The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1881-03-24
THE BANK CONSPIRACY,
HOW THE THREE PER CENT. FUND.
ING BILL WAS DEFEATED.
Some Account Of the 'Pep' Bank That Engln
eered the Plot.
[LoulsyIlle. Courier Journal. |

| lAOuAoNiilO'SuuIIeI JOuEuhl
Washington, March 19-Hardly any unprfju.
diced person, who is at all familiar with the SUR
jeet, doubts that the New York banks that retired
their circulation during the tendency of the
Funding bill, made combination to defeat the
bill. 1t was powerful and at the same time, q
WIZ ked raid, by reason Of which many men were
ruined. The partners In the combination made
efforts to secure the cooperation of country
banks. In some instances they were successful
In others tEey were unsuccessful.
The man who gave direction end force to the
movement OF the banks was H. c. Fahnestock,
Vice President Of the National Bank of New
York, and The man who has had more influenza
with the late administration of the Treasury De.
partment than any other man in the county In
his bank, Mr.. Moulton Senator sherman's broth.
er In law, is large stockholder, and the bank
and all It's shareholders owe the fortunes thew
have made through the bank to It's connection
with the Government It's peculiar relations with
the Government have often been commented up.
on in the newspapers but the figures taken from
the reports of the Controller Of the Currency will
give clear idea of how much profit those rea
tlons have been and how firmly John Sherman
has stood by this petted corporation. The First
National was the leading bank of the syndicate
which placed he four per cent loan. It has
capital of S5OO00O, 1t being one of the large.
stocked banks Of New York City. It's commissions
for the sale of fOurs amounted to about 100000
The statement in the Controllers report shows an
entirely unique character of business, resting as
1t does on Government transactions. Although
its capital Ia only $500 000 its resources last wear
INk,sr L..
large as the bank in New York with the same cap
ital having the largest amount Of resources and
five or six times larger than some banks having
equal capital, 1t is from Sl00O0OO TO Sl2 600 900
more than the resources Of any bank in the city
having twice the capital. Only seven banks ex.
ceed 1t, as follows:
\Capital. Resources.
National Park BHnk.,........S2 100000 S24 S46 55S
National Bank of Commerce 100000 26 332 76O
Metropolitan National Bank" 100000 20 958 74l
Importers and Traders Ma.
uonal Bank. k.:'".'.'.....,"'''. 300 600 81 4l2 1H
Bank of New YOrK.,........... 1000 600 % S84 76S
American Exchange Bank. 5000 coo "a 33l O54
Fourth National Bank"",,.." 100000 20 Sl1 9l6
Only one other bank in the city, the National
Bank of Commerce, which hes So 600 00O has the
large surplus of S2OOO,O.O This represents an in.
crease of the wealth of the owners of the First
National Bank by 400 per cent, in addition to the
dividends which have been declared. In one year
from 1879 to $780, the surplus just doubled. Banks
with twice the capital are content TO count their
stored up surplus by the hundred thousand
Banks with four times the capital have little
muf5 than fifth of the surplus Of the First Ma.
tiOnal.
The combination to defeat the Funding bill was
organized and engineered by bank which has
thus grown rich In Government transactions. II |
is idle and worse, for that bank to take the
ground that II could not afford to invest the $780,
900 to secure circulation In three per cent bonds
Its circulation is nothing to It, According to Sec
retary Sherman last report, the average profit on
circulation throughout the country during the |
last fiscal year, was q per cent, while the aver
age profits of National Banks from March lst |
1870, to September 1st $780, amounted to 81 er |
cent. on capital and surplus. half of one per |
cent taken from the profit on circulation Would |
not be felt by the First National Bank It's loans
and discounts, however, amount to about S8 OO0. |
000 and 1t is there that the bank is sensitive Un-
der II pretense Of Oblecting to the Carlisle SEQ
ton FahnestoCk fought the rate Of interest, He |
knew that the thIees could be sold at par and |
that that would reduce the rate of interest on his
loans and discounts. Therefore he fought the |
Funding bill, and gave notice to the Treasury |
that his 300 corresponding banks stood ready to |
surrender their circulation as soon as IL became
certain that the bill would become law.
The action Of the banks demonstrated what |
dangerous power they hold under the fourth |
section" which Mr.. Carlisle sought to have re |
peaed They demonstrated also that the com.
pulsory clause was right, for they gave evidence |
Of their intention to defeat refunding at three per
cent Mr.. Carlisle said in his speech on that part |
of this clause, requiring the replacing of matuired
bonds with threes, that 1t was to prevent the |
banks from defeating that provision which re-
quires them to deposit none but three per cent
bonds after the list day of July next as security for
circulation. II is perfectly plain that II non in.
terest-bearing bonds may be continued on deposit
after that date any bank which chooses to do so
may absolutely refuse to take three per cent.
bond and still enjoy all the circulation that 1t |
now has 1t may simply decline to present lis
Eve and six per cent bonds for redemption after
they have been called by the Secretary of The
and continue 20 leave them on denosit
with the Treasurer; and by these means 1t will at
not only arrest the process Of funding to the
extent that 1t may hold outstanding bonds but 1t
will also contract the circulation for the time be.
ing by compelling the department to keep on
hand the money with which Its bonds should
have been redeemed"
That the bal ks would have used their power
can not be doubted, in view Of what has taken
place But not all the banks. There have been
lome very honorable exceptions, notably the
Marenck National Bank of Boston which not on
y did not surrender its own circulation, but in
he midst Of the panic applied for more and has
enough with It's correspondents to pre-.
vail upon them not to take out their bonds and
surrender their circulation. Il. L. N.