Savannah morning news. [volume] (Savannah) 1868-1887, 1881-12-09
The Secretary of the Treasury and
the National Banks.


the National Banks.
In the annual report Of the Secretary
of the Treasury, synopsis of which
was published in our telegraphic col
umns yesterday, Secretary Folger devotes
considerable attention to the national
banking system, regarding which he
makes two important suggestions. First,
that bill be passed authorizing the re-
newal of the charters of national banks
upon the expiration of their corporate
existence. and second, that Congress pro-
hibit national banks from retiring their
currency except upon previous notice
Of gwen length Of time.
As TO the first recommendation there
seems no necessity whatever for Its being
adopted. 1t is generally believed that.
as the law now stands, the life of all na
tional banks is limited absolutely 10 a
period of twenty years from the inaueu
ration of the system, after which the
banks themselves must close, and the
national banking system must cease to
exist. This, however. is not the case.
The law does not prohibit national banks
from being organized under certain con-
ditions at any time, and in proof of this
the Chicago National has just been or
ganized in that city, while during the
year ending November 1st last eighty
six new banks sprung into ex
istence. All that the law re-
quires is that at the expiration OF
twenty years from its inception, each
bank must be dissolved and its affairs
wound up. There is, however, nothing
to prevent the same capital from being
reinvested under a new charter. and then
any bank can start out afresh on new
lease of life for twenty years.
This is, undoubtedly wise provision,
and ought to be maintained. What Sec
rotary Folger desires is that banks may
continue in business without any renew
al Of charters, but as a Western con
temporary, which has given much
thought to the subject of the financial
system Of the country, says: "The
twenty years limitation was one
OF Secretary Chase's wisest provisions.
Every national bank thus has notice from
the start that at the end of twenty years it
must be prepared to put its affairs into
perfect order, collect the debts due it,
pays its depositors, provide for the re-
demption of its outstanding notes, dis
tribute its capital and surplus among the
shareholders, and wind up its business
honestly and fairly. The law should be
allowed to stand in this shape. The pro-
cess for forming a new banking associa-
ton, in which both the capital and
the surplus of the old institution
can be employed, is simple and inexpen-
sive, and the liquidation of the old as
ISOLATION is the only thorough means OF
demonstrating to the Comptroller, the
creditors and the public the sOlvency
and solidity of the institution. There
should be such showing at least once
every twenty or twenty-five years. Elk
perience has proved that occasional bank
examinations cannot be trusted to reveal
the exact status of any bank, but there
is no concealment of condition from
the rigid requirements of final Iquida
tion."
As to the second recommendation OF
the Secretary of the Treasury, it Is very
wise. The authority now vested in IA
tional banks to withdraw their circulation
at pleasure is both tremendous and danger
Gus. 1t gives these institutions absolute
control of the finances of the country,
and enables them, by concert of action,
to create panics, and throw the business
of the country into chaos and confusion
at will. This was practically proven
about q year ago, when-to de
feat the funding bill which
had been passed by Congress,
and to secure a greater amount of inter
est on their bonds than Congress was
willing to allow. and which experience
has shown could easily have been dis
pensed with-all the principal Eastern
banks agreed to withdraw in concert
their notes from circulation, and, re-
gardless of consequences, to plunge the
whole land into financial ruin and disor-
der. The fact, too, that they succeeded
in their efforts, and, by their course,
frightened Hayes into veto OF the fund
ing bill thereby proving their ability to
control and coerce the National Legisla-
ture, and the National Executive as well
lis additional and convincing proof
that the power to withdraw their cur
rency at their own pleasure, with which
the banks are now clothed, is most dan.
gerous, and a constant menace to the
vital interests of the country.
1t is, therefore, to be hoped that this
second suggestion of the Secretary will
be needed by Congress and the power of
the national banks in this direction will
be promptly cur'ailed. Not only should
they be prevented from Withdrawing
their notes from circulation within a
given time, but that time should be SO
far extended as to enable ample prepare,
tons to be made to avert any disaster
which the banks, to accomplish any OBJ
ject they may have in view, may see fiji
to threaten.
Belligerent congressman.