The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1883-12-05

the Comptroller OF the Currency was last year
$1o4 ,955 OF, of which Sl6,S20 is to be REIN
hursed by the national banks. All other ex-
penses such as printing and furnishing notes,
and the like, were $14l 1868 so; of which $751;
QUO were for plates, which Is TO be reimbursed
by the banks. The net expense to the govern
ment was $174,896.97 The gain to the GOV
eminent from the loss of notes las stated apovel
Ia at low estimate, 81 ,000, 900 for every period
OF twenty Years, or 100000 per year. Then
the tax may be taken of entirely, and the gov
eminent not he a loser 1t may be taken of in
part, and the government receive more by rea-
son of this circulation than it expends to keep it
IN existence. am aware that this is reduc-
ton OF taxation in favor OF organized capital.
What Is taken off here must sooner or
later be in some degree taken in
elsewhere for means to pay off the
public debt. do not favor the relief of capital
10 the burden of its competitors Of that phrase
Is allowable), or of its helpers. Yet il this tax
Is not taken off by law and thus the eIreul alton
Kept in existence, so expensive may it become
TO the banks TO keep up their circulation that
they may cease altogether TO do so, for to do so
Is not compulsory upon them; and in that case
the tax ceases with the cessation of the etreula-
ton. So that the alternative is presented OF
striking off the tax, and thus obtaining public
accommodation, or of keeping the law Tor the
TAX upon tne STATUTE DOCK without pFouucO
therefrom, and losing the accomm odation by the
lack of motive for furnishing it. In that view
the tax will cense, not from favor, but as means
OF reaching desirable end. Ii Is to be eonsid-
cred, too, that in the States this form of organ
lied capital pays its share, sometimes more than
its lawful share, of State and municipal taxation.
Still, | would not make this recon-
mendation here did L not in another
place herein call attention to the need
of u reduction of the taxation resting upon the
community in general l further recommend
chat this department be authorized to allow to
the banks circulation to the amount OF 80 per
cent, upon the average market value lor the
twelve months prior to the deposit, OF the
United States bonds deposited on security. Thus
n bank would be enabled 20 obtain circulation
upon the premium IT paid for bonds. as well as
upon the par value of them. Had United States
bonds never risen above par. no one would have
a a mt nj ppn latiO acQn1 pT,
them at ratio of 80 per cent. would have been
amply secured. Why should any one doubt
that the same ratio on their market value will
be safe; the ratio of the circulation furnished to
shift in amount to the side OF safety as the mar
ket value swings to and fro9 1t is worthy,
too, OF consideration whether the orig
Inal requirement. in the national
bank act of SO large a deposit of 300 in bonds
for 800 In circulating was not, at that
time, an expedienr for forcing the bonds anoai,
as well a provision for securing the govern
ment and the bill-holder against loss IL is a
ratio OF security furnished for circulation with
out precedent in banking systems and in theory
and experience beyond the needs of the case.
Com pretending this, it starrles less to think of
furnishing the same ratio on the market value.
For, after all, 1T is not new departure so much
as an assimilation, somewhat, of our system to
those accepted in the financial world For
grea ter caution, there may he fixed limit of
value, above which the valuation of them for
adjusting a ratio shall not 60 a collateral adj
vantage, not ONLY to the banks but to the CON-
munity is that an amount OF banking assets laid
away in the premium paid for bonds would
1t is understood. as before stated, that in
business circles United States bonds are taken
as a good collateral mp to 95 per cent of their
market value at the time. To be sure, there is
the right reserved. in case of lowering fuctua-
tion in market value, to demand an increase of
security. There should the same power be given
to his department, and the difference OF per
cent. in the business and governmental margin
will cOunterbalanee the min bleness of the indi-
vldual creditor greater than that of the public
agent in looking after change in market value
and in calling for further security.
"a Ufaf rs hnu mn da bnxr hot ham 10
little danger OF ultimate loss to the government
or note holder upon circulation based upon the
lnterest-bearing bonds of the United States,
though taken as security at margin coming
near TO the current market value thereof.
Other details may be suggested il Congress
shall determine to give relief to the bankers,
and through them to the people in this matter
in the method proposed herein.
think that retrospect OF the twenty.three
years last past will descry Two things: First:
That the civil war oonld not have been carried
Cd and brought To a desirable result. had not
the bonds of the United States hem issued and
found acceptatian with moneyed men. Second:
That they would not have found that accepta-
tion had it not been for the lead and the effort
OF the national banks. Now, 1t has always been
held prime quality of value in these bonds
that they have, by law of the United States,
been exempt from taxation by Stare or munich
patty. Such is the law OF the creation of them.
That law has effect when they in the hands
of individuals and of many corporations, and
there they are invuneiabe by such taxation;
but when held by national banks the law fails of
is purpose. Though owned by the banks
part OF GneF capital OF iuelf assets. huu uSeu Oy
them in their business. even in their relations
with the government, State legislation has
found a way to reach them. 1t
is roundabout ana evasive, but it is
effectual. The stakeholder of a natforal bank is
made to pay a tax the value of his share in
cas,ital and assets, though they consist largely
of the bonds of the United States. l submit
that this Is not equal taxation, and that it. is
especially unjust and ungrateful in view of the
two statements of fact with which began this
paragraph Legislation by Congress could for
bid such exercise or taxing power, and thereby
make the holding of United States bonds, and
the use OF them for basis of circulation, more
desirable to the bank,
There are collateral measures which win give
aid to the banks without detrimenG elsewhere,
and may be taken by them in lieu of all. or in aid
of scant profit on circulation. They may not
now loan on real estate, or take security thereon
as collateral to personal liability. This re-
striction might be removed 1t has BEEN sug-
gested that the requirement for a reserve might
be removed made less in amount. This is OF
doubtful expedteney. The injunction for re-
serve is meant a restraint on daring negl-
gent mana cement, and a safeguard against
forced suspension or the need of sharp contrae-
tiSlls.
The Surplus and Tax Reduction.
That there is likely TO be continued surplus
in the treasury over the ordinary expenses of
the government, so long as the present revenue
laws remain, is seen by those attentive to fiscal
affairs. This has ealfed out propositions for the
disposal of surplus of public moneys, two of
which may be noticed. One is, that the surplus
be parceled out among the States of the Union.
This, though it has been ingenionsly argued, has
not SO approved itself to the common sense of
the people as now TO cali for elaborate state
ment of reasons why it should not be adopted.
The pablo senGe is shrewd enough to see that a