The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1881-02-26
THE NATIONAL BANKS,

| The passage OF the house funding bill by
the United States senate with trfling amend
ment, indicating certainty Of its becoming a
law, has created quite futtcr among the ma
ti0nal banks, because the law requires that at
ter the first of next July all deposits of U. 8
bonds in the U. 5. treasury upon which to OBJ
tain circulation shall be L. 3. 3 per cents. This
clause, ~ it will take some $500, 900 900 to re-
place the present bonds on deposit for cur.
forced market for the heaviest end of all the 8
per cent. bonds of which the bill authorizes
the issue. The banks complain OF this forced
purchase of these bonds and their exchange
for 5 and 4 per cents, MS requiring of them
what the government requires Of no other
class Of business men and then they say, as
these 3per cents will probably never be at
par In the market though they are required to
purchase them at par, their loss in the trans.
action will be so great that they can do better
with the money they can sell their present
bonds for than by retaining their currency
and there is "a general movement among them
therefore TO return their currency and take up
their bonds The movement during the week
has equalled from four to five millions day,
so that on Thursday the deposits In the treas
ury already amounted to over $l2OOO,OO0 by
bankers desiring to withdraw currency to that
amoont. To check the movement, u bill has
passed the senate and will probably pass the
house, renting the present tax on bank de.
posts, which would be about equal to raising
the 3 per cents of the banks to 81 per cent,
at which most of them are willing to take the
bonds. But anyway, there is no doubt that
the funding bill will lead to a very considera-
bic rapid Withdrawal of national bank curren.
cy, from which the croakers In Wall street ar.
que that a great stringency in the money
market is inevitable and the greatest danger
possible Of general smash.up after the fash.
ION OF 1878.
The vaccination, we imagine. is put forth
rather in the spirit Of bulldozing than honest
apprehension. National bank bills are not
money. but mere bits of paper used for con.
venicnce In passing money from hand to hand.
If all the national bank bills were burned up
in a week they surely would not make money
which in this country means gold, silver
and greenbacks-scarcer by dollar anywhere.
The place of the bits OF paper known as ma.
tlonal bank bills would soon be taken by other
bits OF paper-by bank checks. drafts, bills Of
exchange, and all those other forms Of credit
paper which the commercial world knows so
we'll how TO bring into being. 1t would be
a sad state of affairs indeed if the issue or
withdrawal OF few millions of national bank
bills could at any time seriously affect the
scarcity or plcntifulness of money in this
country The banks can affect business in
that way no doubt by simultaneous expan-
sion or contraction of their loans, but not by
contracting or expanding the quantity Of bits
of paper which are nothing but orders on the
gold, silver or grecnbacks lying IN their vaults
1t Is great delusion, under which many seem
to labor, that bank bills are money; or that
any form of paper, whether redeemable on de
mand or not redeemable in money, can make
money plenty or scarce. Money can be made
plenty only by increasing the production of
our mines and minis or the production of
those articles from the soil, or by our handi-
work or brain work that will readily sell for
money. The pretence of beng able to make
money plenty by any other means is delu-
sion and fraud.