The Somerset press. [volume] (Somerset, Ohio) 1873-1977, 1882-03-02

On the Report of the Comptroller OF thu
Currency and RecharterinG of Nstions
Banks.

happiness of the masses of the people will
obtain much profitable information by a care
full perusal of the last annual report of the
Comptroller OF the Currency. An ex-
animation and review of this report
will be OF especial value at this time
while the questions OF refunding and rechar-
tering Of the National Banks are under discus
Comptroller Knox informs us that there
were, on the lst day OF October, 1ssl, 2,l2 Ma
tional Banks in the country, That these banks
have in capital stock, $463, ,s2l ,9s5; surplus
funds, $l2s, ,lt0,6lS; undivided profits, S56572,-
lgl; individual deposits, $l,g10997, ,53L They
eSs2 10000; United States deposits, Ss476,69O:
deposits of United States disbursing offices.
The question arises: How is this amount of
money being used, and of what advantage is
It TO the banks? The Comptroller informs us
that they have $il9,S47, 30 Of this money in
vested In United States bonds which of course
are not taxable. They have S6l, SO, 703 invest
ed in other stocks and bonds, making total
which is slo sse,e ,ees more than their entire cap
They have out in loans and discounts, 81
1o9, or BOB which they are allowed to charge
from TO "a per cent. per annum interest,
theg ars Ts 'G is tan
two and half times the amount Of their capi-
Their bonds and stocks and their loans and
discounts may be considered as SO much active
capital from which they are realizing a con-
slant profit They hold in specie, STA ,33i. .736;
I'm legal tenders, $53, Los, Al of literally dead
capital,
32,35o, ,sSS7 ,3yl-
There were eighty-six new banks organized
during the year ended November l, 1851, with
| an aggregate capital of 1861 ,0J0 These banks
received circulating notes amount ng to So
b23,5s0 The Comptroller tells us that that this
/ is the largest number of banks organized in
| any year since 1872. From the establishment
went into voluntary liquidation, and SO have
| been placed in the hands of receivers. The
| estimated losses to creditors from the failures
| of National Banks during the eighteeTl years
| since they were established amount 70 ~5,240-
0OO, which Is doubtless far less than the losses
sustained in any other kind of business using
anywhere near that amount OF capital The
| failures that have occurred have not been
through any fault of the system on which the
banks are founded, but from bad management
| on the part of the officers of the banks. The
/ comparative few failures among National
Banks as compared to the same amount of cap
4 ital employed in other pursuits is an evidence
| of the great profitableness of the system TO
| The great losses, however, which the people
sustain through the agency of banks does not
\ come 50 much through the banks that fail as
| through those that do not fail. The business
/ interests of the country suffers far more from
the imitation and contraction of currency than
! IL docs from the failure Of banks and loss of
! notes.
These losses occur through bank currency
| that Ia not q legal tender for debts, but is re-
currency, after being made the basis of con-
| tracts, Is Withdrawn from circulation, thus
forcing debtors to pay their obligations in
| OehCh h'hcy ehnh dhAhN III "AhSh taO NNbs a.
| contracted,
On the other hand, the profits arising to
those engaged in banking business does not de-
| pend entirely upon the dividends semi-an-
| nually declared upon their capital stock.
| Enormous profits are secured by taking ad-
| vantage of the increase and decrease of prices
of property, which is brought about by infiat-
ing and contracting the volume of currency.
The Comptroller informs us that between
| January /, 1882, and February p, 1888, the
charters of 393 banks will expire. These
banks have a capital Of So, ,0oO,OOo and a circu-
lation of about $68, ,O0O, 900. From June 1884, to
1891, the charters of 1,0so banks, having $780,
81 965 of capital, and S192, ,5Sl 0S5 of circula-
ton. will expire About S243, 100000 of the
circulating notes of the National Banks are
the three-and-a-half per cents. 1t is very ap-
parent that desperate effort is being made by
the present Congress not only to extend the
charters of these banks, but to refund the
three-and-a-half per cents. into three-per-cent.
bonds, that will have q definite time to run.
The egislation sought in this direction will be
= entirely in the interests of the bankers. Al
really large portion Of the time of the session
has been taken up in discussing John Sher-
mans three-per-ceut. Refunding bill
The question now arises, should these banks
have their charters extended, and should the
three-and-a-haf per cents. be refunded and the
taxes on bank circulation be reduced for the
, | especial benefit of bankers?
ComptrollersKnox,i in his report, discusses
the question of renewing the charters at con-
} siderable length He says:
, | The pr. ncipal reason urged by those who
favor discontinuance of the National Bank
, ! ing system is that money can be saved by au-
/ tnOr1ZlnX the government TO turnISn clrcIlla-
r ton to the country. In other words, that the
profits to the banks unon circulation is exces-
, | sive." I'D
The Comptroller then furnishes figures and
att mpts 10 show:
THAT the profit on bank circulation cannot
now at least be said to be excessive"
He is very careful, however, not to mention
the source from which bankers can derive the
largest profit, and wherein lies the greatest
power for good or evil: that of increasing and
= diminishing the volume of money, and by tha
means Initiating and contracting prices.
. This dangerous power is inherent in all syS
, | TENS of bank currency not regulated by law
The old State Banking system in operation be
. fore the present National Banks were organ
ized afforded perpetual scheme for infiatinl
b the currency, and thus increasing the prices o.
all kinds of property, and making busines
: prosperous, and then contracting the currency
: | decreasing prices and bankrupting our mer
chants and business men, bringing on panic
~ and widespread business d saster 50 common
and so regular had this condition of things be
j. | come that panic once In ten years was con
-, sidered unavoidable.
Since the war, the business men of the coun
try have been forced through the panic of 1S1t
and the few years of disastrous consequence
following the legislation obtained through tn
agency of bankers, which forced a contraction
and destruction of the Government currenc
thar was put in circulation during the war.
7, The finance reports show that about 81 200
l., 100000 of Government obligations in circuls
" | tion when the war closed, for all of which tn
10 people have given their labor and property a
" a full equivalent in value, was in two or thre
m years time thereafter taken out of circulation
y" and converted into ACKNOWLEDGEMENTS
N | gold bonds, thus increasing the demand fC
~ gold upon the Government to the extent c
n | over S60,00J, 600 annually to pay the interes
~ Among the currency obligations that had bt
H. come the peoples money. and on which the
business was largely based, was $3.50, 900 900 {
is 3-l0 notes and $2ls, 600 900 of compound inte
It'd tificates % Of fl indebtedness. @ ted @ etc, suicient
make up the amount here mentioned.
le Following the withdrawal of these ourrenc
notes, q systematic war WAS made by bank
q, upon legaltender notes, and from one to for
millions a month was taken from crculatio
from @ sss SSeooo % to $500 when m' the % pam
er came on. The panic became 80 disastrous
to threaten the entire prostration of busnes
u and in order to prevent this President Grant
Administration was compelled to reissue s2f
100000 of the legal tenders to relieve the pres
ure.
No sooner was a temporary relief brougl
about by the reissue of the currency destrOyt
" than John Sherman secured the passage
Congress of his Resumption bill, the object
l. | which was TO force all the debtors of the cou
4 try who had CONTRACTED debts, in paper Gu
was passed demonetizing silver and to resun
e. specie payments, and by this means legal-te
der notes were gradually to be DESTROYED al
bank notes issued to be put in their places, al
all debts made legally payable in gold.
These Legislative enactments, by which Il
debtors of the country were bankrupted al
stripped Of their money and property. for Il
benefit of money lenders were engineered
n, banks for the purpose of getting rid of Cover
az ment notes and to give them the entire contr
of of the volume of currency, thus enabling the
= to carry on their schemes of initiation and co
E tutions.
d, The President the United States Treasure
H. the Comptroller and other Executive office
, and majority of both houses of Congress a
lFr ed these schemes, ard the banks are now
il tempting through these parties to secure
H. charter of their corporations, and to perpet
:" ate the public debt in their interests.
The Comptroller goes into an elaborate {
49, fense OF the National Banks in his last repo
:" He becomes sort of an attorney for an extC
sion of their charters and to relieve them frC
taxation.
After attempting to show that the profit
their circulation Is very small, he says:
1.-THE proportion of taxation, National a
A. State, imposed on the banks has been shoV
TO be greater than that upon any 9th
cir moneyed capital, being in the aggregate eql
TO an average of four per cent. upon
ca amount of their issues"
On page So Of the ComptroIler's report, q