The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1880-08-13
BANKERS IN COUNCIL.
AN INTERESTING PAPER BY JOHN
SHERMAN.
A Clear Exposition OF the Advantage.
OF National Ianks.-A History Of
the National Rank system
OF the Country.

Alexander Mitchell, oil MILWAUKEE, wa
reelected President, and Jacob D. VeI
millye, First Vice President. Vice Pres
dents wese also chosen from each Stat
and Territory. An Executive Council wa
also chosen. Resolutions in favor OF
general bankrupt law. endorsed by th
Executive Council, were laid on the table
The following letter from Secretar
Sherman was read:
TREASURY DRPr., OFFICE OF SECRETARY, |
WASHINGTON, d. g., Aug. 9, 1880.
George Marstat.d, Corresponding Secretary Q
american Bankers association, Sdrdtoga, N. !
SIR:-Complying with your reques,
that II ! could not attend In person tn,
annual meeting OF the American Bankers
Association at Saratoga, would contrib
ute a paper on some financial topic within
reach OF your discussion, l have deemed Il
most appropriate to state the actual con
tracts Of the national banks with the gov
ernment, especially in reiunding and re
demption operations.
In the early transactions OF the govern
ment gold and silver only were recognized
as lawful money, but for convenience .
practice soon arose OF receiving for pub.
lie dues notes OF specie. Paying bank
we're organized under State laws, and thiI
practice was recognized and approved by
the law OF 1915. So long as bank notes
were redeemed at sight in specie no tron
BILE resulted, but as their redee inability
depended on the selvency OF the banks ol
issue the Treasury at times found itsel
embarrassed and public credit injured, by
the possession OF notes which had become
deprecated or worthless by the sudden
collapse OF the issuing bank, SO that notes
received at par could not be used without
loss for disbursement So great had this evil
become that in July, 1886, the receipt by
the Treasury of any money except coin OIL
treasury notes was prohibited oy execu.
tive order. When Congress met, in the De,
cember following, an acrimonious de-
bate on the currency ensued.
Mr.. Calhoun sustained the claim oi
the administration, and, in giving his
reasons therefor, said he believed that the
State currency was almost incurable. It
was doubtful whether the highest wisdom
could restore it toisoundness, and 1t was
destined at no distant day to undergo
entire revolution. An explosion he con.
sidered inevitable, and so much greater
the longer 1t should be delayed. The
explosion referred to came within year,
and the policy Of the administration in
refusing all bank notes was vindicated.
Mr.. Benton said that the best vindica'
ton OF the order was that 1t stopped the
receipt into the Treasury OF SIC, ,000, 900 ol
worthless notes. As 1t was, however,
thousands OF dollars OF 1t we're received
by the Treasury before 1860, and now lies
in it's vaults worthless, forming one OF
these unavailable" items, which in a
bank would be charged to profit and loss,
but which in the Treasury, for want of
jurisdiction, can only remain an item in
cash where it now is Q nuisance to the
bookkeepers, and perennial subject OF
Congressional investigation. Not less un-
fortunate wss the policy Of depositing
public funds in State banks. Early
financial reports Of the Treasury abound
in lamentations over the embarrassmsnts
and losses to which the Government was
subjected by such q policy,
and the books Of the Treasury confirm
the oft repeated story OF embarrassment
and defalCation. So embarrassed was the
Government by the failure Of banks dur
ing the evil days OF 1887 that all public Of
icers receiving public moneys were, in
effect, by Executive order, directed to bold
the same in their own possession until
paid out by Treasury drafts in favor OF
the public creditors.
This was the form Of movement which,
rapidly, was fully established
in 1915 as the sub-Treasury system, and
the country was gratitied that at last q
plan had been devised by which the fnan.
cial transactions OF the Government could
be conducted independently OF the bank.
The wisdom OF that measure is not to-day
questioned by anyone. From 1916 to 1851
the Government used specie only in pub
lie transactions, and held and distributed
its funds only by and through Its own
officers, and Tor comparatively small trans
actions OF that period the system was sat
isfactory and sufficient, but with the war
OF the rebellion came the necessity OF
making great loans and OF disbursing i'm.
mense sums Of money, and by the act OF
February 18th, 1868, the present system OF
National banks was inaugurated, partly to
aid the eGoverumentinit its great enterprises.
Congress aimed in a new system to
secure, as far. as the government was
concerned: First, auniiorm national cur
rency, amply secured 10 holders; and this
was effected by requiring deposit with
the government by the bank OF Issue
OF more than an equal amount OF State
bonds, and by giving the government the
first lien upon the entire assets ot the
bank. 80.
second-To secure the deposits Of public
moneys made in banks by requiring ample
security. therefor. 1t iG hardly necessary
to recount the eminent successlof the sys'
tenn in these particulars. In no case has
the value OF national bank notes fallen
below the value OF United States notes, In
which they are redeemable, and so long
as the latter are. redeemed In coin the
holders Of national bank securities are
certain that their money will not be
deprecated while in their hands. The
present generation can hardly realize the
Importance Of this stability OF value
which has become to be accepted. as
matter OF course. But how was 1t with
the issues oi the State banksP
Not only did the value OF such notes tiuc
tuate according to the standing Of the re
spsCtiye banks by which they were issued
but in accordance with the location Of thu
bank at which they were redeemable. Be
fore you is my statement showing the
prices OF notes, by specie paying banks l.
Philadelphia. At certain periods IN 81
the notes issued by the banks In the New
Eugland states, were at discount OF on
aud one hall per cent. Michigan bank
varied at different periods in that yea
two and one-halt to fifteen per cent. Fo
banks oil every state, there was ditferen
rate at several periods, and country mer
chant who had bills 10 meet in the city
could not tell before he left, hoy
much money would be requires
for the purpose, nor conl
the mechanic, paid in such currency, ca
culate inadvanCe the shave on his wage
10 which he would be subject. The 9.
tablshment OF National Bank currenc
removed all these fluctuations, and nc
only business man and mechanic, br
the Government can receive and pa