Ottumwa weekly courier. (Ottumwa, Wapello County, Iowa) 1872-1899, 1878-09-18
ANOTHER FIAT LIE,
The Charge that National Banks
Profit by the Destruction
of their Notes.

The Charge that National Banks
Profit by the Destruction
of their Notes.
The Government Gains BY Az the
Lost Bank Notes.
Correspondence Chicago Tribune.
WASHINGTON, d. c., Sept. 11.-One
of the common errors of the green
back men il the assertion that Ma
tional banks derive large profit from
the loss and destruction of their notes.
Indeed, A. J. Grover, a Chicago fiat
ist, in recent speech at Hinckley,
ILL.,, is reported to have said that the
National banks make a profit of per
cent. per annum by the destruction
of their bills! Secretary Evarts could
find no better justification than this
for his saying, "The Ma
tionals show when they begin to talk
that they never think" Most of the
questions raised by the Nationals are
questions Of fact, and the facts are
generally against them. This is par
ticularly SO in this case. The banks
do not get, never have gotten, and
under existing laws never can get, the
benefit of the wastage. The law re-
quires that every bank that goes into
liquidation, whether by its own vol
untary act or by failure, to redeem in
legal-tenders all the circulation that
has been issued to it. If the notes
have been destroyed or lost, they new.
ertheless are considerably the officers
of the Government, whose duty it is
to construe and execute the law, as
outstanding. Legal-tenders have to
be deposited by the banks with the
Comptroller of the Currency for the
redemption of every dollar of their
circulation, irrespective of the amount
that may have been lost or destroyed.
Nor is the percentage of loss as
great as the Nationals claim, some
of whom insist that the wastage in
twenty-five years would equal one
quarter of the circulation. The loss,
whatever it is, inM'es to the BENEFIT OF
the Government, and not to that Of the
banks. The Government most Ger.
tainly gains by the loss of the Ma
tional bank notes. This is fact al
which the banks themselves make
great complaints. The only way in
which a National bank can wind up
its affairs is by the deposit with the
Treasurer of the United States, in the
Treasury of the United States al
Washington, of legal-tender notes
equal in its amount to its circulation
as shown to be outstanding by the
books of the Comptroller of the Cur
rency. This is done under Sec. 1922
Revised Statutes.
The Government gains from the
fact that the banks must deposit thu
full amount of legal-tenders for theil
entire circulation issued, no matter
what amount may have been lost o.
destroyed by fire, accident or othel
cause. OF course the Comptroller
books show the entire circulation o
the bank to be outstanding which ha
not been returned to him for redemp
ton. If any notes have been de
strOyed by fire or accident of any
kind, the bank must, nevertheless
make the full deposit of legal-tender
with the Treasurer, which must, O
course include deposit for the sun
that may have been lost or DESTROYED
Take an example: The COmptroll
er's books show that bank has out
standing circulation of $4,000. O
this it may happen that 5000 ha
been lost or destroyed by fire or othe
casualty. This bank, nevertheless, i
required to deposit with the Treasur
er of the United States the full $50,
900 of legal-tenders in order to clos,
its business, and the Treasury gain
the 1000 should the 5000 of its cir
culatiOn never be presented for re
dempti0n. In any event, no singh
dollar of that 1000 is ever returnet
to the bank or any of its representa-
tives, Receiver, Directors, creditor
or stockholders, unless all the note
of the bank are redeemed. There i
no provision in the law whatever TO
the return of any unclaimed balances
after the final close of affairs and tn
discharge of the receiver. The Law
does not contemplate destruction O.
loss of any of the notes. AS a matte
of fact, indeed, there would be no on,
who would have a legal claim upol
the unclaimed notes. When the re
ceiver is discharged, and the affair
of the bank are finally closed, tn,
bank has ceased to exist. 1t is M
longer legal entity. There sno on,
to represent it. There is no one wht
could make any claim in its name
1t is a mere nullity, absolutely dead
withoutliving or legal representatives
If Congress ever should pass a Law
authorizing the return of these unre
deemed and unclaimed balances
there would be no person to whom
they could be paid. Any such law
could relate only to the future. TIL,
recei YER could not take them, for HI
would be no longer receiver, and he
would have nothing to represent
The stockholders, Directors, Presi
dent, creditors, could not take them
because the very organization IL
which they once had relation Is M
longer in legal existence. Besides
there il really no practical way of de
termining whether the notes hav.
been destroyed or lost, even if tn,
law had made any provision for tn.
return of the notes in such cases. III
cases of fire, even under the law
where the loss of notes could be abso
lutely proved, the Government re
quires the banks to make full deposit
of legal tender notes. Whether tn,
amount is large or small, the Govern
ment gains by it.