Oxford Democrat. [volume] (Paris, Me.) 1833-1933, 1882-06-06

OF less than 100 millions as q basis for
the issue of the 3l3a millions of new
Treasury notes to take the place Of the
national bank notes. AS 100 millions
must be taken to purchase this fund,
there would remain only 2lS4 millions Of
Treasury notes to be devoted to redeem
ing an equal amount of 50 per cent.
bonds.
The annual interest saved on these
called bonds would be 81, 475, 600, in
stead of $4,000, 900.
But even this is only one side Of the
account. Now turn to the other side and
note the taxes lost and expenses incurred
by the proposed substitution.
First. There would be the loss Of the
annual tax of 1900. 900 on circulation.
Second. The Government would have
to pay the expenses of the redemption
and issuing Of notes to take the place Of
mutilated currency now borne by the
banks, which have averaged s26S,OOo
per annum the last five years.
Third. There would be loss of 49,
100, 900 Of State municipal taxes, grow
ing out Of the fact that 81 81, 900, 600 Of
the capital stock Of natioual banks, now
invested in bonds as security for circula-
ton and paying an average local tax Of
Is per cent, would no longer be needed
for that purpose, and would consequently
drop from the capital Of the banks as
soon as they should become simply banks
of deposit and discount, and be no long
err taxable.
To make this clear it should be borne
in mind that 1864 millions of the capital
stock of the national banks is invested
in the bonds deposited for the security Of
their circulation. The Treasury would
deliver to these banks 2l3t millions Of
Government notes in exchange for that
amount of their bonds. This would leave
the banks with l55 millions of bonds,
representing similar amount Of capital
stock liable to local taxation, which would
no longer be needed, as the 2l33 millions
would be all the capital that would be
required to carry on their operations as
banks of deposit and discount. The first
step of these banks, in the event Of the
retirement Of their circulation, would be
to reduce their capital stock to the extent
of at least the lj5 millions of bonds not
exchanged for Treasury notes, which
bonds would then be freed from the local
taxation to which they are subject so
long as they form part Of the capital
of banks. Practically the reduction would
be greater than this, as many national
banks in rural communities would find
it impossible to do an exclusive deposit
and discount business.
Fourth. There would be loss Of ST.
SS7, S5l in the annual tax on deposits,
which the substitute offered by the gen.
tleman from Missouri proposed to surren-
der, S4,94O,645 having been paid last
year by national banks, and S2,946, 900
by private bankers and State banks. The
profit and loss account Of the proposed
substitution would stand thus
Interest saved on called bonds sI.i,j,O00
Tax on circulation lost $S,Dl,CO
State and municipal tax lost 10000
F Exp Se ot snTPaaoe stS @
The Treasury. mote substitute for ma
tional- hank currency on the plan propos-
ed by the gentleman from Missouri would
surrender taxes and incur expenses ag-
gregating sl4.240,s5l, and would save
in interest on called bonds only S7,475,-
600: direct annual loss to the Treasury
and people, Sc, 765, 1851, instead Of a saw.
ing Of sl2 900, 900 as claimed.
THE TAX on DEPOSITS.
1t is said, however, that the tax on the
deposits of banks and bankers should not
be included in the losses by the substitu-
ton of Treasury notes for bank notes on
the plan proposed by the gentleman from
Missouri, for the reason that this tax will
be and should be in any event repealed.
l am unable to see on what principle Of
equity the opponents of the national bank
ing system maintain that the taxes paid
by national banks for the only privilege
they enjoy not possessed by private bank
ers, that Of issuing and loaning circulat-
ing notes, are so small as to give them
undue advantages, while at the same time
they claim that the tax on the privilege
of receiving and loaning deposits is too
large and ought to be repealed.
Itappears from the reports of the Comp
troller that the average annual net earn
ings of all the national banks for the past
four years was little less than per
cent. on capital and surplus; or, after
deducting the local tax paid in about halt