Oxford Democrat. [volume] (Paris, Me.) 1833-1933, 1879-08-05
NATIONAL BANKS.

Near Religion, supplemented by an edi-
torial article, tries to excite a prejudice in
the minds of people, against an inStitu-
ton in Norway, which has not only aided
the material development of the town,
but which has decreased the rate of tax
alton, and thus helped the poor man. Let
us look at a few statements made by this
hnancier who has not even taken the
trouble to visit his bank and verify the
/ figures he gives.
In the first place, the capital of this
bank represents Sll6,000-aS a premium
of l6 per cent. was demanded for the
bonds which the government required to
be deposited as security for bill holders.
These bonds pay five per cent. on their
par value, or As per cent. on the actual
capital. With these bonds as security
the bank is allowed TO issue 100000 in
bills Of the bank. The story that these
| bills are girer TO the bank, was so thor
oughly exploded, last year, that we never
expected to soc it again in any rcSpecta-
bic paper and, in fact, We never have
The government simply says to the bank,
purchase 500, 900 worth of our bonds,
deposit them with our Treasurer, and We
viii allow YOU to issue 100000 worth OF
bills. These bills shall all be paid to the
holders. because we have not only their
value as security, but also margin of
ten per cent. above, if the bonds are at
par, and OF twenty 90 twenty-five per
I cent. az the ruling rates for bonds. But
/ I'm order that YOU shall not cheat the peo-
pie, and issue more bills than we can
redeem by the sale Of these bonds, We
will print these bills for YOU, but they arr
good for nothing till You have paid Us for
printing them, and they have been signed
/ by Your President and Cashier. The
/ bank pay, ds government for printing tho
| bills. and also for the expense of sorting
and destroying the old bills, as they be
come mutilatcd and unfit for service, an
expense not rcckoncd in this article. The
government yirts tie bank nothing.
Now let Us consider the value Of the
$50. 900 in bills issued by the bank. In
the first place. the bank Is obliged by law
TO keep a reserve of $4,000 in green
backs, for the redemption Of It's notes.
That leaves but $1,000 for loaning pur-
poses. But banks doing business outside
of the great business centres DO not have
even that sum. If the bank wishes to
stand well. so tina, dcposi;ors' checks will
/ be honorcd on presentation. It must make
deposit in some city bank, and carry a
/ large balance there, in order that It's
check, may pass through the clearing
house. The Norway Bank carries a de-
post of at least $1,000 in the CascO
Bank Of Portland, for this purpose, and
has $1,000 IN bills at Washington, being
assorted, and lying as muulatcd currency
| These two items diminish the actual loan
mo circulation TO $4,000. This sum
| loaned at S per ccnt.-thc discount charg-
ed at Norway Banks s., 200, or IS pei
cent. on the accredited circulation OF
| 100000. Is this any great privilege
or unjust discrimination: The banks
have always been permitted to issue bills,
and have had greater privileges than this
under former banking laws. For every
dollar Of coin deposit, the bank was
allowed to issue three dollars in bills. SIX
per cent. on the circulation Of $500, 200
is $4,000. Thus, under former sys-
tens, the circulation at six per cent. has
earned nearly four times as much as 1t
now earns at eight per cent, when repre-
sentcd by the same amount of capital.
But. says our astute fnancier, the stock
holder receives double interest, and makes
a great profit. Let US see about that.
The stock holders purchase 100000
worth of bonds, and receive on their par
value, from the government, $4,000 an
nual interest. Or, twenty men holding
s. 900 each of government bonds, take
these bonds as the foundation or capital
of bank. The government Is at no
more expense now, than it was before the
bonds were used as a banking capital.
Still. the stock holders receive $1,000.
They also, as owners of the bank, receive
the So, 200 which we have shown was
earned on the circulation. The income
10 stock holders from these two sources is
$4,000. The expenses Of the bank are
not to be jumped at by candid men, and
Jumped at So, 900, as does the Nelo Re
liqion's correspondent. In the first place,
the town taxes every stock holder fol
his stock, at full value, as personal prop
erty. There is no escape from this tax,
as the cashier is obliged to notify every
town in which stock holder resides, OF
the amount of stock owned by said hold
er. We have averaged the rate of taxa
ton in four towns of Oxford County, and
find it to be IL per cent. This would
be 81, ZOO on the capital of 100000.
Then the government taxes the bank one
per cent. on its circulation, or 5000 on
the $50, 900 issued. This makes di-
rect tax of $4,000 paid by the stock
holders. Then there are the expenses OF
the bank for them to pay. Say the cash
Ter receives 5000, which is very small
salary for so great responsibility as rests
upon this officer. Other expenses of the
bank, say for rent $50, books and bills
500, stationery and postage sl5O, IN
surance and expenses $50, legal fees and
officers expenses 500, making IN all