Mower County transcript. [volume] (Lansing, Minn.) 1868-1915, 1879-09-04

diminution of the currency, the national
banks will increase their wealth, not by
issuing more currency, but by issuing less
or, better still, hy speedily Withdrawing all
their currency which is already out !
wonder whether it has never occurred to
deeply on this subject, that, if his view of
the national banks be correct, their conspir-
acy to increase their wealth by fall of
prices would have best succeeded, and they
would have made the most money, by not
issuing any currency at all! How in the
world did it come to pass that the 1929, G9l,-
697 of national bank currency, an increase
of over 81, 100000 since last January, ever
saw the light of day if the bankers would
thereby prices, es low as possible? What
consummate fools these national banks
must be-!
"But," Gen. Ewing may tell us, there is
a deep and dark plot at the bottom of this.
They only act the fools to put us off our
guard. First they run out the currency to
make us all feel lively, and then, suddenly,
they withdraw it all; and thus they will
catch us when we least expect it, break us
all down and make themselves enormously
rich" That seems to be Gen. Ewing's
without limit" which the national banks
may inflict upon the people, and of 1.-THE
wealth they may themselves accumulate by
hidden and concerted measures of expan.
sion and contraction of values" All, what
profound and wonderful conception the
leader of the Ohio Democracy has of the
relation of banks to the business commun-
ity! Look at it a single moment.
THE BUSINESS OF NATIONAL BANKS.
The circulation of bank notes is not the
only nor the principal business of those
banks. Their main and regular business
consists, as l have stated, in taking and
deposits, together with their own capital, in
making loans to business men, in discount.
ing notes and bills, in buying aud selling
exchange, and so on. The more extensive
and safe this kind of business is, the greater
will be the prosperity of the banks: and
this business will be the more extensive
and safe the more active and prosperous the
business of the community is with which
| the banks deal. A bank stands to the bust.
ness community in the relation at the same
| time of debtor and q creditor. It is
debtor to its depositor and creditor to those
whose notes and bills it holds. When the
depositors of bank become embarrassed,
they will withdraw their deposits, and
thereby diminish the funds with which the
bank operates. When the debtors OF a
bank are ruined, they cannot pay their
debts, and the bank holding their discount.
ed papers is one of the first creditors to
suffer loss. 1t is, therefore, the manifest
interest of bank that its Gus
toners, both debtors and creditors,
be in as solvent and prosperous
condition as possible. As everybody knows,
in times of prosperous business the banks
make money, and in times of business de.
preston banks are heavy losers, and are apt
to fall unless conducted on the soundest
principles. During our late business crisis
the average earnings OF national banks to
capital and surplus went down from nearly
II per cent. to less than 435 per cent. The
ing the three years ending in 1873 amounted
| to 1854, 119, 415. And now comes Gen. Ewing
and tells us that the national banks, over
1900 in number, scattered all over the land,
with Il capital furnished by 100000 stock.
holders, ma ority of whom are persons of
limited means, will be so insane as to think
that they can increase their wealth by ruin.
ing the business community, and that they
will conspire to that end! Surely, no man
who has the faintest conception Of the nat
ural relation of banks to the business in.
terests of the country would for moment
entertain, much less express, SO utterly wild
and preposterous an idea. But such is the
financial craftsmanship of the leader of the
Ohio Democracy.
REAL VIRTUES IGNORED.
It will not seem surprising, after all, that
this leader should have failed to mention as
the real characteristics of the national bank
ing system: az that, as to the regular
services which banks render to the business
community, the national banks, on the
whole, are the best aud safest banks we ever
had; aud, ~ that the national bank cur.
rency is the best and safest bank currency
this country has ever seen.
While, as stated, it is the natural inter-
est of banks that their customers, creditors
as we'll as debtors, be in solvent and pros.
porous condition. so it is the natural inter.
est Of the customers of banks, in fact, of the
whole business community, that the banks
be conducted on the soundest principles, so
as to give to those who deal with the the
greatest guarantees of security and re)ia-
bility. Without safer banks, through
which, III our economic organization, bust
ness exchanges are made, there is no safer
the history of this country have
we had banking system which,
III every respect deserved and enjoyed the
confidence of the business community as
the national banks deserve and e, Joy it.
Let them he Judged by the test of expe.
rience. Since the first organic alton Of The
national bank system We have gone through
a great civil war, with all its vicissitudes;
we have gone through period of headlong
speculation and recklessness in the con.
traction of debts; we have gone through a
terrible financial collapse, with widespread
bankruptcy and general business depres.
sion. During all that time until the list of
July last year, all the losses suffered by oil
the creditors of all the national banks in
the country amounted to only $6,4l54 33,
and these losses are constantly reduce by
dividends paid in the winding-up process.
No banking system in the history of this
country, nor anywhere in oay country, can
show such a record for safety under such
circumstances. The one failure of the City
OF Glasgow bank, in Scotland, last year, in
aicted upon its creditors loss of $26, 00O.-
OOO-a loss four times as great as the aegre. |
gate losses suffered from all our national
banks during the sixteen years Of the exist.
ence OF the system. In this country the |
losses inflicted upon their creditors by state
and savings banks in the year 1873 alone
were larger than those ever caused by
national bank failures since 1862. The
losses from five state banks in the one city
OF Chicago during two years preceding
the losses from all the national banks since
their organization from Maine to California
and from Oregon to Texas. l repeat, no
banking system of similar extent in the his
tory of any country has as brilliant a record
as this.
70 What is 80 extraordinary a result due
To the wise regulations of law under which
the national banks are organized, and to
the strict supervision by the government to
which the law subjects them in the conduct
of their business. l will not say that the
provisions of the law are perfect and might
not be improved. But do say that they
have proved wonderfully effective that they
are more perfect than anything we have had
20 far, or anything we are likely to have,
should the national banking system be
abolished. There is a system at last under
which the possibility of = / :
'HAM BANKING is REDUCED TO MINIMUM.
One of the greatest abuses of former bank
ng systems, the organization of banks of
deposit without sufficient bona fide capital.
9 prevented by the provisions of the ma
ional bank act, that the capital stock of
he national bank must be fully paid in,
nd restored to its full value after impair.
aent, in failure Of which a receiver is .
ppointed by the comptroller. And hence
be striking fact that in our national banks
he existing ratio of capital to liabilities is
early four times, and that of combined cap. ]
al ardl reserve to liabilities mors than .
hree timea uvaafar fhan in tho I o1S hon l., | r