Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1878-10-05
National Banks.

contests of the year brings out quite fully
all their characteristics, the result being
upon the whole favorable to the banks.
An editorial in the New York Times OF
Thursday, under the heading, Justice to
the National Bank System answers in
an admirable manner the charge that the
system is monopoly.
"As a matter of fact" says the Times,
1.-THE banks are in no sense monopoly
Their business is open to any one who
chooses to enter upon IT, and can give the
required guarantees. The conditions i'm
posed bv the law are in no sense privileges.
but are framed In the interest and for the
protection of the public. So far from the
action of the government comforting gratu-
itous advantages upon the banks, it makes
their business more difficult and less profit
able than it otherwise would be. or than 1t
would have been under any State system
that existed before the National Banking
law was passed. These conditions are OF
two classes, one relating to the notes issued
by the banks, the other to the general bus
ness of deposit and discounts. As to the
latter, the law requires reserve in legal
tender money, rigidly maintained against
deposits. feature Of protection which
was entirely wanting in all the State laws.
and which. 80 far as we have been able to
ascertain, is not accorded in any other
country. Further than this, the law re-
quires q degree of publicity for the affairs
OF the banks nowhere known under the
State laws. They are compelled to make
periodical and frequent statements to the
Treasury, for publication, and there is no
country in the world except France
where 30 much detail is demanded.
or where the customers of bank can as
certain 30 easily, so often. and 40 COM
pletely its exact condition. Besides these
formal statements. those dealing with the
banks are protected by careful and con-
slant series of examinations by Govern
ment experts. the results Of which are re-
ported to the Treasury, whose officers are
clothed with ample power to act upon
them promptly and effectively. The OBJ
ject Of these legal requirements. apart
from the reserve. is what the object of all
such requirements should be. to enable
the depositor to protect himself with the
greatest practicable aid from the Govern
ment. In this regard the national system is
different. and superior to any that has been
previously established by law in this coun-
try. 1t avoids the error ofimposing arbitra-
~ legal restrictions which lull the business
community into false security, while it
places in the hands of the depositors the
means Of knowing as precisely as may be
the exact strength of the institution in
which he places his funds. No State law
did - much, and no law could do more.
Az TO the note-holders, their security is
Is absolute as could be under any system
including government paper, and after
resumption it will be open to only one
improvement-thati is. the actnal and con-
slant redemption of the bank. notes in
specie. Meantime. the protection accord
ed By the government in the strongest
manner is given precisely to the class
who need il most and are most helpless of
themselves, namely, the note-holders.
This protection consists in the deposit OF
bonds. which would alone be ample; in
the prior lien possessed by the note hold
ers on all assets of the banks; in the per-
sonal liability of the shareholders to an
amount equal to the value of their capt.
tai in the per cent. reserve always on
deposit with the Treasury; in the COM
plete guarantee of the government for in
slant redemption. The completeness OF
this security has never been surpassed; it
has been strikingly demonstrated in the
recent past by the fact that the notes of
insolvent banks have actually commanded
= slight premium.
The fact that the banks derive profits
from circulation and from the bonds de-
posted for the security of circulation is
mis-applied when it is made the basis OF
prejudicial criticism. If bank-notes are to
be issued at all, and they are to be secured,
Government bonds are the very best form
of security. Either we must adopt that,
leaving the banks to make such profit as
they can from their notes, or we must
abolish bank-notes and substitute Govern
ment notes. If we do the latter, we shall
find that we have an unstable currency, al
best, and may have vicious. because an
irredeemable, currency. No sound finan-
cier can have much difficulty ia choosing.
As to the charge of corruption of our poll
ties and the press. it is only necessary to
remark that all changes in the law from its
frst passage have been in the direction of
limiting the exclusive privileges and in
creasing the exactions established by law.
and that these changes have been almost
uniformly sustained by the entire press
OF the country.
We copy from the Boston Advertiser an
interesting communication to that paper
. upon the Chinese question. The writer is