The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1878-06-16
STATE BANKS.
The Press Unanimously Fav0rs the
scheme to Repeat the Tax Prohibits
ing state Bank Circulation.

Ing state Bank Circulation.
Augusta (Ga) Constitutional Chroniclel
Apropos ofSState banks, many persons will
be surprised TO learn that while the specie
reserve Of the national banks, during the en-"
tire term III their existence, has probably
averaged not more than 10 per cent on their
circulation, the like percentage in the State
banks, from 1884 TO 1863, averaged from 30 to
40 per cent; that In 1868 1t WAS about 33 Ia
Massachusetts,, Pennsylvania and Ohio,
about 50 even in Indiana, 30 In Missouri, and
81 in this State Georgia.; that for all the
banks twas about 42L in that year.
columbus tGa.I Times.l
The amendment which Mr.. Vance, of North
Carolina, proposes to offer to the internal
revenue bill, repeating the 10 per cent tax on
State banks, suggests q "Reminiscences OF our
political history. It will aid in showing how
far we have progressed In concentrating in
the general government important powers
formerly reserved or exercised by the States.
During Gen. Jaekson's administration, u large
party, constituting o majority OF the people
Of the Union, denied the cOnstltutfOnaiity OF
o United States bank, or bank incorporated
by the Federal government. They contended
that this was power possessed exclusively
by the States. 1t was upon this Issue, and
upon incidental questions growing out of tt
that the old Wing and Democratic parties
were formed. Their respective policies, di-
verging from this point, took in other meas
ures Of difference but this was the initial and
I0hin SuDIeCG Oh Controversy. Inc wing OT
anti-AdmiDistration party did not at any
time during Its existence deny TO the States
free and unrestricted powers to charter bank
ing corporations, but only insisted that the
Federal government had concurrent powers;
while the Democratic party claimed
the power exclusively for the States.
What q change do we witness nowl The
Democratic party Of to-day-including both
Democrats and Wings Of the former period
acqulesce In the power Of the general gov
N nhaTfar
banks, and actually have to beg for the privi-
lege OF the Statss also exercising this power
This is what Mr.. Vancc's amendment
amounts to, for the tax which he proposes to
repeal acts as prohibition upon State banks
Of circulation. The Federal government has
not only assumed banking powers of this
kind, but has deprived the States Of them.
We hope that Mr.. Vances amendment will
prevail. It will aid In freeing commerce and
industry from restraints imposed by the
financial laws of Congress-laws which limit
the amount oftthe circulating medium arbi-
trarlly and without regard to the wants of
business. The South. especially, needs an ex-
panson Of the currency at one season OF the
year, and q contraction or adjustment at
another season; and the prosperity OF the
business OF every section requires that the
amount of the currency should be graduated
to Its needs, instead of trying to force trade
and industry to accommodate themselves to
Procrustean money gauge.
baltimore SUM-
The proposal now before Congress to repeal
the ten per cent tax on the circulation of State
banks, which is practically prohibition Is dis
cussed edltorially in the New York Times as
q measure Of good policy; Although the at
tempt to drive State banks out OF existence
was successful, except 10 few instances, 1t
has always been doubted whether Congress
has the constitutional right to enact a special
law discriminating against one class Of bank
Ing institutions in favor Of another. Upon
this point able lawyers differ in opinion.
Leaving that question undecided. the Times
Is clearly convinced that, as 1t was the pur-
pose Of Congress to getTid Of State banks as
an obstacle to the introduction Of the national
bank system, it would have been better to
have wiped them out altogether, rather
than to have undertaken to effect that object
"by indirection through clause in o revenue
bill" The advantages presented by the ma
tonal bank system In providing uniform
currency secured to holders by an adequate |
deposit Of United States bonds when con- |
trasted with the State banks of the wildcat |
kind, are too obvious for argument. The |
we're that under the probationary tax law OF |
Congress cities OF large population were de-
prived OF the benefits accruing from the |
free local circulation Of State bank notes. |
and for which each city was centre, Of re-
demption; whilst under the national bank |
system the notes Of national banks, though |
Unfortunately In all the States /
OF the Union, gravitate invariably to New
York and glut that city with currency of
which other cities and other sections of coun-
try often stand In the greatest need Thus,
under the national bank system, the distri-
button is unequal, some sections having
plethora Of money, others scarcely any at all
Under the old system of State banks the notes
were constantly coming back to the places of
Issue Tor redemption, and consequently the
circulation at all points was measurably
equaliZed.
Ever since the national banks have been es-
there IN hnn tr4 Ir
time OF redeeming their notes In coin. They
have been practically In condition Of suspen-
sion; "eonvertibility in legal tenders" being
only mockery, for nobody cared to exchange
equally Bon-convertible and in no respect bet
jer than the first. The Times looks forward,
however, TO inevitable changes which circum-
stances will bring on the banking system of
If. The fact is pointed to that it will not be
ong when the changes caused by the resump-
ion OF specie payments and the retirement OF
government bonds, upon which the national
'ank circulation rests, will bring about
lotes and the issues of State banks,
t the latter be allowed existence, for
10Th would then stand upon the same
'asts-that OF the redemption Of their
notes in coin. The Times notes that there are
'94O, OOO. 900 of old bonds-one issue redeem
bile at pleasure in about three years, and the
est definitely due in from two and o half to
en- years. Besides these there are nearly
1900, 100000 OF funding bonds, redeemable at
pleasure in three to thirty years Hence the
ime will come when the national system will
necessarily be abandoned, altered or reduced
n size, by the removal of its foun-
ation. It is argued that il Congress n
las the right to impose tax of 10 per cent : !
% the State banks, it can lay it conditionally. :
hat is to say, it can make it by law a
ondition precedent to the removal of the
ak that the State banks shall protect the
olders of their notes by depositing with the \
tate authorities State bonds or other salts
actory securities for their redemption. as is
one under the New York State bank system. j
But as the charters Of State banks are de-
lived from the State In which they are sit
ated, 1t would seem to be for the States them =
elves, and not Congress, to provide, by legis- =
alton, protection to the holders of State bank
otes. Indeed, it now appears probable that =
many of the national banks themselves
you'd under such circumstances prefer to {
eorganize under State charters; for II United
tates bonds were still to be had State bonds I