speculative. and
forced to the extent to which was carried by fictitious
purchases and sales Of gold at the high pre-
mums which were quoted day after day at
the time the Union meeting with disaster in
1864 and tue salvation OF the country involved in
doubt were nominal in amount, and no could have
enormous sum Of greenbacEs that the fictitious
quoted premium indicated 1t would bring For instance,
coin could have been sold for greenbacks at premium
Of 1885, at which rate $4,000 In gold was worth SlOO-
600 in green0aoks and the money paid, and eonse-
quenty there never was time when National banks
att at the rate Of 100000 OF bonds for $4,000
Of gold coin and as bona nde operations 70
dlsengenuous to assert and appeal TO the speeu
latons Of Wa-s for confirmation, that banking sys
could have been organized under such circumstances
II it could have been, such an opportunity 10 make
money would OF course have been taken advantage OF
10 the fullest extent That was DONE and therefore
il is safe TO conclude that it could not have been.
That the premium on gold was a great specu-
atye and fictitious at the time IL is claimed that United
States notes we're worth only 80 the dollar is
clearly proved by the fact that the prices Of manufa
tured goods, provisions, etc.. did not advance
mensurately with the premium on gold aud were not
materially affected thereby. IL is 10 be remem-
bered, too. that gold reached the premium
az which S35, 900 OF 1t worth 100000 OF green
backs the Summer OF 1864 July III, more than
repealed and that at the end OF 1864 for which year tue
premium gold averaged about lO3 per cent, about
tOn Of the system, while at the end OF 1862 for which
year the average premium on gold was
about 81 per cent, the numler or NATIONAL
banks organized nearly 1000. Tue capital OF the
000 and at the end OF 1865 10 was about OOO
showing tnat banks were organized TO a much less ex
tent when gold was at high premium than they suDse
Quenty when tue premium had greatly fallen.
IL very apparent that the National banks not
generally organized when gold bore the highest prem
INN, but aerward, when the preservation OF the cou
try assured Its credit consequently established ana
the premium on gold decreased .
Green may be safely challenged 70 point out
instances of banks organized on the basis on when ney
claim t could have been done Tue error they fa into
is IN assuming that the wealth of capitalists was repre-
sented in gold at par or that they ud procure gold Tor
whatever property represented their wealth at any time
t was their advantage 10 do So and by turning into
leRaltender money at OppOrtune moment realize
large premium that cold Ostensbly would eOmmand
whereas the truth s that their wealth was measured by
the same medium as the wages or the laDJrers were
paid aud used TO effect all exchanges OF value IN
the country; that II measured by United StatH
egateuder notes. the egaiZed standard OF values, AM
when converted into money was converted INTO suen
notes. aud not into gold.
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