New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1879-09-13
THE A b C OF FINANCE.
XVII.
NATIONAL VS.. WILDCAT" BANKS.

merely local needs Gold comes when the |
trade Of thc whole country requires more or less
Lcral-tenders OF gold. if more wanted for Tie
business of any town, county or State can hc drawn
only from other places by borrowing or bv competi-
tion in scll,rg products. But National banks can
b. started wherever men who have means learn |
that such banks are needed. and increase or re
duce their circulation at pleasure. If the farmers
have large CROP the bank can take ont more
circulation If more is needed lend its notes |
on the obligations of men who buy anu
move the grain and look with confidence for re !
turn If its notes when the grain has been sold 70
consumers I'm like manner local business of almost
every kind may supply itself. through the bank sys-
tenn with such currency il really needs, and NAV
thus be free from too great dependence upon the |
lenders of distant cities. The only thing required
j. capital. invested according to law in bonds ior
the security of the public In order to invite capt.
tai to engage in banking at every place where there
Is need of II. the National system gives some prohi
on the circulation thus employed for local wants
Yet this system. strange TO say. the very men who
complain of a lack of currency wish To break down.
Strange u say. the very men who think there Is not
currency enough are those who object most loudly
to the profits which invite men of means 70 put ou
more currency.
Ii is pretended that "the banks -" having common
interest viii act together 10 contract the currency.
and thus increase their profits by every fall in
prices" IL this Is so, why do they put ont any note
ut all 7 Small crops of wheat cause high prices,
and high prices of wheat help the farmer. There
fore. will not that gigantic monopoly" the farm
ing interest burn all the wheat OF feed it TO the
hogs in order to put up the price Small crops and
high prices do not help any farmer unless he has
crop to sell. We may be sure that he will not |
destroy his own grain in order TO mako grain more
scarce AMI help others 10 get high prices. So with
banks: it helps them to have money scarce only |
,t.h haul tfot+l
wish that other bank would make money !
scarce but not ono viii deprive itself OF |
money & lend in that Others may |
make larger profits. Any contraction, too |
which causes disaster. hurts the banks by |
breaking their customers. Some fail owing the |
banks and cannot pay what they owe The Ma
tional banks have lost S64, 110,l15 in bad debts |
CHARGED of within the last three Years. Other Gus
TONERS lose money. that they have less Ia deposit
and nselucutly the banks get less TO lend. Bad |
fines for thc country are bad for the banks ia |
1870 the ltonal banks gained II per cent their
who'll capital Invested in 1873, less than half as
much 5laioo per cent. TO say that the banks will !
bring disaster upon others in order TO help item
selye. is sheer nonsense. What workman, In order
10 better his condition. will set on fire the factory
which pay, him wagesf
II is said that the National banks form d" a pow |
erful aud dangerous monopoly" Nothing can be |
more absurd. These banks are not Ia interest. |
a HIS been shown. Find fifty bankers, and you |
find fifty different opinions. National bankers are |
Of all parties. and of all shades of opinion as to
finance and IL never has been found possible to get
tenth of them 10 act together. There are 100000
stockholders in National banks but more than half
Of them 81 900 or less of the stock each, and
war upon them rs a class is largely upon |
women and children. Banking Is a monopoly only |
as farming is A man who cannot get land cannot |
be farmer and "a man who cannot get money has |
no right to be a banker. But the real objection to
the system Is that il prevents men who have no |
money from issuing swindling notes as bankers. |
Have the people forgotten how they were robbed in
old times by wildcat banks The National |
system is so guarded that it is safe for the people
For that reason it is hated by the who want TO
swinde the country once more by starting banks |
without money, and putting out worthless notes |
without restraint.
ANY set of men can start National bank who !,
will do it honestly and have the means TO do 1t |
safely But the restraints of the law are meant to
protect he people, and the system We have Is the |
safest in the world. The bankers obliged to pay |
in and hold three times much capital, in proper |
ton to liabilities as the 1.216 banks of England |
and Wales put up to protect their creditors. Sworn
returns and strict inspections required here ; |
The lack of them in other countries 10 Is confessed
exposes the people 10 greater danger. During SIX |
teen years all the losses TO all the creditors of Ma
tional banks amount to only $G415,423. But a |
single bank in Great Britain recently failed |
with loss TO creditors of $2G.OOO,OO0. The |
old State banks as all know. used to fail |
by the score, involving rich andi poor in heavy |
losses In one year, 1871, banks having capital
of SCI O36 265-mOre than one-iifth of the entire |
banking capt. tai Ia the country at that timefaled
with circulation of $23.577, 732, and In nearly
every instance the whole capital lost. In al
any yoar of disaster 1t is safe to say, the loss
10 creditors of tho old State banks was greater than
the loss to the creditors of all National banks In
sixteen years. 1t costs something to make the
system so safe. Policemen and fire-engnes. for the
protection of life and property, cost something also.
But it would be much more sensible TO abolish them
than to permit knaves to start banks and issue notes
without restraint
None deny that the banking system has saved the
people many millions by its safety. None deny that
a perfectly safe and uniform currency. of the same
value in every part of the land. is of very great |
benefit But those who assail this system, in order
70 revive the State banks, have no idea what that
change would cost. Ii has been shown IN Article |
". that the tax paid, in the rate of exchange be-
tween the West and South and the East, In the |
years before the not less than or q per
cent on the whole value of goods transferred |
and payments made. If that value Is only |
81 900. 900 OO0 the cost of returning to the old |
system would now be from $4O,OOOOOO to |
$50 OOO,O 900 yearly. But it is generally be- |
heved that the amount OF exchange drawn |
each year is already over $J,OOO.OOO.00O |
and it is rapidly increasing. At the past |
rate of growth. the domestic commerce VIII
double in ten years On a yearly movement of
$4,000 OOO, 900, the cost of substituting Thirty
eight kinds of paper, some bad and some good for
.-I u,fa vii