The Portland daily press., 1878-08-28
SOUND SENSE FROM sERAPHINA.
Untnxcd Bonds and National Bank Earn
ings.

Untaxcd Bonds and National Bank Earn
ings.
JONES COURT, Aug. 27, 1878.
To the Editor of the Press:
Simmons came in this morning with the
PRESS in one hand and big book, which 1 at
first took to be Bible, under his arm, and
holding out the PRESS with my name, Sera-
phina Smith, in large type at the bottom of my
last letter, said, "Wby, you are little finan-
cier," and he squeezed my hand so that fair
ly blushed Even Johnny noticed it and rather
brstled up to the good man, saying in his
usual gentle tone of voice, 'Don't you hurt
ma" which only made me blush the more at
which I laughed and patted him on the head,
| saying, IA man must be a brute, Johnny, to
hurt your ma" Well, the upshot of the mat
ter was Simmons had book which bis cousin
on bis mothers side, who is in Congress, and
who she says is bigger man than Hayes ''sent
him some time since''. 1t is the "Report of
the Comptroller of the Currancy.'' He said,
| "Since you have become a student of finance
thought would bring you over this book,
| which is just full of figures" After he had
gone sat down and read it till dinner time,
and have been reading ever since. There is
deal of real nice reading in it, and thought
you might like to have me make a few ex-
tracts. notice by some of the speeches in
Aroostook county that the speakers complain
that the national banks are monopolies and es-
cape taxation on their capital, which is in
bonds. Yet learn that the government gets
more for bond untaxed than it would for one
taxed-enough more to make up for tax on
such bond, as one would pay for a four per
cent. bond par, untaxed, when if it was taxed he
would have to buy it enough less to enable him
to pay a tax. But find that the banks are
heavily taxed, viz, one per cent on circulation,
one-half per cent on deposits, and one-half per
cent on all capital not invested in government
bonds. "The entire internal revenue is now de-
rived from taxes upon spirits, tobacco and fer
mented liquors, upon such articles as require
the use of proprietary stamps, and upon bank
deposits, capital, circulation and checks. 1t is
difficult to understand why the tax upon bank
deposits, which tax, like the others, was essen
TALLY war tax, was not repealed at the same
time, unless because of an unjust prejudice
against banks which is peculiar to this country,
and which is traceable to the large losses here
tofore sustained by the people upon bank cur
rency issued under the authority Of iDjudicious
laws of many of the states.'
The London Bankers Magazine for April,
1877, says: "It is easy to understand how, in
the midst of that terrible struggle for existance
which racked for time every joint and sinew
of national life almost past endurance, the gov
apfo IF tbo ito1 fol 81
seize hold of every and any available basis for
taxation, and hence fixed on the easily reached
resources of the banks as most valuable
source of supply. But now that these dangers
are happily passed, no adequate reason
can be given for such an inpost. There is
nothing which conduces more to the prosperity
OF country than sound system of banking,
and besides good management, which is of
course, understood, nothing is more essential
to sound banking than sufficient and ample
capital-capital large enough to enable deposit
tors to feel that they may rest on it in safety,
and any measure which imperils the growth of
banking capital for the sake of the taxes which
may be levied on it, is indeed short-sighted."
The Comptroller says: The only plausible
reason given for continuing the tax upon the
banks is that they enjoy special privileges. But
the only real privilege which they possess is
that of issuing circulation, and even this is not
restricted privilege, but is open to all who see
fit to engage in the business of banking. More
over, the profit upon circulation does not, un-
der the most favorable circumstances, exceed
two and half per cent and if issued upon four
per cent. bonds, does not exceed one and a half
per cent. of its amount. That it is not a great
source of income is evidenced by the fact that
the banks have. siHce the passage of the act of
June Il, 1875, voluntarily reduced their circu-
laton more than forty-fOur millions of dollars"
The state taxation upon national banks is also
oppressive because of the unjust system of val
nation which prevails in almost every state.
For instance, the state assessors of New York
in their report for 1873 say: "We are satisfied
that less than fifteen per cent. of the personal
property of the state, liable to tax xAtion, finds
place on the rolls of the assessors, and of
mortgages not even five per cent. The amount
of personal property assessed in some of the
counties is less than the banking capital, and
the same is true of thirty towns and cities,
among which are some of the most prosperous
in the state" In the report of the assessors
for 1876 the total personal estate in the state of
New York was returned at 1919, ,4S8, 40, and of
the city of New York at $218, ,626, 178. The
bank assessment 10 that cay for the same year
was $85, 1916. The banks Of the city there
fore paid nearly one fourth of the whole per-
sonal tax of the state, and nearly forty per
cent. of the personal tax of the city. 1 pro-
pose, Mr.. Editor, to put down the figures:
TAXES PAID BY THE BANKS IN 1877.
On Circulation Il per cent?. ss9 osa %
On Deposits III per cent?. ......... 1852 IA
Capital Not Invested in q. 5. Bonds q o :,
on Pe5h cheeR sshs Stamps Sold ssssg 90
State TaxeS 1876. 3o0s ,zo4 W
Total. .sl2,6s5,5ai 70
Suppose some of the people who cry out
against us because we have few shares Of
bank stock, take theif pencils and figure up
how much will be left from the interest on the
bonds the banks hold aftsr paying all these
taxes. l can see now why my four shares OF
stock in the Merchants do not yield me sixteen
or eighteen per cent. as one of the. wild-eyed
shriekers said it did. find by looking over,
that even national banks make losses, and that
in 1877 they lost SIS, ,933, 5S7 SO. These figures
almost take my breath away. Reading still
further / came to this: National banks
which paid no dividend" What an idea! |
had supposed that they all paid, but it is said,
1898 banks, having a capital of Sal, ,166, 200,
paid no dividend in the last half of 1871" l
now come to the interesting point which shows
just what the national banks really earned in
1877:
RATES OF EARNINGS OF CAPITAL AND SURPLUS
First half 3.l2.l00 per cent
Last nalI
Total. .......... .5.62-100"
am really surprised, Mr.. Editor, to find
that the banks, these ''great monopolies," did
not make more than 62-100 per cent. last year
and think, unless you are financier, it will
astonish you. Bnt Johnny has just come in for
10 I'm T oil