The Portland daily press., 1878-05-11
The National Banks,

The great outcry which is made by the
Greenbackers about the currency of the Ma
tional Banks is very unnecessary noise.
There is no great body of men who insist up
on the perpetuation of the system beyond the
time stipulated in the contract between the
banks and the nation. Indeed it is
very doubtful if the banks themselves
would desire to retain their circulation,
of so little value is it despite the con-
slant reiteration of the misstatement that it
is giant monopoly eating the substance of
the people, The large taxes aud many re-
strictions put upon the banks by the govern
ment make the circulation of but little profit
to them. The Casco Bank of this city and
many others in the country have voluntarily
surrendered their circulation because it did
not pay to retain it. So that the complaint
that they make undue profit from th is source
is very empty indeed.
In the stress of war necessity and for the
purpose of rapidly disposing of large guam
tity of bonds, the government offered the
banks an inducement to take the bonds, by
heavy taxation of their circulation as state
institutions and by offering them circula-
tion under national authority. 1t told them
that if they would deposit in Washington U.
S. bonds as collateral seculity, it, the govern
ment, would endorse their notes for circula-
ton. 1t made contract with them that the
arrangement should continue for twenty
years. Under this plan the most of the banks
took national charters in 1858. Their time
will expire in 1888 and the plan will then un-
doubtedly be much modified, if not entirely
abandoned. Honesty and good faith require
that there should be no Infringement OF the
contract until its expiration, except by the
consent of the banks. As we have said,
many of them are voluntarily surrendering
their circulation because it is not profitable.
They did the nation great service in the time
of its trouble and it is certainly very ungra
cious thing to attempt to heap odlum upon
them now by Misrepresentation of their con.
dition and purposes.
The Greenbackers, so far at least as they
find expression in congressional speeches aud
bills, desire return to the old system of
state banking, and it may not be amiss to
compare the old system with the present.
Under our state laws prior to 1868, banks
were permitted to issue notes to an amount
double their capital stock. Thus bank hay
ing 100000 of capital could issue 100000 of
notes. These it could loan, and it could also
loan the money paid in for its capital stock
with the exception of small reserve of coin
to redeem its notes. Thus it could draw in
terest on nearly 100000, to say nothing of
its deposits. Now the same bank has on de-
posit in Washington 100000 of government
bonds on which it draws on an average five
per cent. 1t has 100000 of circulation guar
anteed by government which it can loan, ex-
cepting a small reserve of greenbacks to
redeem its notes. Thus it can loan nearly
$4,000 against about 100000 under the
old system. Formerly too bill holders had
no security for the value of their property ex-
cept the solvency of the banks. Whenever
one of these failed loss fell upon everyone
holding its notes. They were not good as
currency except in their immediate vicinity,