The sun. [volume] (New York [N.Y.]) 1833-1916, 1879-01-14
Surprising this Bank should Fail.

ohPHONiHE AhiN SnOulO ate
We have shown how JONI SHERMAN's cir
culnr Of Jan. cut Off the small purchasers
Of four per cent bonds from the benefit Of
the commission heretofore allowed on all
sales by the Government and added hun
drcds of thousands of dollars to the profits
of the First National Bank
That is not the only New Years gift made
by the old ally of JAY COOKE, MCCuLLocH
Co to the institution which has now
inherited the privileges Of those Christian
bankers.
When the First National Bank acting as
JoHN SHERMAN's agent, sells bonds to an
actual purchaser, il is not required To for
ward TO the Treasury the money received in
payment. A certificate Of deposit" easily
contained in one-cent yellow envelope or
written on the back %. q nosie.!! card. is all
that nco! 20 to Washington. The money
remains in the vaults Of the bank, without
interest, to be put to commercial uses. at the
discretion Of the directors, and for tho banks
profit. exactly as the money Of any dcpos-
itor Is used. Under the operation of this
arrangement the Governments balance at
the First National Bank has ranged during
the past six months from fifteen to forty
five million dollars, as shown by the figures
reluctantly given TO Congress 10y JOIN SuER-
MAN in answer to Mr.. IIEwIrr's resolution.
Up to the first OF January there was only
ono reetriction on the profitable employment
49, First National Bank OF these cnor-
Nvernment money. SnEE-
MANS circular Of Aug. 1, 1o,,,
-. asthc four per cent bonds are paid 10. y,
uncaes OF deposit of such public dcpoA'ar'., w. f,r
wise. call will issue, ma, airing WITHIN DIV. :.
the redemption % siN rcr cent bonds. and ,ac Dos
ccvcd for four per cen. bonds WH rpah dis~a until
sab oiH Datac.'
The bank had the use of tho peoples mil
lions for three months under the old circu-
lar. Mr. SHERNiANs friends at % Broadway
seem To have been dissatisfied with this
limit. In the new circular tho wording Of
the provision regulating deposits was
changed by JonN SHERMAN. and made to
read thus
The money received hy dcposiiary banks account
Of subscriptions fi issii sh sud tin' tut s'
i,,t As ore " me r"noer ofhs uadci sue. ami calls
for the re icmpton o per cent bonds Will issue from
time to tmu. as the secretary may Direct
In other words, the First National Bank Is
hereafter to have the use OF the Govern
ment's twenty millions, or thirty millions,
or forty-ivc millions, for a period of time
limited only by JoHS SII-anAN's Ideas OF
what Is proper and cxpedcnt.
In view Of this extension Of privileges al
ready extraordinary and of tho fact that
the Governments balance at the First Ma
! tional Bank Is likely to be much larger for
some time to come than IL has been in the
past. the stability OF that institution be-
comes a matter Of grave public concern.
The capital of the First National Bank is
only 100000 Suppose that it should un
cxpectedly fail with a Government balance
OF foIty-nyc millions on It's books. Banks arr
not exempt from the catastrophes that
sometimes occur to concerns doing a larg,
business on a small capital. Enterprises
conducted on the JAY COOKE system Of iinan
clerlng may be said TO be peculiarly liable &c
disaster. II the First National Bank SHOULD
be unfortunate in its spcculatons wha
would become Of the peoples money;
In case OF the First National Banks fail
wc, would the Government be prcfcrre'
creditor? II so, what proportion Of forty
five million dollars would it be likely to re
cover from the assets Of the bankrupt insti
tuition? II it could recover nothing, how IA
would the members OF the Bank Ring be in
dividually responsible, and what would thci
individual responsibility be worth ? Or doe
Honest JOHN SHERMAN himself expect I
come forward in such an event and make "a
the deficit out Of the slender accumulation
p of his thrift and toll These are question
; which the people have a right to ask.