Northern tribune. [volume] (Cheboygan, Mich.) 1875-1885, 1882-12-09
NORTHERN TRIBUNE.
SATURDAY. DECEMBER Q. 1882.
Banking Of the Future.

Ranking Of the Future.
From the Detroit Post and Tribune,
The comptroller of the currency, in
his annual report to the secretary Of the
treasury, says:
The successful refunding of the 5 and
6 per cents as they matured, at first into
4and AZ per cents, and subsequently in
to 81 per cents and during the last year
into per cents, together with the rapid
reduction of the debt, has had the effect
of renewing the discussion as to the
permanency of the national banking
system and its ability under existing
laws to supply the additional circulation
which may be hereafter annually required
The banks hold 100000 of 81 per
cents and nearly $1S0OOOO00 of per
cents as security for their circulation.
If the debt should hereafter continue to
be reduced at the same rate as during
the past year, all of these bonds will be
called for payment in less than three
years, and 1t will be necessary for the
banks holding such called bonds either
to depOsite lawful money for the purpose
of retiring $2OO,OO0,OOO of their circula-
ton, or purchase Az per cents, or Pacific
railway per cents, which are now at a
high premium in the market.
To this it may be said there is very
little probability that the national debt
will disappear with the same rapidity in
the near future that it has in the past
several years.
Whether congress cuts at the right or
the wrong end of public revenues, there
is sure to be Topping off. 1t may be
said that the demand in this direction
is unreasOning and unreasonable. All
of which may be true; but the demand
exists, and its pressure will be recOg-
niZed.
In obedience to this demand there will
be reorganization of the revenue scht d
ule, ana none can predict, with any
thing like nearness, what the surplus
revenues of the government will be until
after year or so OF trial.
But this much may be said with GER
tainty; We are approaching the end OF
our very large annual surplus, and with
it the end of the great yearly reduction
of the national debt.
less revenue will be to remove the appre-
hension of an early change in the basis
of national banking.
But even if the policy of the rapid ex-
tinguishment of the public debt shall be
tion of the national banks will not be
disturbed. Whenever the time arrives
that there are no national bonds to be
used as security for their circulation
something else will be found.
The suggestion that these banks be
organized into free banks, with power
to issue currency, without deposit of Sc
curity, only making all responsible
Jointly and severally for the circulation
of each, cannot be entertained.
There must be and will be no going
back to unsecured circulation, even in
this improved form.
Even after all the United States bonds
are paid off, and this lies only in the re-
mote future, there will be large amount
of local and state Indebtedness, which
will furnish perfect security for bank
ing, quite as good, indeed, as national
bonds. Under proper regulations, as to
the character of this class of bonds which
may be used. the circulating power of
the banks may safely and wisely be con-
tinued.
There are not few who believe that
this power can be better exercised by the
general government only. But these
have not fully weighed the value of the
banks as furnishers of local circulation.
Currency drifts to the public treasury
and the great mOneyed centers as 10 the
waters of the mountain streams to the
sea. Without a supplying reservoir,
such as is furnished by local banks of
issue, the financial centers become flood
ed with currency, drained from the bal
ance OF the country, and every business
interest in the drained section suffer as
a consequence. Banks of local issue
prevent this. They equalize the distri-
button Of currency, spread it out over
the country, and bring it back to spread
out again as rapidly as it is drained away
This is one of themost useful functions
of the national banks, and its exercise
has been of incalculable valne to the
business Of the country.
a Dire Prediction.
Under date of Ottawa, Nov. 81. Prof
r.. Stone VIRGINS. of Canadian finance