New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1881-01-13

hate everything National" and can nnu ho
good in any system that is not controlled ex-
clus;yely by the States, should be inclined to
break no the National banking system. OF
its incalculable benefits to the country they
know nothing. They are politicians, not bust
ness men. But is there any reason tor a SINH
lar disposition among Republicans, or Demo-
Gratis of progressive tendenclesf The banking
system is not only the best this country has
ever seen it is admitted by statesmen ana
financiers of other lands to be the best ever
yet adopted in any country. Surely it is not
good sense to tear it down until there is some
probability that system rs good may be es-
tablished in its stead. That uniformity OF
notes and of security can never be secured
by the action of separate States has been
shown by sad experience. The benefits of the
National system in that particular, to the
millions who handle notes, mako small de-
posits. and have not the means nor the time
to inform themselves accurately rs to the
sOundncss of banks in different States, are
really jncstimabe.
But, whether the National system be good
or bad it will not pay to throw all industry
and trade into disorder, by inducing the
banks to surrender their circulation without
providing any substitute. Even children
know that it does not pay to "bte Oft ones
nose to spite ones face" The country
cannot afford the prOstratiOn of business
which rapid retirement OF the bank circula-
ton would cause, in the absence of any power
to substitute a different currency. Members
OF Congress are strangely lacking in iniOrna-
ton about the details of practical business, OF
they would see at once that such a change
ought not to be permitted for any reason
whatever.
When the principal stockholders of Ma
tional bank come to the conclusion that they
can make more money on the whole by freely
lending their entire capital, without the re-
straints of the National system, than they
can make by lending $50, 500 in notes. as the
law now permits, on capital sufficient to
buy 800, 900 in bonds now selling at Sill, 900,
their remedy is very simple and easy.
They send into the market to sell their
bonds, realize $112 600 i'll cash, send 100000
to the Treasury for the redemption of their
notes, and rs their former loans fall i'll pro-
coed to lend SIP 900 IN all, just rs they see lit,
instead of lending $50, 800 under restrictions
Of law. Somebody else, who had money to
lend, now holds the bonds and draws interest
on them, SO that the Treasury pays out just
the same interest, though to different persons
That somebody else, now holding the bonds,
no longer has the $4,000 in money TO lend,
SO that the aggregate OF money To be loaned
is in no way changed. But $4,000 III money
is locked mp and that amount of currency is
cancelled as the bank notes come in and are
redeemed The net result of the operation Is
sudden contraction, equal to the whole
amount of circulation surrendered. Suppose
that banks having $50, 100000 of circulation
find reason 10 take this course; there Is abSO-
lutcly nothing to hinder a contraction of the
currency to that amount in single week, if
buyers can be found Tor the bonds.
1t would he we'll for members Of Congress
to know that bankers who have now much more
than SOC, 600, 900 III circulation are at this very
time hesltatng whether to surrender it or not.
The action of Congress on the funding bill
will determine. If they see that Congress Is
hostile to the banking system, and disposed 10
adopt measures which will Cause general dis
turbance in business, they are not likely to
hesitate. For them it would be q sensible
thing to get a good price for their bOuds while
they can, to turn their capital into gold, and
to wait calmly for the sure result of Congtes-
siona folly. They are not compelled to stick
to the National system single day longer
than they think they can make money by dong
20. The question for Congress is whether it
can afford to take any course which will
induce the banks to surrender circulation and
contract the currency.