Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1878-06-27
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The National Banking system.

should be heartily in favor OF its adop-
ton. But before we condemn and cast
away national banks we ought to examine
their merits and dement's candidly. Those
who oppose them do so on the ground
that they are monopolies. and argue that
if the government were to issue the cur
rency itself il would save the interest ON
the bonds which the banks have deposit
cd with the treasury to secure their circu-
la,ion. The Boston Journal having care
fully examined the matter says:
doubtless the majority of the stock
holders of national banks and especially
that portion who are called bankers would
offer no objection to the redemption OF
their circulation hy Treasury notes. The
simple fact that the circulation of the ma
tional banks has fallen from $500, 1894 600
December /, 1874, to $500, 100000 at the
present time proves that the profits OF cir
culation are not so great rs to make it an
inducement for bankers TO keep their mon
ey employed in the business. Men do
not withdraw their capital from bust
ness which affords large profits.
But the question of monopoly and the
profits of National banking can be more
definitely solved. The par value of the
United States held By the Treasury for Sc
curity of national bank circul .tion is
S346, 243, 600. of which about $50 600, 900
bears 6 per cent, 5000, COG, 000 5 per
cent, and the balance and 4 l-2
per cent. The annual interest on these
bonds is 1888, POL. The amount OF
bank currency issued upon the bonds
above mentioned is S3ll ,6l9, 1875, on which
there is tax of one per cent, called the
tax on circulation, amounting TO -, ll6,-
1872. From the gross amount OF circula-
ton must be deducted ) per cent, the
amount retained in the Treasury as re-
demption fund, leaving 1896 ,03s, 23J a.
the available amount OF money to be used
in banking purposes. The average rate
of interest throughout the country is per
cent, and estimating the income of the
circulation at that rate, we have S23, GS3,-
059. The above may be more concisely
stated as follows:
Interest on S296 ,03S ,235 circulation at
3 per cent. per snnum. S23, 6S3 059
Interest on bonds l7,75S, 2jl
Total income Sal, 43l, $40
Less tax on circulation 3,ll6 l46
Net income on capital S38 ll5, l6i
The same capital (the bonds at per
cent. per annum would earn 29,069 1913
Difference, representing profit on circu-
lation S9,W5,33S
From the above it will appear that the
value of circulation to National banks,
could their money be kept loaned out all
the time. would be about 80 900. 900 on
capital of over 500. 100000 (the curren ,
cy value of the bonds) or little over 2
1-2 per cent.
II must be admitted that this is not a
very ruinous monopoly, even if there
were no mitigating circumstances but
when we take into consideration the fact
that the stock upon which this circulation
is based, valued in 1876 at 1901, 7SS, 900,
was made to pay State and municipal
taxes aggregating S9.70l 1852, or per
cent, any candid man will fail to see
where the charge that the National bank
ing system is excessively burdensome to
the people and the business and industry
of the country fairly comes in. When
one looks at this subject in its true light
he will find that the only Uniled States
bonds which are taxed indirectly are
those which are held by the Government
as security for bank circulation-that the
tax on circulation (S3, 10000 and on
bank stock by local authority (S9, 7Ol ,0OO)
is to all intents and purposes "A tax on the
Government bonds, which are In fact the
only property upon which the business is
based.
We have not alluded to the many adj.
vantages which all classes OF people in this
country derive from the National BANKING
system. such as the general currency of
the bills of National banks, the sums of
money saved by business men which years
ago they were compelled to pay as dis.
counts on State bank bills, and the millions
lost by all classes, and the government
through the failure Of State banks. These
considerations Of themselves would con.
vince candid men that even if the National
banking system afforded no revenue and
cost the people several millions Annually
1t could not be wisely done away with
We look at this question from the popp.
lar side, and from that aspect we believe
that the national banking system il the
wisest. safest and in every way the best ever
devised. To-day the class which would he
least injured by the withdrawal of the cir.
culation OF national banks would be thosa
men whom demagogues denounce as
bankers. The chief revenue of all banks
is derived from loaning their deposits
Should their own circul alton be taken from
them they win continue business lust the
same and ask as high rates of interest As