Daily globe., 1879-06-18
NATIONAL BANK. RESERVES.

we cannon say GnaI we are pIedseu Will
the bill reported from the banking and cur
rency committee of the House by Mr.. Buck |
ner relative to national bank reserves. It
requires them to keep on hand, in standard
gold and silver coins of the United States, at
least twenty five per cent. of the amount of
their circulation and deposits. This, be-
sides being an unnecessary hardship on the
banks, looks to us like device by means
of which the currency may be very sensibly
and injuriously contracted.
Let us see what the effect of such bill
will be: The national banks have circula
tion of about three hundred and fifty mil
lions of dollars in round numbers and de-
posits of about treble that amount. If they
are required to keep on deposit in their
vaults one-fourth of the total amount it
would be equivalent to the withdrawal of
their circulation altogether, for tie amounts
so retained as reserves for redemption would
represent moneys driven from circulation.
The question arises if the business if the
country could be conducted on the currency
that would remain-three hundred and sixty
millions of greenbacks and perhaps two hun
cred millions of coin. we think the expe-
rience of the past will sustain US in the as
sertion that that is not sufficient for the
needs of trade, and we would regret exceed
ingly the passage of such bill.
The bill, too, would work an exceeding
ly great hardship upon the banks. They
ko:~ S~1x1 kha 70
arising from loans. If they are forbidden
from loaning more than three -fourths of the
moneys they receive on deposit they would,
as a necessity, lose one-tourth of their prof
its. Some of the larger banks might be
able to stand the loss thus entailed,
but many of those with smaller
business would be obliged to retire
from business, and, consequently, great loss
and inconvenience would be inflicted upon the
business community. Besides, it is unnec
essary that any reserve for the redemption
of their notes of issue should be maintained
in their results, as each bank has on deposit
with the treasurer at Washington thousand
dollars in bonds for each nine hundred dol
lars of notes they have in circulation, sum
wholly sufficient to secure every person hold
ing II bank BILL
The bill is unnecessary on other grounds,
the chief of which is that the existence of
the national banks is limited, and probably
before the law contemplated could be placed
! in operation they viii cease to exist alto
gether. The present agitation having for ite
purpose the substitution of greenb backs fol
national bank notes is not evanescent, but
will continue to increase until the result
sought is accomplished. The people of all
parties have come to the conclusion that
there is no need of two forms of currency in
circulation, and that the best currency is that
issued by the government But small sec
ton of either party would to- day vote to re-
tain the national bank circulation if the
question should come up for decision. While
they have confidence in it to certain ex
tent, they have greater confidence in the
currency issues of the government, ani
would much prefer to see greenbacks sub
stituted for national bank notes.
The bill, as q whole, is not wise one, ant
we hope it will not pass. The only grea
change necessary in order to place our cur
rency on satisfactory basis is that allude,
to-the substitution of greenbacks for th
: national bank currency. The time. is no
far distant when this will be done, and unit
: that time arrives the wiser course will be t
!, leave the matter severely alone.