Oxford Democrat. [volume] (Paris, Me.) 1833-1933, 1882-05-09
From the Detroit Post.
MR.. LADD'S MISTAKE.
THE ERROR HE MAKES ABOUT NATIONAL
BA>kS.

Mr.. Ladd OF Maine has been making .
speech in Congress In opposition to the
extension OF the national bank charters
The speech is ostentatlously packed with
figures the most OF which have no more
bearing on the question than the new
comet has on the result OF boys game OF
marbles. But one point, TO which nc in
adyertenty refers, is worthy OF notice
He says the banks have made a profit,
which he proceeds to state, and states in
correctly, and then he adds: :" IL Is we'll
known 10 every intelligent man In the land
that in the operation Of the law but ~ per
cent. OF the capital employed Is furnished
by individuals and 30 per cent. by the gov
ernment," and he leaves IL 10 be inferred
that the profits OF the banks are made OF
the $50 per cent" which he falsely asserts
l. given them by the government.
What Mr.. Ladd asserts as well known
u every intelligent person Is not known
To any Intelligent person. Nor is 1t a fac e.
Further the circulation of the banks has
been TO the banks bu; of trifiing consequence
as source OF profit.
or this two banks in New York city fur
nish striking illustration. The Chemi' =
al National Bark has a capital OF $500 =
goo. II has no circulation and never had
any, therefore 1t never had any 30 pei
cent. or any other per cent. OF capital
furnished to 1t by the government Yet
the profits of this bank have been $780,.
600, and its shares. which originally co-l
500. are selling at s., 900.
The Merchants Exchange National Bank
In the same city has a capital OF $1,000
600; 1t has $751; 100 circulation, its ne,
profits are Set down at sls7 900, and it,
shares are selling at $50. or ten dollars be-
low par.
Why are the shares OF one national bank
which has no circulation, and never had
any, selling at $50 for every 81 invested,
while the shares OF the other bank, with
nearly three-quarters of million OF circu-
lation, are selling at ninety cents on thu
dollar: II the profit lies in the circulation
lieve, the Chemical National ought 10 maxi
nothing. while the Merchants Exchange
should show large profits. But, as seen,
this is not the fact, and the reason is OBJ
vious to every person who knows any
thing about finances and who will examine
the facts. These are the facts:
The Chemical National Bank with only
$500, 900, has sl4, 224, 220 on deposit, and
its outstanding loans on March llth were
Sl3, 945 900.
And here it should be said that neither
the government nor the national banking
system has anything TO do with the amount
OF these deposits or loans. They have not
been increased one cent by any law of the
land. They would exist If there had never
been national banking law and they will
not be affected in the slightest degr ee by
the repeal Of the banking law.
The Merchants Exchange National Bank
which, as already stated, has $1,000, 900
capital, has only sS,245,Ooo deposits and
loans amounting to only 81, las, 200. Thus
the Chemical, with less than one-third the
capital of the Merchants, has more than
five times as much deposits, and loan'
more than three times as much money.
And It is on the amount Of these deposits,
no part of which are made by United
States officers, and no part of which be-
long to the United States, and the loans
which are made of these deposits, that the
Chemical Bank has made such enormous
profit, while the other bank, with smaller
deposit list and the aid OF q larger circu-
lation. has not made the average current
rate of interest on the capital invested.
The conclusion from this is certain-it is
deposits and loans, and not circulation,
which make profit for the banks.
tal fNT