The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1880-01-09
FINANCE FOR THE PEOPLE.
XVIII.
MEEI1s OF THE NATIONAL BANKS.

quired to own and deposit with the United
States Treasurer, for 100000 in notes issued,
100000 IN United States bonds to keep at all
times s., 800 in lsgal-,enders on deposit against
| 800 900 in bank notes Issued rs fund for their
redemption; and to submit to strict inspection
] and restraint. How then, are men who have
! capital induced to go into banking wherever
there is local need? They are allowed to
ssueIand lend $50, 900 in notes. while they draw
interest on the bonds worth 100000 which
they own. This Is holly denounced as giving
the banks "double interest" on their money.
But tho object-to secure with perfect safety
banks and currency enough for the business OF
each locality in q rapidly growing country-is
often forgotten. Post Offices are opened by
the hundred, and post-routes established.
When the business does not pay Us yet, would
1t be WISE to shut up all such Offices? The de-
felt is borne by the Nation, because postal facil-
ities, even for new or sparssly settled districts,
are necessary to the general welfare and pros
perty. To deny them because OF the cost
but TO the millions elsewhere, who constantly
need TO reach such places by mail. II the local
banks cost something, do they not also render
great public service The water-pipes which
supply pure water to whole town also cost
something Should they be torn up? 1t would
be quite as sensible as 10 abolish the National
banks because they gain some profit IN supply
ing safe currency for local needs. IL men
want pure water instead OF poisonous stuff
from the bitches, or pure currency instead of
the knayish wildcat money OF old times. they
must pay the cost.
Is the cost too large? The profits OF the
National banks are 30 small that many are re-
firing from the system, and 22,517 1903 more OF
circulation has been gwen up by banks than
has been issued to banks since January, 1875.
The proof OF the pudding is the eating" II
the issue Of notes pays the men who have tried
it, why have the banks surrendered 500, 100000
of their circulation Farmers or blacksmiths,
who are getting rich in any place, are never in
haste TO sell their farms or shops and to get out
Of the business there. Again, there are now in
existence S53 State and 2,s56 private banks
which refuse to come into the National system
and issue notes, though they could il they
chose. II the profits are TOO great, If the sys-
tenn is really burden, il the banks gain more
than fair return for the services rendered
how is 1t that other banks and bankers DO not
make haste 10 come into tho system and to
share it's profits? The truth lie, as the official
reports lave proved, that the average gain of
National banks by their circulation is less than
2 per cent. yearly. In many places it 10 much
less and in many there is no gain whatever.
1t is often thought that banks and other
bondholders gain unduiy, because their prop
erty ia not taxed. But every dollar invested in
bsnds IS taxed at the outset. The tax Is paid
in the price. Jones wants to rent farm, and
the rent is 1000 for the year il he pays the
taxes, amounting to 5000 But he says, i pre-
fer 10 pay 81 200 for the farm and have no
bother about the tax just such a bargain is
made By every man who buys a bond exempt
from taxation he pays more for the bond be-
cause it is exempt. When the average tax is
2 per cent, taxed six per cent bond well sell
for 20 more than an untaxed four per cent
bond. In reality Government collects from
the buyer, at tho outset, all the tax that he
would be expected to pay as long as the bond
runs, on the money invested in it. Other per
soma property OF all kinds escapes taxation
But not dollar invested in United States
bonds has escaped or ever can escape.
The Z" double interest" gives grief only 10
men who never pay any OF it. The men who
do borrow money and pay interest make no
only single interest at the usual rate. II
Jones borrows 81 900 at bank he pays no moro
than ii lie had borrowed from his neghbor.
Smith. How is he the worse off, then, for the
fact that the bank also owns bonds? Who pays
the extra charge? Not the people, for thsy
pay only one interest on the money borrowed
by their agent, the Government, whether the
bond ID owned by the bank or not. II the banks
had never been formed, the man who started
them would have right to precisely the same
interest on the bonds they own that is now
paid TO them as bank. The Nation has bor-
rowed their money. The bonds belong to them.
And the interest must be paid to them or to
some other holders. Thus the Nation loses
nothing, and tho private borrower loses moth
ing in fact, he gains, for il the bank had not
been started he would not have been able to
borrow the money at all. The very object In
starting the bank was to supply money for lend
ing where there was not enough before. The
case is really simple. Brown, the workman,
mast have 300 to pay Black, the storekeeper.
lie goes TO his frtnl White, the farmer, WHO
has saved money. But White says, II have
lent all my money on mortgage for year. But
Black Will iase my due-bII the sane as cash,
s1d will lend you that at interest. Brown 10
CAD, and pays inie.e.t willingly, for the due-
bill is the same as men " to him. Black tales
1t gladly, for he 8nows that White is good, and
has morsy invested. And White, bayrg let