New-York tribune., 1878-02-20

circulation and protecting the laborng classes from re
quen losses. Many OF reform were proposed
m out little Was & or c ee az %
OF the different States Mr. Galan, as early as 1881
proposed to OF existence State banks, and Mr.
Woodbury. ia 1885, urged upon the different State Leg
islaures the policy Of requiring security for circulation
proposed by different writer's that the States should
quire the circulation to be based upon Goyerhmen. nm
elusive issnc of United states Treasury notes.
The legislation authorizing the National banking ss
TEN the result of great war, and II Is not probable
that the system could have been organized III time Oh
peace The success OF the system has been greatly De
yond the anticipaOns OF its advocates and IT gem
orally Acknowledged that It is the equal or superior OF
any system heretofore devised It's merits donot consist
free system, and Is not open to the objection %, OF
other banking systems which are monopoes. lts
restrictions and burdensome and its pen
aes The profits to the stockholders for the last
five have not been as great as the system OF state
banking which preceded IT, The statistics which II fur-
nshes TO the Republic aud TO Congress are more com
pete and accurate than any that have ever been made
to obtain similar statistics Of the condition OF the
state institutions now in existence have proved
ings banks have been numerous and the losses enor-
nous, it il estimated that the total losses to creditors
fifteen years have not exceeded S6,000O00 an amount
probably not equal to the losses which have fallen upon
the creditors OF savings banks anC state banks during
The National banks have accumulated surplus fund
of more than Si20,OOO00O under a provision OF law
which requires that onetenh part OF the net profits o
every bank should be carried TO the surplus fund until
amount Of the surplus Is now more than oncgarer or
% per cent of the capital and is fund 70 which losses
and bad debts are chargeahle This fund was
chiefly accumulated during the prosperous period
which followed the termination OF the war; bHt me
during the last two years the present system should
be discontinued, II is probable that the present surplus
fund would be distributed among the shareholders and
II is not probable thai under any future system 50 arge
surplus will be accumulated for the safety OF the cred
The only reason advanced by the advocates of the
peal OF the system ia that money may be saved 10 TIE
E.VaV
furnished by the National banks. III the profits
upon circulation great as is generally supposed
is not TO be presumed that the banks would voluntarily
surrender the OF such great profit. Yet the banks
have riyen M $50 900 eco.
The pending bll proposes to abolish the system Of
National banks. after trial Of fifteen years and TO give
Congress the right to issue the paper money Of the
try such paper currency 10 he not ful cgatnder nor
pronise To pay hut an irredcemahle species OF Cur
rency before Issued since the organization OF the
Government 1t win have tne effect to keep the subject
Of the currency before the people ana propositions Tor
likely 10 be introduced each successive Congress.
The effect Of the repeal OF the present system would
probabIv he the resiaDlshmrnt of the different state
systems in operation previous 10 the organization of the
nonlor with the south for he reason that that section
has not at present the capital with which 70 procure
United states bonds and tho rates Of interest
profit upon National bank issues. The Eastern and
Middle States. a. matters stand prefer the present
system; 1t is altogether probable tnat the passage
OF such bi as Is pending in this committee, which
in effect abOlishes the National banking system "ond
upon issue of State bank notes.
The New-York Free Banking Act which was the first
act passed by any State authorizing the issue OF ccua
Ing notes based upon bonds deposited as security there
furnished market for the bonds Of that state ana
increased the value thereof The National banks the
owners of $3.50 100000 Of United State bonds while the
circulation issued 10 them is not much IN excess OF $500
OOOOO and one ~ the chief objects IN the organization
the system 10 supply steady market and Ia fac
iate atiO OF the United state bonds ana iu
crease value bonds beyond other funds OF equal
credit bat not available for banking purposes There Is
doubt that these expectations have been more than
fulfilled and the credit fthc United states and its ability
borrow money at low rates has been greatly increased
by making its bonds basis for currency. Nearly one
fourth of the per cent loan recently negotiated 10y the
Government was subscribed for ana Is held by the
National banks, and since the date of their cation
their assistance In the funding and the negotiation Of TIE
bonds Of the Government has been recognized.
II cannot doubted that under any system OF state
Institutions that may hereafter be organized, the losses
of .Dc peop.e from exchange would be much greater
annually nau the Of interest paid by the Gov
ernment 10 the banks